Mortgage question

[Hazel M]

Hi - just a quick question if anyone in the know can help please.

 

We are looking to have a house built, and not sure about how mortgages work for this.

 

When we arrive we'll be living in rented until we either buy a house & land package or buy land then build separately.

 

Either way, obviously we'll be paying out rent - so do we also have to make mrtge pymts on top of this while house is being built (which would obvoiusly work out v expensive and so probably not affordable at all) or can mrtge pymts start once the house is built and ready?

Probably daft to think the bank would wait - but worth an ask coz I have no idea how it works when you have your house built!

 

Thanks.

[Andrew from Vista Financial]

Hi Hazel

 

Yes you will have to pay the mortgage on any amounts borrowed whilst you are renting.

 

However the mortgage payments would go on interest only during the construction phase and the money is released in stages to the builder so you are not making payments on the whole amount from the start.

 

It is a very important point that you need to factor in. Once the build is complete and you move in then you would generally turn the payments from interest only to principle and interest (capital and interest).

 

Regards

 

Andy