The obvious problem with selling assets is that they might not sell as quickly or for as much as you would have hoped and this could delay your self build project or even ruin it.
There are several ways to approach this problem:
- If the main asset you are relying on selling is your existing house then you could sell it first and move into rented accommodation or you could buy a large caravan or mobile home, put it on the site and live there.
- In some cases of renovating an existing property it may be possible to live in half of it while doing up the other half and then swap. Interestingly, the whole phenomenon of Segalrefers to a simple self build timber frame form of construction pioneered by the architect Walter Segal. see details of the system self-build started when the Architect, Walter SegalThe architect who devised a simple timber frame self build system (often simply known as 'Segal self build'). see more on the Segal method was renovating his house he decided to build an ultra simple timber framed temporary house at the bottom of his garden to live in while the rest of the work was going on. The system he used to do this eventually led to Segal self build.
- You may be able to arrange for an extra mortgage facility by using your existing house as a guarantee.
The option of taking out a bridging loan to tide you over till you sell an asset is likely to be a very expensive way of doing things.
Whichever route you take, it is worth planning it so that if the worst comes to the worst and you cannot sell a high value asset then you don’t get stuck at a stage which leaves you unable to sell the house you are building. Remember that the basic shell of a house which is weathertight and secure may be a very saleable item for someone else to buy and finish whereas one with the roof half completed will not.
VATValue added tax can, to a large extent, be reclaimed on self build. see the page on VAT refund
Remember that with most types of domestic self build you can claim back the VAT on building materials at the end of the job and this can have a bearing on your budgeting. However there are several exceptions (such as a granny flat) and it pays to read the HM Revenue and Customs guidance notes on this.