Raising Finance & Timing

What to provide a bank or building society when raising finance for a building project & the timing of payments

Raising Finance


It is a good idea to contact lenders in the early stages of planning. If you already have a mortgage, talk to your contact at the bank or building society to gain some feedback on your ideas. Take them through your plan and try to get an understanding of their requirements and what they may be prepared to offer.

You will be required to provide the following documentation to the lender when the time comes to apply for a loan or mortgage: details of the proposed purchase, a property valuation, building plans (if available at this stage), the building budget, a copy of planning permission, your salary details and a statement of your financial position.

 

Timing


Payments for building projects are usually released from the lender in 4-5 stages. These will be based on the completion of major activities, e.g.

  1. Ground works completed
  2. First floor joists in place
  3. Roof in place and the overall structure watertight
  4. Electrics and plumbing installed, walls and ceiling plastered
  5. All décor and furnishings completed


So, the key to planning when and how much funding to draw down, is to prepare a schedule of works showing the steps of a build over the period of time of the project. Depending on the size the project, the resources available to you and the complexity of the build you will need to determine how long the project will take given the tasks you will need to accomplish.

All the tasks in the schedule require co-ordinating and scheduling so they occur in an orderly and timely manner. The slippage of one task can impact the timing of the overall project if subsequent tasks are dependent on the completion of that task. It is important to keep in mind that there are a number of personal on a site at once, all with their own schedules to work to so you have to factor in a contingency for timing. Note, the quicker you want the build to take the more planning required up front. The co-ordinating of activities including the timing of deliveries also becomes more critical.

Your lender may well ask for a progress report, outlining actual spend vwhat was budgeted for the project. This will help the lender determine if you’re on track with your financial plan. It is not unusual for a surveyor or the bank manager making a site visit to check that the work has progressed as far as you’ve indicated.

Before you start to prepare a project plan it is worth checking out what project management solutions are available to you. There are a number of software solutions in the market but one worth looking at is OpenProj. OpenProj is a free, open source project management solution. It replaces Microsoft Project and other commercial project solutions and is available for download free via the following link:

Website
 

 

Another option is to download the DIYManager Pricing Tool. It is an Excel based tool which is simple and easy to use. Once you have logged in you can access the Pricing Tool from your Toolbox.


Below is an example of a project plan for a loft conversion using the DIYManager Pricing Tool. The Summary provides a breakdown of costs for the stages of a project. The tool will also provide daily and weekly Gantt charts so you can review the timings of the building stages with the costs for each stage. The timing is based on a standard build (it may take longer if you intend to do a lot of the work yourself).
 

DIYManager Pricing Tool: Summary example

 

DIYManager Pricing Tool: Gantt daily example

 

DIYManager Pricing Tool: Gantt weekly example

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