Mortgage for Self-Build - What's my chances?

ronaldo

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I own a house that's rented out and would like to get a mortgage for a self-build.

Value of current House: €130,000
Mortgage: €92,000
Repayment: €370 per month
Rent: €560 per month

The above house has been rented to the same tenant for the past 2.5 years.

Age: 28
Salary: €29,000
Savings: €29,000 (by the time I apply)
No loans

I’m living at home at the moment but am looking to move out. I could ask the tenants to leave my current house but they’re good tenants and the rent covers the mortgage. I’d also like a detached house for myself (current one is a semi)

I’ve spotted a site for €45,000 and would need an additional €100,000 for the build. That means I’d need a mortgage of €116,000. This gives a 20% deposit and a mortgage of 4 times my salary.

Are my chances of a mortgage certain, possible, nil given the above information?
 
I'm not sure what type of house you intend building but I assume it is very small and will be built using the cheapest materials possible. Also you need to factor in legal fees , engineer fees, planning fees etc. Maybe you should wait until you are in a more comfortable position to build.
 
You wont build a house for this. We are about to build and have spent 10k without the builder going in yet!
The council fees alone would be at least 5k, more depending on the county. Raw materials have gone up by 25% since last year alone.
 
Hi,

Labor will be pretty cheap as I'm in Donegal.

However, I'll take your advice on board and add 15% to the build cost as a contingency.

That would leave me with the following updated figures:

Expected Salary: €30,000 (should get a payrise in January)
Required Mortgage: €135,000
15% Deposit: €24,000
Fees: €3,000

That would leave a 4.5 salary multiple. By January, I'll have the above deposit/fee money (and a few extra thousand) saved. I could apply before January but that'd leave a higher than 4.5 salary multiple.

What's your thoughts on the above? Will my current house have a big negative impact on my chances of approval?
 
As previously stated, materials are currently very expensive. I'm building a house and labour price is rock bottom, but can't see how you would finish a house all in for 135K. Is it a very small house? Is it going to be very basic? You may regret this later as chepa stuff generally needs to be replaced pretty soon. Have you got quotes to back up your estimations?
 
One question that you need to get answered is will the bank take your rental income into account? I'm assuming they will look at your "worst case scenario". If your tenants move out, and you can't fill the house.

Unfortunately I think they will look at your case as this:

You're current mortage of €92k, + what you are looking for of €135k gives you total borrowings of €227, with a salary of €30k. Banks now look more at repayment capacity, rather than assets or collateral. Their focus has changed from 10 years ago.

From the banks point of view, I don't think they will take the value of your current house into consideration, as the last thing they need is another house that they can't sell, on their books., in the event that you default.

Banks are now also looking at the security of your employer, to see if your job is safe.

I'm in something of a similar situation, so I'd be interested to see how you'd get on. I started a similar thread to this yesterday, I hadn't seen your posting.
 
We got a mortgage a couple of months back in the same situation. They wont take rental income into account unless you are receiving the rent at the time of application and during the build. Which they may in your case.
Again I think your big issue is proving to the bank that you can build a house they will want to give you a mortgage on for that amount of money. They will look for full costings on it and they are very thorough now. Like someone said the cost of materials has gone through the roof since last year. You will need an engineer to sign off, which means he has to stand over the building legally. If it's a direct labour self build the insurance required is a few grand. We are using a contractor and had to jump through a load of hoops, I cant imagine what the bank would put you through if it was a self build with direct labour.
My brother build a house himself, and I mean done the block work, foundations, roof himseld with some labour coming in here and there. He did it as he went over a few years as he saved etc. He is a qualified excellent trademan and an architectural technician and it still cost him 130k. Having been going through this, unless your building 600sq/ft house I cant see you building this for this sum or a bank backing it. I think you need some professional advise. Are you even sure you will get PP? as that is not easy either.
 
I would be using a contractor - my dad...... :-D

Most labor would be via friends - builders, plasters, etc.

I'd also be getting the architect (a good friend) at good rates)....
 
Ronaldo, you need to look into this carefully. "Friends" will need to be paid too. As mentioned numerous times materials are expensive. Unless your dad gets them for free? Do you even know the size of the house, as you've failed to provide this information. Really, get your facts straight before you meet the bank, otherwise you have no chance with a vague plan.
 
Ronaldo, you need to look into this carefully. "Friends" will need to be paid too. As mentioned numerous times materials are expensive. Unless your dad gets them for free? Do you even know the size of the house, as you've failed to provide this information. Really, get your facts straight before you meet the bank, otherwise you have no chance with a vague plan.

Can you give a rough estimate or the area of the house to do a quick cost per m2 calc? the bank may ask how you intedn to build so frugally. If you answer with 'friends' etc. then does that mean they will be doing this for free or as cash in hand nixers? What happens to VAT thats meant to be paid? The whole contract could be tainted by illegality on the tax issue alone and the bank might close the door at that. I'm not 100% on this but its just a thought.
 
Im in the middle of building... still... and ive got to say its the small items that add up, for example spent €100 last week on solid plastic exit pipes for fan for cooker the 4 by 2 inch kind... I would have budget €15 for that.
its all the little things that end up with my local account being €3000 here and €3000 next month,

there are so many little things you need.. budget seems low even if you take out all labour costs and build it yourself.
 
Can anybody give a cost per square foot of self building? A rough guide would do.

Even better, if someone could someone give a breakdown of groundworks, blockwork, roof, electrical, plumbing etc.

Trying to do up a budget, but am totally lost.
 
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