Self build and investment mortgage advice?

Mrsclt

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Hi, we own a site in dublin with a derelict house on it, v small mortgage on it. About 50k. It was originally two houses. We would like to develop one into a four bed family home for ourselves and build a smaller two bed property to the side to rent out. We own our current home which we will be keeping and renting. worth about € 380k, mortgage of around € 245k. Good salaries, credit history etc. projected market valuation of the new properties when completed would be €475 and €300k respectively so a good investment. Our issue is we can't find any bank who even do investment mortgages anymore? It's a bit complicated as its a self build and one house would be an investment property. We don't have to build the smaller house but it seems a shame as there is the space to build and we v likely to get planning permission but beginning to think we won't find a bank to work with us. Any suggestions?
 
How much will it cost to build the properties, ie have you had an estimate from a QS? You will essentially need to put a business plan together esentially before the bank will even entertain this.
 
Will cost about €450 including fees. Have had a couple of architects pulling together costings. It's kind of chicken and egg: I would imagine any bank will require drawings, as costings etc for a formal application but we don't want to engage and pay someone to do plans for two houses etc if we are totally wasting outer time. We are hoping to try and get a sense are we even at the races and what ballpark we could borrow and then commission plans and make a formal application. Is this pie in the sky?
 
More importantly have you met with a planner from the county council to see if you are likely to get planning permission? A pre-lim meeting will give you an indication of an application succeeding. You'll need plans drawn up to apply for planning permission anyway so why not go ahead & get them done. Sometimes you have to invest some money with no guarantee.

You'll also need to do your sums on what your total debt on the three properties would be, how much equity you'll have when the two new ones are built, projected rental returns, your ability to cope with repayments during void periods, tax bill etc etc. Where did you get your figures for the value of the two new properties from? €450k building costs against a completed value of €775k looks quite optimistic. How much of a deposit will you have against the two new properties? The CB proposal is 20% for PPR & 30% for BTLs. Have you spoken to a broker - they may give you a good indication of whether any bank is likely to look at this?
 
So it's already two houses there so planning permission won't be an issue.mwe have had the planners out already but again as there are already two houses there, albeit derelict, planning won't be an issue. Pretty confident the valuations are solid, got them from two local estate agents last week.
Question for you; given its a self build mortgage and we already own the site, will we still require a deposit for the mortgage. I didn't think this was the case with self build? Plus given the LTV will be around 60%, does this make a difference? Speaking to a broker but so far, the three banks she has spoken to, kbc, aib and ptsb just don't do self build investment mortgage, kbc don't do self build at all and th latter two would look at us for one house but not the investment one. Like I said, we could keep the site as one house, just seems a shame not to do the second as there is already a house there....
 
Would it be an option get full planning permission for both houses but build your own first & do the second house later. You'd have good equity in both your current house & the new one then. A bank might be more willing to consider the second house then?
 
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