Mortgages and Advancements

D

deesmith

Registered User
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Hey,

I was just wondering if anyone could help me on this... we have applied for a mortgage and our broker has assured us that there would be no hassle getting it as we own the site we intend building on and would have income in excess of 80k between us. However we are just starting the process of getting our plans drawn up. There is about 6/7k of expense before we get our mortage through and we dont have any savings. Has anyone any suggestions to what we could do. Would our broker be able to get an advancement on our mortgage? i know the bank want plans and proof of planning persmission before our mortgage is approved.
 
Once you own the site you can normally only start to draw down the mortgage once the house build has started - the usual stages are foundations, eaves (roof), plastering and completion. Also the lender needs site of the planning permission before drawdown. Your best bet would be to get a short term overdraft facility or a credit union loan (assuming a family loan is out of the question) with a view to repaying from the first stage payment.

Sarah

www.rea.ie
 
But our engineer said it was hard to sign off more than the actual cost at anyone stage. Can he sign off so that the fees are included?
 
no, your engineer can only sign off on the work done to date (at any particular stage) and must included how much is left to complete.

essentially, when you are self-building, you need enough cash to pay for all the work up to the first stage payment, then drawdown first installment from bank, then you need cash to pay for work from 1st to 2nd stage, then drawdown next installment, etc.

if you don't have any cash to start you'll have to talk to your bank or get a loan as the previous poster mentioned.
 
Get short term loan, apply for mortgage of building cost plus whatever extra you need, subject of course to value of house and income. When mtg approved and planning ready, draw first stage payment against value of site, engineer will then draw stage payments based on cost of build. Definitely lenders out there who will allow you draw against site value once planning is in place before you start any building.
 
Thats great guys thanks. I think we are going to organise overdrafts on our accounts to allow us to get the planning permission. When we do that I will get our broker to organise a short term loan with the bank. thanks for advise everyone
 
Sorry something I am still unclear about - once our mortgage is approved can we get the money back from it to pay any short term loans we have to get planning permission?
 
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