Building New House Mortgage

Z

zabbo

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I want to get advice on the position I need to be to build a new home.

We are currently living in a house we intend to rent out and build a new house in the countryside.

Purchase price of property in 2006: €267,000
Current Value: €200,000
Outstanding Mortgage: €200,000 with 24 years remaining
Current Mortgage Rate: 1.25%, BoS tracker
Current Mortgage Repayments: €750 (rising to 850 in 2018 when TRS expires)
Expected Rent: €950

We are both directors in small business (no other staff) with combined income of €90,000. (business is healthy and growing)

Most likely we would seek a mortgage of around 180-200k with minimal deposit. What are our options? or where do we need to be in order to get the required amount?
 
As you are second time buyers, you will need a deposit of 20%. So if you are planning to spend €200k on a house, you will need €40k. While lenders can make exceptions, I doubt if they would make an exception for you as you already have a €200k mortgage.

You have a very cheap tracker mortgage, so your costs of accommodation are very low. Most of your repayments are capital. In other words, you are quickly building up equity.

I would say that you have to be thinking medium term - at least three years away.

In the meantime, build up your cash reserves. It's possible that BoSI might offer borrowers with trackers a deal to refinance their trackers. For example, if they were to offer a 20% discount, then you would suddenly have a €40,000 deposit.

Brendan
 
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