equity release refused, alternative options for mortgage

Discussion in 'Mortgages and buying and selling homes' started by Mister T, 16 May 2018.

  1. Mister T

    Mister T Registered User

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    I’m hoping to buy a parcel of land on which to build a house. I’ve consulted with the planning authority and there are no planning issues so a grant of planning permission is most likely. I want to buy the site prior to obtaining planning permission. However, the banks won’t give a mortgage for land unless planning permission is granted.

    I own a house in Dublin, the mortgage on which is €100,000 less than the current value of the house. I have asked the bank about getting equity release on my house to buy the land but they won’t give equity release for the purpose of buying land. I’m looking to borrow less than half the value of the land (about €40,000) and have the remainder in savings. I have a permanent job and ability to repay a loan of this amount.

    Can anyone advise what options I might have for getting a mortgage or loan of €40,000 having regard to the above considerations. I’m hoping to avoid the higher interest rates of a personal loan.
     
  2. Brendan Burgess

    Brendan Burgess Founder

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    You will have to switch to a lender like Pepper to get proper mortgage lending in this country. But they will charge a premium rate on the whole mortgage, so it might not be worthwhile.

    Brendan
     
  3. Mister T

    Mister T Registered User

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    Thanks- I have a tracker so switching the mortgage isn’t an option. Maybe pepper will give a mortgage for the land only - I haven’t tried them but from any banks I’ve spoken to it seems none will lend for land where there is no planning permission.
     
  4. Brendan Burgess

    Brendan Burgess Founder

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    Probably not.

    But how much is your current mortgage and what is the interest rate?
     
  5. Mister T

    Mister T Registered User

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    Current mortgage is about €190,000 at ECB +1.75%
     
  6. Bronte

    Bronte Frequent Poster

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    12,635
    Why do you want to buy the land?

    You could try a credit union. Some of them do mortgages.

    Can you afford the repayments on 40K?
     
  7. Mister T

    Mister T Registered User

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    I want to build a house on it in a couple of years at which point I’ll sell my current house.
    Yes I can afford the repayments.
     
  8. Monbretia

    Monbretia Frequent Poster

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    I think a credit union is your best bet too if the banks won't do it, yes you'll have to pay a higher rate but sure there doesn't seem to be much alternative, CU might do it as a secured loan which at least would be lower and take the land as security.