Mortgage options for self build project

J

Jolly Man

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Hi all,

Have been looking through the site you could read for hours and hours all very useful information.

Basically myself and my partner are a young unmarried couple we found a perfect site at a good price and submitted our planning permission today.

We have a deposit on the site already, and our next step really is to organise a mortgage. I am estimating total costs including the site at 300k. My father is a builder and we will carry out most of the work through him. I was hoping to get any opinions and views that anyone may have regarding the whole mortgage and self build process.

Regards,
Jolly Man
 
Hi again,

I may not have been very clear with the previous comment, i am currently talking to a mortgage broker, would this be recommended or shopping around myself be a better option?

From what i have read and researched there does not seem to be a 100% mortgage out their for self build, and the self build mortgage from EBS seems to be one of the best options i can find. Apologies if this all seems basic but its my first time going through all these issues and its great to be able to discuss them and get possible solutions and feedback on peoples experience's with these situations
 
Probably best to get a price for the job from your dad and add in any other items then like any additional finishing and furnishing before going looking for a final figure. At that stage, SHOP AROUND, go to all the banks and mortgage brokers. I went to a mortgage broker who told me he dealt with all banks but ended up getting a much better deal from one of the main banks.
 
Thanks for that, i am actually a quantity surveyor myself not that long qualified but i will put a bill of quantities together for the house and price that up for the banks can also to a cost summary broken down into sections to suit stage payments if necessary, but do banks actually look for this sort of thing?
 
Hey,

Back again just really keen to get as much advice as possible.

Was wondering is there any major pitfalls or things to look out for when looking at mortgage options?

Is there any hidden costs associated with the process as a whole?

If there is no such thing as a 100% mortgage for self build projects what does this mean is the only option a 92% for the value of the site and 100% of the building costs. The rest of the value of the site to come from savings?

I appreciate all and any input people have.

Regards,
Jolly Man
 
Jolly Man said:
Hey,

Back again just really keen to get as much advice as possible.

Was wondering is there any major pitfalls or things to look out for when looking at mortgage options?

Is there any hidden costs associated with the process as a whole?

If there is no such thing as a 100% mortgage for self build projects what does this mean is the only option a 92% for the value of the site and 100% of the building costs. The rest of the value of the site to come from savings?

I appreciate all and any input people have.

Regards,
Jolly Man
Click to expand...

For a self build, price it high and get approval for enough money. So long as the costs of the house appear reasonable, I don't think you'll have any problem. I have just completed a self build myself. I kept going using the banks money until it hit the full amount and only then used my own. You will have to get a valuation by your architect or engineer at each drawdown anyway. I think the amount you'll be allowed to borrow might be determined more by the ability to repay than the actual costs of the house on a self build. I dont recall the bank asking for any evidence of what I actually spent on the house. So long as the valuations were ok they seemed happy.

Make sure you allow for the other costs as I said already. Include the likes of: ESB connection, Water Connection, Architects fees, tiling and painting, even the furnishings.

Hope this is of some help.
 
Cost to build property may be 360K but the value when completed may be worth 500K

A valuer will be able to confirm the value of the property when completed.

Therefore you are looking for a lot less then 92%...72%
 
Pexus,

By the 72%, you are calculating this based on the final value of the dwelling house is it? What does this mean for me in terms of the mortgage?

The house is situated by a secluded beach in the sunny south east it will be 3017 sq feet. There is a house on the market there at the moment circa 2500 sq ft with an asking price of 800k. I am hoping to be fully moved in for the 300k
 
By the 72%, you are calculating this based on the final value of the dwelling house is it?

Yes thats correct!

What does this mean for me in terms of the mortgage?

Not sure what you mean?
 
What i mean is, if it is at around the 72% value does this mean that i will have to get the rest of the money from savings to make 100% in order to pay for the site?
 
With a self build the most you can borrow is 80%-90% of the purchase price of the site, depending on the lender - unless you can prove that you are getting the site at a reduced price ie below the market value eg from a friend/family member. If you are paying the full market price you will need to have 10% - 20% of the pp up front. Generally, you can then borrow 100% of the cost to build. Usually this means that you are borrowing around 90% - 92% of the total cost of site and construction (although it may be more or less than this overall). You could, however, borrow more than this by sumitting higher estimates for the cost of construction to the lender.
 
Thanks Helen, that clears a lot up for me. I was discussing this with a work friend yesterday and he said that the lender came out and valued his site at €130k even though he only paid €100k does this happen?
 
It can be done but the lender may question why you are paying x amount when it is valued at y. They may only lend based on the purchase price, unless as I said above you can get the vendor to confirm to them that he is selling you the site at a price below the market value. They could then advise that he seeks independent legal advice so unless he is a family member or close friend this could get messy.
 
It really depends on what you're looking for - are you planning on fixing or going variable? Is there any one thing you specifically want from your new mortgage - interest only repayments/deferred payments etc...

For self builds EBS are good to deal with. First Active are also.
 
Ya they were both the two companys that i was looking at. I dont really know what i am looking for as i do not fully understand the whole system as of yet!
 
First Active's fixed rates are more competitive than EBS's. If you are considering going variable and inclined to have some money left over at the end of each month First Active's [broken link removed] may be of interest to you. You could also go with a tracker rate which would be based on the amount you are borrowing and the value of the house on completion. Both EBS and First Active offer trackers.
 
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