Self build first then get mortgage?

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vf949

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Is it possible to build a house from savings (say €200k) and a short term family loan (say €100k from a parent or more if needed) and then once the build is complete get out a mortgage (for the approx €100k) and repay the family member immediately?

Would this cut down much on staged payment sign off fees by the engineer, solicitor, etc?

So what I'm asking is would lenders have any problem with giving a mortgage for an already paid for home?
 
vf949 said:
So what I'm asking is would lenders have any problem with giving a mortgage for an already paid for home?
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Virtually impossible currently. The only exception might be a separation where buying out the other party.

Just keep enough of your own funds to complete, as the final payment is most difficult to get signed off.
 
Very bad idea, better to apply for the mortgage before you start and then only draw it down on completion if you want to do it that way.
 
Yes, there is that risk, anything could be wrong with the application that would mean you wouldn't get it, far better to get the approval first so you know everything is in order.

Plus depending on the bank's lending policy it could be classed as not a home mortgage as such but equity release or refinancing or whatever they might like to call it which could affect the underwriting.

It's the same work on your side to just get the approval first before you start, just means you have to do it sooner rather than later, then at least you know you are in a position to repay the family member, no reason why it should cost anymore if you don't draw it down until the end. To be honest I'd prefer to pay the few hundred extra for the stage payment cert and the solicitor and just have it straightforward rather than borrowing from family. As you have so much savings you are not going to need multiple stage payments, one is probably all you need and a final one. Only risk is that the build would take so long that the approval might be out of date, if it was me I'd draw down a small amount just to get the loan up and running early on :)
 
Okay thanks guys. It's the first mortgage that I've ever applied for so this is all new to me!

I had been thinking that the initial approval might be out of date alright because the house will probably take well over a year to build. As you say @Monbretia if I draw down a small amount early on it would get the mortgage started.

Thanks again guys!
 
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