Are they serious!?

splashthecash

Ok - just back with my wife from our very first meeting with the bank (I don't know if I can name them so I won't) regarding applying for a mortgage for a self build and I can't believe what they said..

I'll briefly describe the situation:
- We would like to buy a site in Kildare
- We would like to build a house on said site
- So, we were asking for money for both the site and the cost to build the house

They basically said that that we needed to provide (along with the morgage application), plans of the house, costings for the house relating from the plans and planning permission!!

Do they not realise that they are basically asking us to buy a site, find our designer\architect, go through the lengthy process of designing the layout of the house, get quotes from builders\suppliers, put a costing together,apply for planning permission (probably more than once) and then come back to them! When at this stage they can turn around and say "nay, your not suitable for a mortgage for us".

I'm sorry if I'm missing something here, the bank was our first port of call as I assumed the following steps:

1) Go to bank and see how much you can get
2) Select site
3) Go back to bank and get mortgage
4) Buy site (subject to planning permission)
5) Apply for planning permission
6) Get planning permission
7) Start building

Apologies for the rant - we are newbies at this (is it obvious?!)

tails_naf

I understand your frustration, and it does seem crazy to require that much detail.

All I can offer is what happened in my case -

We already had the site (family land), but did not have planning yet (was in the process of getting it, so we had plans drawn up, etc).
Went to the bank, and they wanted to get a costing for how much it would be to build - so we had to get our engineer to say it could be built for X.
(note - the engineer didn't think that it could be done for the amount I wanted him to say, but I did a some rough quotes and in the end he put down the amount I wanted - it was 200k)

And we had to get a valuation for how much the house would be worth when built (again, this was done by a valuer, off the plans).

So while they did not say we needed plans and planning, they did want to know if we were biting off more than we could chew, and if the end result would be in 'positive equity'.

I guess there is some upfront money that needs to be spent before going for the mortgage - getting an engineer, getting plans, valuations.
It might cost 1-2k for that initial stuff, so not a huge outlay..

I think you may be able to argue the need for having planning and the site purchased - or maybe you could do a deal with the land-owner saying the sale is pending planning, and start applying for it.

Then you could go back to the bank with all the ducks lined up, and I'm sure
it will be a more positive outcome.

mickdw

The bank are just looking for info in relation to how much you are looking to borrow versus property value on completion. It is hard to do this if you have no site or plans.
Anyway, they should still be able to talk in terms of percentage mortgage applied for & mortgage amount you will qualify for. What Im saying is, they should be able to say for example that they will give you a 70% mortgage on a property costing €200,000. They might approve a lower figure if you were looking for a 90% mortgage or whatever but they should be willing to talk in broad terms at this early stage.

I would suggest you speak with a different mortgage provider.

Im sure you would be happy with a basic mortgage approval document subject to x,y,z. At least you then knew where you were in relation to making offer on a site subject to planning.

foundation10

I would approach it with the bank as follows:

1. Select your preferred site and get an architect to do you a feasability drawing of some sorts, which is essentially a sketch of what they think can be obtained on the site planning wise. You need to get this done anyway otherwise you will start going down a route of entering purchase contracts for site which will not work for you.

2. Get this costed to a general specification.

Now approach your bank again with your chosen site with site purchase price, sketch of what your architect thinks is achievable and it costed based on size (not needing it detailed as this cannot be done without detailed drawings).

If they require an estimated end valuation I dont think anybody can give this today as there is no market there for property and I would also argue this with the bank if they go down this route. Are there any similar properties in the area, if so what are they on the market for?

Ask the bank for an indication as to what they would be willing to grant as a mortgage based on the above and try and obtain a term sheet/ pre approval/ letter of offer.

Also when acquiring a site it may be worth including a condition in the contract for sale that the purchase is subject to both planning and finance approval

martin46585

They basically said that that we needed to provide (along with the morgage application), plans of the house, costings for the house relating from the plans and planning permission!!

to a new self build project its seems like your being put off before you start, but this was the common case with some lenders only 5/10 years ago, this was so in my case, the bank wanted the site bought paid for and planning passed before they would consider lending, sounded at the time as over cautious, but in hindsight was i suppose, to furtureproof their investment in regard N/E,

Mellor

TBH, I don't see what's wrong with the banks attitude. It would be foolish of them to lend money against nothing. If you don't/can't get planning the you end up with a mortgage with no colateral.


also, you appear to not be aware of the requirements, luckily its not as bad as you assume.

splashthecash wrote: »

Do they not realise that they are basically asking us to buy a site, find our designer\architect, go through the lengthy process of designing the layout of the house, get quotes from builders\suppliers, put a costing together,apply for planning permission (probably more than once)

They didn't ask you to buy the site, and you don't need to buy the site to apply for PP.

You also don't need quotes from builders/suppliers and a basic costing is obtainable from a QS. But, in this climate a builder will probably give a quote for free.

As for designing the layout, This could also be avoided if you apply for outline premission. This is quicker and cheaper and should satisfy the bank's concerns. From here you can secure the loan and proceed

1) Go to bank and see how much you can get
2) Select site
3) Go back to bank and get mortgage
4) Buy site (subject to planning permission)
5) Apply for planning permission
6) Get planning permission
7) Start building

The highlighted art appears to be where your confusion and frustration comes from. you can apply for PP earlier, it actually solves problems to get it out of the way early before you have commited to a site (that may be useless)

tba

They do need permission from the owner of the site to apply for planning however.

Mellor

tba wrote: »

They do need permission from the owner of the site to apply for planning however.

I know. When is that ever an issue with a site that is for sale?

tba

Its not usually an issue as a matter of course, but you didn't mention it and I thought I would.

In this case the granting of a planning application and further refusal of finance to the original poster, could raise issues of fair return on investment. The site seller could sell the site onwards with an increased value due to the grant of full planning on the property.

While contractual agreement with the seller of the land could be entered into for a return of your investment in planning/professional costs should they sell to a third party, a sane person would never enter into this agreement as the costs for the applicant could be massive enough to negate profit from the sale of the site..

splashthecash this is unfortunately a case of you having to stick your neck out for a return on your investment.

You should see if a fee proposal for works based on the area or bill of quantities could be submitted to satisfy the bank.

This could have a significant effect on the cost of the application as the project will not have to be designed beyond planning layouts.

Additionally a more risky and even cheaper method is to see if an outline planning grant would be acceptable for the bank, this would remove a lot of the drawing costs for you, unfortunately an outline planning permission is not a guarantee of full permission and cannot itself be used to construct a project. (6 in one half a dozen in the other)

Mellor

tba wrote: »

Its not usually an issue as a matter of course, but you didn't mention it and I thought I would.

Well, I had thought it was obviosu.
But you are right of course, its best to state these things just in case.

In this case the granting of a planning application and further refusal of finance to the original poster, could raise issues of fair return on investment. The site seller could sell the site onwards with an increased value due to the grant of full planning on the property.

Maybe, but often the grant is tied to the aplicatant not the site.
Regardless, if you can't get finance, then it's not really an issue. It's hard not to begrudge someone who is profiting from your hard work, but to be fair, it doesn't effect you what so ever. The site will still be sold to somebody else, you money is still spent on PP.
Why woud if bother you if the seller can charge extra not or not. It's a bit petty.

Additionally a more risky and even cheaper method is to see if an outline planning grant would be acceptable for the bank, this would remove a lot of the drawing costs for you, unfortunately an outline planning permission is not a guarantee of full permission and cannot itself be used to construct a project. (6 in one half a dozen in the other)

Now you'tr just copying me :P:D

tba

Mellor wrote: »

Now you'tr just copying me :P:D

Oh, I completely missed you writing that, I apologize, but then again clarity about the limits of outline planning does no harm.

As for a solution, I might suggest appointing an architect who will be willing to back load the larger portion of their fees till after planning stage, or even get a student/recent graduate to draw up a planning set for you (you will find no shortage).

Mellor

tba wrote: »

Oh, I completely missed you writing that, I apologize, but then again clarity about the limits of outline planning does no harm.

Ah, I was only tesing anyway.

Obviously great minds think alike.

As for a solution, I might suggest appointing an architect who will be willing to back load the larger portion of their fees till after planning stage, or even get a student/recent graduate to draw up a planning set for you (you will find no shortage)

I'd even say you'd have people willing to do out line for next to nothing, on agreement that they handle the planning consequent of outline premission as well as the construction stage.

I know i would