Mortgages going forwards.

RichardAnd

I suppose the idea for this thread was placed in my head last Saturday whilst visiting my grandparents. BEside their home, there is a small plot of land that would be just big enough to build a decent sized home. My grandfather reckons it could be done for about 100-120k and he would be keen to see someone, namely me, undertake such a project.

Now that's all fine and dandy except for one minor issue; the cost. I'm a good saver and I have a sizable reserve of cash but it's nothing close to 100k. Of course, there is the option of a mortgage and that's what got me thinking.

Let's say I took out a loan of 70k to build my house. At my current wage levels, that would be under three times my anual salary which, as far as I know, would make it a "safe" mortgage. However, it would still mean 6-10 years of repayments in which time I could have lost my job. Thus, even this loan, quite modest by irish standards, seems to me to be a dreadfully risky undertaking. Therefore, I won't be taking out such a loan.

The whole thing just got me thinking about the nature of mortgages and really, I can't see them as being very wise undertakings. It would be nice to own one's house but in reality, until every cent of the mortgage is payed off, the "home-owner" is simply living in the property of a bank. Is all that really worth it just to full-fill a very Irish need to own land?

If I had the money needed for a house, I'd buy one but the prices still seem far too high. Ad interim, I'm starting to think that renting is the way to go...

the groutch

thing is tho, with renting you'll have nothing to show for it, it's dead money
at least with your mortgage, unless you get caught out at the top of a bubble (ie. bought from 2005-2007) you're going to have something to show for it, even if worse comes to worse and you did have to sell because of losing a job

you're in a very strong position, because there's no way you'll ever be in negative equity, you can only gain from this generous offer from your grandparents

RichardAnd

the groutch wrote: »

thing is tho, with renting you'll have nothing to show for it, it's dead money
at least with your mortgage, unless you get caught out at the top of a bubble (ie. bought from 2005-2007) you're going to have something to show for it, even if worse comes to worse and you did have to sell because of losing a job

I get that but what if I wasn't able to sell the house? Or what if the house was in negitive equity? Then it's just be stuck with debt I probably wouldn't be able to pay off

the groutch

RichardAnd wrote: »

I get that but what if I wasn't able to sell the house? Or what if the house was in negitive equity? Then it's just be stuck with debt I probably wouldn't be able to pay off

do you mind me asking where this is?
I'd find it hard to believe you wouldnt be able to get 100k for a newly built house unless it's in a very dodgy area or the middle of nowhere down the country

RichardAnd

the groutch wrote: »

do you mind me asking where this is?
I'd find it hard to believe you wouldnt be able to get 100k for a newly built house unless it's in a very dodgy area or the middle of nowhere down the country

It's in Dublin, specifically near fairview in the north of the city.

the groutch

the groutch wrote: »

thing is tho, with renting you'll have nothing to show for it, it's dead money

God in heaven, are people still spouting this tripe in this day and age? Dead money?
Why use the bus - bus fares are wasted money when you could buy a car!
Buying in the shop is wasted money when you could grow food yourself!
What do you suppose the interest payments are then, if not dead money?

What you have to show for it is a roof over your head. That's what you pay rent for.

Tipp Man

If you were on the dole (at current levels) you could probably service the 70k mortage.

You seem like a very risk averse person - which is not a problem in itself - but if you continually don't act because of possible downsides then you will never get anywhere.

You've got to speculate to accumulate - often the most money is made in the worst of times (not saying you are using this as a money making exercise just highlighting that plenty of people speculate even when times are dreadful. Its important to remember that as bad as things are we have not stopped as a country

For me the most important questions to ask about this situation are:

• is the site in a good location for work? are you likely to be always in the same or similar job location?
• If you lost your job could you rent a room or the house out?
• as the site is beside your grandparents (if i read correct?) does this rule out selling the house in the future?
• Do you want to own a house?

the groutch

RichardAnd wrote: »

It's in Dublin, specifically near fairview in the north of the city.

okay, I'm don't know a huge lot about that neck of the woods, what you should do is ask an estate agent (everyone has a relative or friend of a friend) roughly what they think it'd be worth when built, take off 30%, and if it's still higher than your build cost I reckon it's a no brainer

the mortgage payments on 70k odd are gonna be less than what you'd pay in rent, so you'll save yourself money in the long run too

D1stant

RichardAnd wrote: »

It's in Dublin, specifically near fairview in the north of the city.

Go for it. No question

Tipp Man

D1stant wrote: »

Go for it. No question

It seems pretty much like a no-brainer to me also (subject to planning etc)

dan_d

Richard, I've posted this in another thread...

My parents got a mortgage in the 80's. My mum's salary wasn't counted, though she's a teacher - permanent, pensionable etc. - but they didn't count any salary that the woman made in those days. 25k mortgage based on one fairly small salary, with an interest rate that ran at about 14%. Crazy. BUT .... they needed somewhere to live. They bought a big 4 bed semi-d in north county Dublin (Which was MILES out in the country then!!!). They're still there, 30 years and 4 kids later.

You're looking at a mortgage in the context of the short time period that you have been aware of mortgages/the economy. I think you said before that you're about 24 (?). So assuming a naturally intelligent and curious child, you've had some awareness of house price levels for about 10 years - ish. Which is essentially the guts of the Celtic Tiger. Unrealistic, bubble prices, that shot through the roof, and then crashed. It's not a particularly good reference point.

I'm not saying to you run out and buy a house by any means. And yes, with some very,very tight management you might construct the house itself for 120k. But that price would probably not include planning prices, and sums for consultants. Btw, I don't buy into this thing that if you manage the build yourself it automatically makes it cheaper. Most people think that if they know how to do DIY, they can manage a construction project. That couldn't be further from the truth...if you have no knowledge of construction, then under your own management, you're likely to overrun your budget.

You can rent indefinitely and if you're ok with that, that's fine. My own opinion is that Ireland isn't set up as well as other European countries for renting, in terms of tenant's rights, etc. In my view, however, there's absolutely nothing wrong with buying a house, once you ensure that you don't overstretch yourself. Everything is ok in moderation.Moderation just went out the window in recent years.NE is possible over the life of any mortgage. The thing is that people like my parents bought years ago with a view to having a family home and staying there. They didn't buy to "get a foot on the ladder" and keep trading up and up and up. NE only matters if you want/have to sell and/or you can't meet your repayments. You can take certain measures to help prevent this, but nothing is guaranteed.

I wouldn't bother with building if I were you right now though.The site isn't going anywhere, and you're young enough, really. The more money you save the better. In a couple of years time, your job could be more secure, you'll have more money saved, you might even have someone to share the mortgage with, making it that bit safer, house building prices might drop further. It's certainly an option, but it's a bit early yet!

In the next 6-10 years you could lose your job. Or...you could die.You could develop a debilitating disease. You could have a payrise that doubles your pay. You could become a Dad. You could have to move abroad....the list goes on (btw, I'm not wishing the bad stuff upon you!). Taking on the mortgage you describe is quite a small risk. Don't be afraid to take some risks or you'll never get what you want out of life.

Duckjob

the groutch wrote: »

the mortgage payments on 70k odd are gonna be less than what you'd pay in rent, so you'll save yourself money in the long run too

The statement makes no sense whatsoever. Are you an estate agent?

Monthly payments of rent vs mortgage payments have absolutely nothing mathematically to do with overall cost. If there is a co-relation, it is that lower repayments tend to point to a longer term, which means the loan actually costs more over it's lifetime.

JustAddWater

dan_d wrote: »

NE only matters if you want/have to sell and/or you can't meet your repayments.

Eh, not really. Negative Equity means your house is worth less than you're paying for it

It's not only applicable if you decide to sell. Even if you can meet the repayments, you could be still paying too much. Hence the reason that renting a nice 3 bed house in some areas can cost the same price buying a 2 bed small apartment just down the road.

Just saying that negative equity ALWAYS matters as you can end up paying waaaaaaay more than you should

OP, if you think you can build the house on the land, 70k is a lot but look at it this way, compared to mortgages of recent times, it's not much. Look long term and at the end of the day if you're happy, go for it!

the groutch

Duckjob wrote: »

The statement makes no sense whatsoever. Are you an estate agent?

Monthly payments of rent vs mortgage payments have absolutely nothing mathematically to do with overall cost. If there is a co-relation, it is that lower repayments tend to point to a longer term, which means the loan actually costs more over it's lifetime.

okay, I might have phrased that incorrectly.

what I was getting at was that if he was renting for 20 years rather than paying a mortgage for 20 years, chances are he'd end up forking out more (unless he decides to just rent a room)

dan_d

JustAddWater wrote: »

Eh, not really. Negative Equity means your house is worth less than you're paying for it

It's not only applicable if you decide to sell. Even if you can meet the repayments, you could be still paying too much. Hence the reason that renting a nice 3 bed house in some areas can cost the same price buying a 2 bed small apartment just down the road.

Just saying that negative equity ALWAYS matters as you can end up paying waaaaaaay more than you should

OP, if you think you can build the house on the land, 70k is a lot but look at it this way, compared to mortgages of recent times, it's not much. Look long term and at the end of the day if you're happy, go for it!

A 25k mortgage with a 14% interest rate means that you end up paying way more than you should/what the house is worth and that's before the idea of NE is considered.

If you're in a house for 20 years, during that time prices will rise and fall. If you don't need to move out, then you don't need to worry about NE. I'm not saying go out and get a 500k mortgage and it won't matter if you fall into NE. I'm just saying a balanced view is possible - that you can, to an extent, protect yourself against falling deeply into NE. But if you think that a house is going to always be worth more or the same as what you pay for it over the life time of a mortgage, then you need to look again at the numbers.

Our tracker had about a 5% interest rate on it. When we got the deeds to the house, the total amount we would paying over the lifetime of the mortgage, at that rate, was listed in them at around 700k. That is a ridiculous amount of money, totally over paying for the value of the house.But that's the cost of borrowing the money. (as it transpires, between interest rate drops and paying off chunks, we won't be anywhere near that - thankfully). But people don't see that. They just see - my house cost 300k, now it's 350k/250k. I've made a profit/crap I'm in NE.

Interest is there too...most people just ignore it. You overpay, no matter what. As I said before - apply moderation. Borrow within your means. Well within them.

pog it

Richardand you've come to the right conclusion yourself, rent or wait until you have the bulk of the mortgage saved up and if short of 10-15k take up a credit union loan. That is exactly my plan.

Whatever about 2011 and 2012 being bad... I'm sure you of all people know what's in store in 2013/2014.

Bandana boy

70k Morgtage over 20 years will cost you <400 euro a month

I would guess you will not get a lot on the rental market for that price.

All in <120K a house in Dublin probably reprsents a fairly decent investment.
Putting up 30-50K yourself ,your chances of getting in trouble would be nearly non-existant
I would expect if you moved abroad or down the country you should be able to rent that out to cover the morgtage.

The only concern would be the first year when your building the house ,if required could you move back home while its getting built ?(avoid paying rent and a morgtage )


Set up a meeting with a broker ,talk through the numbers.

I know if I had this in front of me I would jump at it

BrianD3

Remember that if your grandparents give you the land, you may be liable for gift tax depedning on the land value. The tax free threshold for gift from a grandparent to grandson is something like 35k whereas for a parent to a son it is something like 350k.

Zubeneschamali

Something the rent vs. buy argument tends to ignore is that you can buy any house, and then generally do what you want to it, so you can get what you want (at a price). You can only rent a much smaller subset of places, and then you can't modify them as you don't own them.

Say you want an open plan place with a nice garden and lots of outdoor paving. That really cuts down the number of places you can rent. But if you're buying, you can buy something that doesn't quite match and then knock out walls, and landscape the garden.

This means buying is fundamentally different from renting. It's not just about money.

dan_d

BrianD3 wrote: »

Remember that if your grandparents give you the land, you may be liable for gift tax depedning on the land value. The tax free threshold for gift from a grandparent to grandson is something like 35k whereas for a parent to a son it is something like 350k.

Very good point.

the groutch

BrianD3 wrote: »

Remember that if your grandparents give you the land, you may be liable for gift tax depedning on the land value. The tax free threshold for gift from a grandparent to grandson is something like 35k whereas for a parent to a son it is something like 350k.

dan_d wrote: »

Very good point.

could they get around that by gifting it from grandparent to parent first, and then from parent to son?

RichardAnd

Thanks for all the replies.

Well firstly, if I ever undertook this project, I would not do so until I'm closer to 30 (24 right now). Secondly, I wouldn't do this as an investment, rather I'd be looking to set up a home for myself and any family I might one day have.

I've heard of gift tax but I'd no idea it was so steep. Surely there are ways to get around it. Could I not purchase the property from my grandparents instead at a low cost?

Duckjob

Bandana boy wrote: »

70k Morgtage over 20 years will cost you <400 euro a month

I would guess you will not get a lot on the rental market for that price.

Thats a very short sighted view IMO. If the term is 20 yrs then you need to plan for 20 years.

How's that repayment going to look when interest rates normalise to CURRENT + 4/5% over the next couple of years ?

Zubeneschamali

Duckjob wrote: »

If the term is 20 yrs then you need to plan for 20 years.

Well, over the long term, rent is going to be (cost to buy) + (return for the landlord), which is going to be more than (cost to buy), unless all landlords are losing money in the long term.

keithclancy

Zubeneschamali wrote: »

Well, over the long term, rent is going to be (cost to buy) + (return for the landlord), which is going to be more than (cost to buy), unless all landlords are losing money in the long term.

Rent is going to equal Cost to Rent, Period.

The Rental Market sets the Rental Rate, saying the cost to purchase sets the rent is crazy as the the Landlord may be on Fixed/Variable or have purchased it outright ,

Two identical house next to each other will command the same amount of rent while it might cost the owner a vastly different sum of money.

The Rent = Mortgage is partly to blame for this housing bubble and partly where the "Rent is dead money" thinking comes from.

Estate agents have allot to answer for, absolute dumps "Ah yeah, you'll easily get 1200 for this, just stick a double bed in the box room and you'll get 100 more a month"

Gumbo

OP, have you considered the construction and professional costs properly?

buying the site (if applicable)
Site investigation
Planning permission
building costs
architects fee
engineers fee
solicitors fee
building energy rating guys fee

and budget a % for unforeseen items.

a typical buildiers finish during the boom would of cost you about 135e per Sq. foot of building, more than likely a lot lower now but materials etc still have to be bought.

what size is the piece of land and roughly what size home do you predict will fit on the site?

i think 120k sounds low if im honest.

PS, know the area well, so if you can get a family home which more than likely will be detached and newly built for anywhere in and around your estimates, i would jump on it personally.

RichardAnd

kceire wrote: »

OP, have you considered the construction and professional costs properly?

buying the site (if applicable)
Site investigation
Planning permission
building costs
architects fee
engineers fee
solicitors fee
building energy rating guys fee

and budget a % for unforeseen items.

a typical buildiers finish during the boom would of cost you about 135e per Sq. foot of building, more than likely a lot lower now but materials etc still have to be bought.

what size is the piece of land and roughly what size home do you predict will fit on the site?

i think 120k sounds low if im honest.

PS, know the area well, so if you can get a family home which more than likely will be detached and newly built for anywhere in and around your estimates, i would jump on it personally.

The site isn't very large. I'm not sure as to the exact area but it's about the size of a terrace house + garden. The house itself has already been designed though so there would be no need to pay for that again.

I honestly have no idea as to the costs of building a house. I would have though 100k would be enough to build a fine home

Bandana boy

Duckjob wrote: »

Thats a very short sighted view IMO. If the term is 20 yrs then you need to plan for 20 years.

How's that repayment going to look when interest rates normalise to CURRENT + 4/5% over the next couple of years ?

Rents for a Three bedroom house in that are are 800-1200 depending on finish If morgtage to buy is <400 then interest rates can do what they like and it still makes sense.That <400 is over 20 years if rates go very high and he is struggling to pay he could always move it to 25-35 years as appropriate.

I suspect the costs being quoted are a little low ,but if they are within 50% of his quotes here I think he would be mad not to jump on it now ?.
Waiting till your 30 if morgtage is going to be half your rent is actually a very bad decision.

Duckjob

Bandana boy wrote: »

Rents for a Three bedroom house in that are are 800-1200 depending on finish If morgtage to buy is <400 then interest rates can do what they like and it still makes sense.That <400 is over 20 years if rates go very high and he is struggling to pay he could always move it to 25-35 years as appropriate.

I suspect the costs being quoted are a little low ,but if they are within 50% of his quotes here I think he would be mad not to jump on it now ?.
Waiting till your 30 if morgtage is going to be half your rent is actually a very bad decision.

2 points -

1) According to EBS calculator, monthly repayment on €70,000 over 20 yrs is a smidgeon over €400 today. It could easily be double that if interest rates "do what they like"

2) Tax on rental income ?

I can understand people making a non-financial case for buying into a declining property market eg. settling kids, schools etc, but I can't see how anyone could make a financial case for buying today as opposed to waiting and reevaluating in 12 or 24 months time.

dan_d

To be fair to the OP, he's not going to start building or get a mortgage tomorrow. I think he's already said he intends to hold on.

I think what he was more questioning was the idea of mortgages - is it too much of a risk to take out a mortgage in general, given what we've seen happen over the last couple of years.

waffleman

I know of a person locally who had 100k on deposit in bank of ireland - he went into the branch to get his money and was told to come back the next day. The next day he was called into the bank manager who said the bank couldnt give him the cash but would give him the deeds to 2 houses. Naturally the guy was shocked and went straight to a solicitor to see if this was legal - he was told that the bank can legally offer the deal but it was up to him whether to accept. the solicitor also advised him to calmly walk back into the bank demand the deeds to 3 houses. The next day he accepted the deeds to 3 houses for his 100k deposit. I think this really shows the state of the banks and property market at present. Hold onto your money and save until prices bottom out - its the only sensible thing to do.

Looking here will also put you off getting any mortgage: http://www.drcalculator.com/mortgage/ie/

dearg lady

RichardAnd wrote: »

I've heard of gift tax but I'd no idea it was so steep. Surely there are ways to get around it. Could I not purchase the property from my grandparents instead at a low cost?

If you bought the site for less than market value CAT would still apply. The amount you pay towards the site would be taken into account however.

RichardAnd

dearg lady wrote: »

If you bought the site for less than market value CAT would still apply. The amount you pay towards the site would be taken into account however.

I've no idea what the site is worth. Surely my grandfather can sign his own property off to whomever he wishes, no?

An uncle of mine gave his daugther some last back in the early 00's to build a house and I never heard anything about tax. Now, I didn't have imtimate knowlege of the buisness but still...

dearg lady

RichardAnd wrote: »

I've no idea what the site is worth. Surely my grandfather can sign his own property off to whomever he wishes, no?

An uncle of mine gave his daugther some last back in the early 00's to build a house and I never heard anything about tax. Now, I didn't have imtimate knowlege of the buisness but still...

He can sign it to whoever he wishes of course, but the recipient may be liable for CAT. The threshold depends on the category of person, for example a parent can give more tax free to a child than a grandparent. I can't remember the exact figures, they change every budget, ok here they are...
http://www.revenue.ie/en/tax/cat/thresholds.html

keithclancy

waffleman wrote: »

I know of a person locally who had 100k on deposit in bank of ireland - he went into the branch to get his money and was told to come back the next day. The next day he was called into the bank manager who said the bank couldnt give him the cash but would give him the deeds to 2 houses. Naturally the guy was shocked and went straight to a solicitor to see if this was legal - he was told that the bank can legally offer the deal but it was up to him whether to accept. the solicitor also advised him to calmly walk back into the bank demand the deeds to 3 houses. The next day he accepted the deeds to 3 houses for his 100k deposit. I think this really shows the state of the banks and property market at present. Hold onto your money and save until prices bottom out - its the only sensible thing to do.

Looking here will also put you off getting any mortgage: http://www.drcalculator.com/mortgage/ie/

I wonder why these stories always happen to 'a mate', 'a guy in the pub' or 'someone who is known'

So basically they said ... we dont have 100k to give you, here's three houses instead... If the bank couldn't cover 100k it would be all over the media.

waffleman

keithclancy wrote: »

I wonder why these stories always happen to 'a mate', 'a guy in the pub' or 'someone who is known'

So basically they said ... we dont have 100k to give you, here's three houses instead... If the bank couldn't cover 100k it would be all over the media.

He was satisfied to take the deeds - if the bank refused to offer him another house who knows - they may have coughed up the cash then. The point is they are desperate to keep cash to such a degree they made such an offer. I'm no economist but this would suggest to me it's only a matter of time before peoples idea of what is a good offer to build / buy a house changes dramatically.

keithclancy

waffleman wrote: »

He was satisfied to take the deeds - if the bank refused to offer him another house who knows - they may have coughed up the cash then. The point is they are desperate to keep cash to such a degree they made such an offer. I'm no economist but this would suggest to me it's only a matter of time before peoples idea of what is a good offer to build / buy a house changes dramatically.

Did he actually check what they were first ?

What about the conveyance fees etc ?

I'd want my cash to be honest, now hes stuck with something the bank couldnt get rid of and were willing to let 3 of them go for 100k.

Take the 100k, change to swiss francs, hide it in the floorboards and then you'll be living the high life in a few years :P

waffleman

keithclancy wrote: »

Did he actually check what they were first ?

What about the conveyance fees etc ?

I'd want my cash to be honest, now hes stuck with something the bank couldnt get rid of and were willing to let 3 of them go for 100k.

Take the 100k, change to swiss francs, hide it in the floorboards and then you'll be living the high life in a few years :P

Hey I'm with you - I'd want the cash. I'm sure he did his homework and you never know the way rents are being propped up in this banana republic he could have his 100k back under the floorboards in 5 years...

Bandana boy

Duckjob wrote: »

2 points -

1) According to EBS calculator, monthly repayment on €70,000 over 20 yrs is a smidgeon over €400 today. It could easily be double that if interest rates "do what they like"

2) Tax on rental income ?

I can understand people making a non-financial case for buying into a declining property market eg. settling kids, schools etc, but I can't see how anyone could make a financial case for buying today as opposed to waiting and reevaluating in 12 or 24 months time.

http://www.mortgages.ie/index.cfm/spKey/first_time_buyers.mortgage_payments_calculator.html?mode=basic&go=go&buyer_type=First+Time+Buyer&house_price=120000&product=-1&amt=70000&lender=-1&status=Single&comparison=loc&term=20&x=15&y=6

This has it <400

He is talking about building not buying
I believe Rates to build are rock bottom and will not go lower
I could of course be wrong but even if I am it will not be by much

While rates could go from 4% to 8%
1-it is not likely
2-Thats still a mortgage cheaper than renting in that area online calculator suggests repayments at 8% jump to 585 a month still way cheaper than rent rates

Rent is Dead money if the same price could buy you the house.And if you needed to sell you could close out your commitments with the sale price

The problem 2002-2006 was the mortgage was often 100% higher than it cost to rent that house.In that case the only value was if houses went up in value for ever.

This though is not the case he is talking about building a house for about half the market rate to buy in that area
He is looking at a betwen 60-70% loan to value morgtage and when you factor in the value of the land that could drop to 30-35%

That is probably as safe an investment as I have ever heard of!

OMD

Duckjob wrote: »

2 points -

1) According to EBS calculator, monthly repayment on €70,000 over 20 yrs is a smidgeon over €400 today. It could easily be double that if interest rates "do what they like"

.

A €70K mortgage over 10 years could be taken out. You can fix for the first 5 years at 4.6% with Bank of Ireland. This would cost €725 a month. After that mortgage rates can do what ever they like. If they reach over 10% then he simply extends mortgage term.

dan_d

waffleman wrote: »

I know of a person locally who had 100k on deposit in bank of ireland - he went into the branch to get his money and was told to come back the next day. The next day he was called into the bank manager who said the bank couldnt give him the cash but would give him the deeds to 2 houses. Naturally the guy was shocked and went straight to a solicitor to see if this was legal - he was told that the bank can legally offer the deal but it was up to him whether to accept. the solicitor also advised him to calmly walk back into the bank demand the deeds to 3 houses. The next day he accepted the deeds to 3 houses for his 100k deposit. I think this really shows the state of the banks and property market at present. Hold onto your money and save until prices bottom out - its the only sensible thing to do.

Looking here will also put you off getting any mortgage: http://www.drcalculator.com/mortgage/ie/

Nuts!!!
What does anyone want with 3 houses??! Way too much hassle!

bbam

RichardAnd wrote: »

to build a decent sized home. My grandfather reckons it could be done for about 100-120k

I'd say he is way wrong... what is a decent sized home??
To build a decent house up to or preferably beyond current regs, in Dublin AND complete the required grounds work will cost much more, double I'd guess unless you are in the trade...

Bandana boy

bbam wrote: »

I'd say he is way wrong... what is a decent sized home??
To build a decent house up to or preferably beyond current regs, in Dublin AND complete the required grounds work will cost much more, double I'd guess unless you are in the trade...

Its not a million miles of though.My insurance on my 3 bed house in Dublin is based of a 150K rebuild cost.Since i bought building costs have lowered substantially.

bbam

Without even getting into the price of building a decent spec of a house the Council Development Contribution is hefty enough... €156 per sq meter..

On a 1300sq ft house that's about €18K from the budget without turning a sod..

We built two years ago (not near Dublin) and i managed the build myself, it's shocking where the costs add up and with hard work ours came in within 5% of budget so we didn't loose the run of ourselves either... €100K to build a "decent sized" house to turnkey standard(that's what you need to live in) in Dublin is pie in the sky..


http://www.dublincity.ie/PLANNING/PLANNINGPERMISSION/Pages/DevelopmentContributionScheme.aspx

I know this is a bit OT from OP post but there is no point in them working on figures that are way out either... there is a big difference in a €100K and €180K mortgage

Gumbo

Bandana boy wrote: »

Its not a million miles of though.My insurance on my 3 bed house in Dublin is based of a 150K rebuild cost.Since i bought building costs have lowered substantially.

is your house terrace/mid terrace etc?

waffleman

bbam wrote: »

We built two years ago (not near Dublin) and i managed the build myself, it's shocking where the costs add up and with hard work ours came in within 5% of budget so we didn't loose the run of ourselves either... €100K to build a "decent sized" house to turnkey standard(that's what you need to live in) in Dublin is pie in the sky..

Any trouble getting planning?

I have friends who have been turned down 3 times plus now tryin to build on family land. Reason given is there are plenty of good empty houses about - go buy 1 of them.

dan_d

waffleman wrote: »

Any trouble getting planning?

I have friends who have been turned down 3 times plus now tryin to build on family land. Reason given is there are plenty of good empty houses about - go buy 1 of them.

Seriously?? That's really what they're being told??

That is a....I'm not sure if it's an incredibly enlightened view or a terribly stupid one on the part of the council. When did they suddenly grow a brain and start thinking for themselves? They seemed happy enough to throw out planning permission to whatever developer wanted it over the last decade, even though there were "plenty of good empty houses" in many of the areas in question.

Unbelievable.

kippy

RichardAnd wrote: »

Thanks for all the replies.

Well firstly, if I ever undertook this project, I would not do so until I'm closer to 30 (24 right now). Secondly, I wouldn't do this as an investment, rather I'd be looking to set up a home for myself and any family I might one day have.

I've heard of gift tax but I'd no idea it was so steep. Surely there are ways to get around it. Could I not purchase the property from my grandparents instead at a low cost?

Hi,
1. I would recommend sorting out the gifting "issue" first.
Make sure you get this land in your name at the least cost possible.
2. Be careful about this "building a home" lark until you've met herself (maybe you have, I don't know). She may NOT want to live there - she could be from another country etc. There are lots of reasons why you should hold off on this until that "family" is at least in the planning process.

In four/five years time its hard to know what the story with mortgages/build costs will be but at least if you have some savings you'll be in a better position.
I'd love to be in your position btw (only in Galway)
Best of luck whatever you do.


Kippy

waffleman

dan_d wrote: »

Seriously?? That's really what they're being told??

That is a....I'm not sure if it's an incredibly enlightened view or a terribly stupid one on the part of the council. When did they suddenly grow a brain and start thinking for themselves? They seemed happy enough to throw out planning permission to whatever developer wanted it over the last decade, even though there were "plenty of good empty houses" in many of the areas in question.

Unbelievable.

Yes seriously. Well nothing I'm sure a brown envelope wouldnt fix. Maybe that should be factored into the mortgage. I live in Donegal so it's probably more of a problem here due to management fees not bein paid on empty holiday homes in negative equity. Perhaps the council think if they force people to buy them everyone will start paying management companies again for the work they should be taking over themselves.

Bandana boy

kceire wrote: »

is your house terrace/mid terrace etc?

Is a corner house at the end of a line of terraced housing.
Is in an old neighborhood but the house it self was built 10 years ago

Raskolnikov

BrianD3 wrote: »

Remember that if your grandparents give you the land, you may be liable for gift tax depedning on the land value. The tax free threshold for gift from a grandparent to grandson is something like 35k whereas for a parent to a son it is something like 350k.

Could the land not be gifted to the father, then gifted to the son from the father?