Mortgage for the land you own

forex

Hi all, I would like to buy land to build a house. When buying a lnad, to make things quicker, I would like to use my savings. Do you know if it would be possible to get a mortgage for the land (I will own) and the house together ?
Would you know any banks who would provide tha kind of mortgage?
Thanks

PCPhoto

you would also need to apply for planning permission to build on the land and for permission you would need detailed drawings indicating the size of the build and proposed build details.

basically owning the land does not allow you to build on it (its Ireland !! go figure) ... unless you have freehold title on the land.(I think)

forex

Thank you for the reply, I am aware about planning issues.

quad_red

A friend enquired about doing something similar with AIB recently.

He was told that he would have to buy the site himself with his own funds and then start building the house. Only then would they pitch in with the mortgage funding to complete the house. I think they mentioned that it would have to be one storey up before they would contribute funds.

Their reasoning was that if they stumped up money in advance and to buy the site then they were beholden to him to actually build it.

If he didn't build for whatever reason then the site would lay idle and the planning permission potentially expire.

forex

This is understandable, do you know if they would provide funds only to complete the house or at the end they can provide funds for entire project?
I just don't want to empty my bank account ...

quad_red wrote: »

A friend enquired about doing something similar with AIB recently.

He was told that he would have to buy the site himself with his own funds and then start building the house. Only then would they pitch in with the mortgage funding to complete the house. I think they mentioned that it would have to be one storey up before they would contribute funds.

Their reasoning was that if they stumped up money in advance and to buy the site then they were beholden to him to actually build it.

If he didn't build for whatever reason then the site would lay idle and the planning permission potentially expire.

D3PO

forex wrote: »

This is understandable, do you know if they would provide funds only to complete the house or at the end they can provide funds for entire project?
I just don't want to empty my bank account ...

what your essentially talking about is a 100% mortgage. Banks dont do that anymore with very good reason. If you were going to buy a ready made house you would have to fund a min 8% yourself why do you think that you should be able to do anything differently because you are building ?

forex

thank you, I am completelly aware about lending conditions and I am not talking about 100% mortgage, but about a mortgae within the bank % limits

D3PO wrote: »

what your essentially talking about is a 100% mortgage. Banks dont do that anymore with very good reason. If you were going to buy a ready made house you would have to fund a min 8% yourself why do you think that you should be able to do anything differently because you are building ?

ResearchWill

Simple Answer OP yes such loans are available.

From AIB

"Q5. I have a site and am planning to build my own home – can I get a mortgage?
Yes, mortgages are available for Self-Build customers, provided you meet all the usual criteria, that is:
• For mortgages up to €400,000, you can borrow up to 92% of the site, plus total build cost or up to 85% for mortgages over €400,000.
You will need to supply particular documents relating to the cost of your Self-Build and the final value, as well as a copy of the planning permission and details of the proposed size of the property. Your AIB Mortgage Co-ordinator can give you all the detail on this, refer to the Mortgage Checklist included in this pack."

http://www.aib.ie/servlet/BlobServer?blobcol=urldata&blobtable=MungoBlobs&csblobid=1214427653637&blobkey=id&blobwhere=1214427653637&blobheader=application%2Fpdf

seamus

Short answer is yes, the bank will give you a mortgage to build a house.

But at the very least you will need to own the land and have the plans and planning permission complete and ready to go before the bank will even entertain you.

Even then, as others point out there will likely be further hoops to jump through, such as paying the builder with your own funding before you can draw down on the mortgage, not to mention requirements to be insured, etc etc.

From what I recall of other people doing it, the bank basically structure the drawdown in stages, based on the building meeting certain criteria at each stage. If the criteria are not met, you cannot draw down. The final drawdown is only made when the snag is complete and the building completely signed off on.

I could be wrong though.

killers1

forex wrote: »

Hi all, I would like to buy land to build a house. When buying a lnad, to make things quicker, I would like to use my savings. Do you know if it would be possible to get a mortgage for the land (I will own) and the house together ?
Would you know any banks who would provide tha kind of mortgage?
Thanks

Banks will generally lend up to a max 60% of the site cost and can fund 100% of the construction costs so long as the value on completion is within their loan to value guidelines. They will also look for you to have substantial savings in the background to cover any cost overruns etc. A general guide would be input from your side or funds available of circa 20% of the build cost. Another risk factor for the bank is whether you intend building by Direct Labour or Fixed Price Contract as each entails a different level of risk to the bank.

If you are buying a site you make the purchase subject to the planning permission being granted. Banks will lend for this type of project, the most common problems that arise are the fees involved with making a failed planning application which you would have to absorb.

runawaybishop

seamus wrote: »

Short answer is yes, the bank will give you a mortgage to build a house.

But at the very least you will need to own the land and have the plans and planning permission complete and ready to go before the bank will even entertain you.

Even then, as others point out there will likely be further hoops to jump through, such as paying the builder with your own funding before you can draw down on the mortgage, not to mention requirements to be insured, etc etc.

From what I recall of other people doing it, the bank basically structure the drawdown in stages, based on the building meeting certain criteria at each stage. If the criteria are not met, you cannot draw down. The final drawdown is only made when the snag is complete and the building completely signed off on.

I could be wrong though.

You are not wrong, the engineer and the bank will agree the stage payments and what work needs to be completed and signed off by the engineer before the bank will release each stages funds. It is usually 5 stages - foundations, walls, roof, fixings and completion.