Self Build Advice

manxcat

Hello,

Seeking some advice with respect to building a house. My wife and I have a site bought, fully paid for with planning granted. Nice position to be in however like a lot of other couples we both purchased (before) around the boom.

To that end we both have mortgages, both have 10 years remaining and we both owe the bank around 160k..so 320k in total. Neither house is in negative equity, but not hugely positive either - break even territory. We are both in full time employment and have savings set aside for our self build.

We would love to build, but we cant delude ourselves either - who is going to lend to us with 2 houses? I am hoping someone will have some advice on our exisiting propertys..

Should we sell one (or two) ? in order to progress with the self build? Any advice welcome...what options do we have..

Liam D Ferguson

No way of answering that question without knowing how much you each earn, what age you are, what other loans (if any) you have, how much rental income you'e getting on one house and would get on the other, how much you're paying on each mortgage, how much you save each month, how many kids you have (if any)...

Shorter answer is that having the existing two houses doesn't automatically preclude you from getting a new mortgage to build. But you have to prove to any potential lender that you have the capacity to afford all three mortgages. Hence all the information required above (and more) to prove that.

euroboom13

I personally would sell one house and try and build new home.

My reason is you would be insulating your income from interest rate hikes(on two loans!), and limiting your new borrowings .also your end goal is new home and now ain't the worst time to haggle a good build price.

(The argument is that your 2 houses may increase in value shortly, and make you rich, but unlike most people in this country, whom still see property speculation, as answer to everything, I don't see a boom in property riding in on a white horse just yet, so forget the gamble and go with the dream!)

Putting all three properties in the mortgage bowl ain't something I would wish on anyone, especially with the end of low rates in sight.

Hope that makes sense!

Good luck

manxcat

Thanks guys much appreciated.

Some more details which may help.

I take home 3400 after tax and my wife take home 2900.
Both properties mortgages are around 1250. Mine is a tracker and I take in rent of 750. My wifes is variable and she takes in 600.

We are currently renting ourselves which costs 725 per month.

We have both being paying into good pensions for 10 years.

We have 30,000 savings in shares and 30,000 in the bank. We currently save 1500 per month.

Should also mention I get a bonus once a year which comes in around 10000 after tax.

Last, but by no means least we are both 33...and have 3 kids!

Really want to build, but I feel something will have to give..please feel free to advise!

Liam D Ferguson

You might qualify for a small mortgage (<100,000) keeping both houses. But I wouldn't. Your wife's property is costing you money. Let's say her interest rate is 4%. Annual interest is €160,000 x 4% = €6,400. You're only getting €7,200 rent, less expenses and tax. I'd be inclined to sell that one. Your one is on a tracker and is making better rent. I'd hang on to that one.

euroboom13

Agree ,its a no brainer, sell variable and keep tracker, and build a dream.

manxcat

euroboom & Liam many thanks for your input. Certainly help me to make a decision!

The Cuban

Cant see a bank giving a third mortgage,you`d struggle to get the second one in todays climate. If one of you lost the job then you could end up in difficulty.

Another option is to build the house in stages over a couple of years, the shell of the house is the cheapest part (Value wise anyway)

chamaid

Depends on where you live but it can be cheaper to buy than build. 80-100sq/foot for a very good finish including flooring/paint/curtains etc. A rated house. If you have the time and knowledge, go direct labour but if you have a good job, get a contractor and let them work away. The savings of direct labour will be erroded by small mistakes.

lucky john

chamaid wrote: »

Depends on where you live but it can100sq/foot for a very good finish including flooring/paint/curtains etc. A rated house. If you have the time and knowledge, go direct labour but if you have a good job, get a contractor and let them work away. The savings of direct labour will be erroded by small mistakes.

there a load of new rules regarding self builds. Using direct labour is almost a no no now. You have to appoint a main contractor and have an engineer oversee the whole build. The cost of a one off house has gone way up in the last few months. There is no doubt that buying at this moment is actually cheaper than building.

http://www.irishexaminer.com/ireland/new-code-could-add-50k-onto-cost-of-self-builds-259468.html
http://selfbuild.ie/news/are-self-builders-in-roi-an-endangered-species/