self build mortgage

bigdaddy2010

Hi currently looking at buying a site for 150k and cost to build at 200k. So total cost 350k. We are both working with combined wage of 115k. Savings of 65k. No debt. No dependants.

Based on the above figures can we get a self build mortgage? What is breakdown of site and build costs (10% site costs, 20% build)?

Just interested in buying this but don't want to be wasting our time if we aren't eligible.

Thanks in advance

wellsir

Hi,
We are planning on doing something similar and we are meeting with the bank during the week. We have earnings of base salaries of 90k but I also earn another 22k tax free from a farm I lease that is work circa 750k. We do own a house that is worth about 200k and has a similar amount still owed on it (bought at the peak of the boom), we would like to sell it, but market is so slow. (midlands area) I also get bonus earnings that they seem to completely ignore even though its guaranteed and growing.

The initial reaction from the bank was negative, despite having assets of almost a million and liabilities of about 220k in total. But they did advise that I needed to make it a local conversation in my local branch as they would understand the implications of the farm land much more.

What he did say was that you have to have 20% of the total value in cash before they lend you anything. Now, I'm not sure if that includes the value of the site (47k) and the house (250k is our budget, turn key for a house of between 2250 sq ft and 2500 sq ft) which would mean you would need circa 60k in cash before we commence and they will then loan a max of 90% of the total required. We have about half that figure.
They won't loan you professional fees such as architect, council, solicitors and so on. That will have to come from your cash fund which can run up to 30k i understand! (Meeting architect during the week as well)

I'd be interested to hear how you get on, and I can let you know how we get on too if you want.

Trish56

You should qualify for a self build mortgage based on figures quoted.

Presuming you are first time buyers you can borrow 90% of the first 220k = 198k and 80% of the balance = 104k so in total 302k and you have sufficient savings to cover the balance. Your income also qualifies for a mortgage of 302k.

What is sq. footage of build? - how did you come up with 200k for cost of construction? You will need a qualified Architect/Engineer with professional indemnity insurance to supervise the construction who must also provide detailed costing's. The mortgage can be drawn down in stages and must be certified by the supervising Architect/Engineer. You must have planning permission when applying for the mortgage. It's a simple enough procedure once you qualify.

Trish

bigdaddy2010 wrote: »

Hi currently looking at buying a site for 150k and cost to build at 200k. So total cost 350k. We are both working with combined wage of 115k. Savings of 65k. No debt. No dependants.

Based on the above figures can we get a self build mortgage? What is breakdown of site and build costs (10% site costs, 20% build)?

Just interested in buying this but don't want to be wasting our time if we aren't eligible.

Thanks in advance

bigdaddy2010

wellsir wrote: »

Hi,
We are planning on doing something similar and we are meeting with the bank during the week. We have earnings of base salaries of 90k but I also earn another 22k tax free from a farm I lease that is work circa 750k. We do own a house that is worth about 200k and has a similar amount still owed on it (bought at the peak of the boom), we would like to sell it, but market is so slow. (midlands area) I also get bonus earnings that they seem to completely ignore even though its guaranteed and growing.

The initial reaction from the bank was negative, despite having assets of almost a million and liabilities of about 220k in total. But they did advise that I needed to make it a local conversation in my local branch as they would understand the implications of the farm land much more.

What he did say was that you have to have 20% of the total value in cash before they lend you anything. Now, I'm not sure if that includes the value of the site (47k) and the house (250k is our budget, turn key for a house of between 2250 sq ft and 2500 sq ft) which would mean you would need circa 60k in cash before we commence and they will then loan a max of 90% of the total required. We have about half that figure.
They won't loan you professional fees such as architect, council, solicitors and so on. That will have to come from your cash fund which can run up to 30k i understand! (Meeting architect during the week as well)

I'd be interested to hear how you get on, and I can let you know how we get on too if you want.

Thanks for that. Am dealing with a broker at the mo and just need to see can I get minor alterations to the plans before proceeding. Trying to get costings for build as well to get a rough idea of the total. I'll let you know by the end of the week on how I get on.

bigdaddy2010

Trish56 wrote: »

You should qualify for a self build mortgage based on figures quoted.

Presuming you are first time buyers you can borrow 90% of the first 220k = 198k and 80% of the balance = 104k so in total 302k and you have sufficient savings to cover the balance. Your income also qualifies for a mortgage of 302k.

What is sq. footage of build? - how did you come up with 200k for cost of construction? You will need a qualified Architect/Engineer with professional indemnity insurance to supervise the construction who must also provide detailed costing's. The mortgage can be drawn down in stages and must be certified by the supervising Architect/Engineer. You must have planning permission when applying for the mortgage. It's a simple enough procedure once you qualify.

Trish

Thanks Trish. 1600 sq foot house. Needs extensive site works eg new waste treatment system, bored well etc so I typed in details online and came up with this figure. How much are architect fees roughly?

Trish56

bigdaddy2010 wrote: »

Thanks Trish. 1600 sq foot house. Needs extensive site works eg new waste treatment system, bored well etc so I typed in details online and came up with this figure. How much are architect fees roughly?

Architects fee to supervise and certify stage payments should be around €2500/€3000 although can vary depending on what part of the country. You should build a 1600 sq. ft. easily for 200k....lenders usually use circa €90 to €100 per sq. ft. The lender will also have the property valued by a Valuer on their panel so the amount you can borrow will be the lesser of cost of construction and site or value on completion.

You will also need to take out a self build insurance policy before you commence building. This will cost you approx. €1500/€2000.

bigdaddy2010

Trish56 wrote: »

Architects fee to supervise and certify stage payments should be around €2500/€3000 although can vary depending on what part of the country. You should build a 1600 sq. ft. easily for 200k....lenders usually use circa €90 to €100 per sq. ft. The lender will also have the property valued by a Valuer on their panel so the amount you can borrow will be the lesser of cost of construction and site or value on completion.



You will also need to take out a self build insurance policy before you commence building. This will cost you approx. €1500/€2000.

Thanks Trish. Very useful information. Nice to get concise answers. Any other fees I should expect?

Trish56

bigdaddy2010 wrote: »

Thanks Trish. Very useful information. Nice to get concise answers. Any other fees I should expect?

I presume if you have full planning permission that you are aware of the Local Authority Development charge which can be substantial and is supposed to be paid before building commences. Lenders valuation fees will be initial circa €130/€150 and final fee on completion 50% of initial fee. Your own legal fees to register site in your name and mortgage approx. 3k and 1% stamp duty on site and construction costs = €3500.

wellsir

So the bank pretty much said PFO. Despite the fact we have an asset of 750k with zero debt earning over 20k tax free, we were refused, she didn't even submit the application. I explained that we essentially have 3 people earning in the house. They don't take these earnings into account at all, even though its more secure than any job, so go figure!
The max loan amount is about 275k and they would insist on us having close to 100k in savings to pay for the site, professional fees and so on, which is fair enough. SO until we find that 100k we stashed under the matress, we are staying where we are.

I know the banks were out of control a few years back, but they are completely over compensating now. I've had a mortgage of one type or another for 14 years and various loans and have never missed a payment on anything...EVER.
Back to the drawing board for us.

bigdaddy2010

wellsir wrote: »

So the bank pretty much said PFO. Despite the fact we have an asset of 750k with zero debt earning over 20k tax free, we were refused, she didn't even submit the application. I explained that we essentially have 3 people earning in the house. They don't take these earnings into account at all, even though its more secure than any job, so go figure!
The max loan amount is about 275k and they would insist on us having close to 100k in savings to pay for the site, professional fees and so on, which is fair enough. SO until we find that 100k we stashed under the matress, we are staying where we are.

I know the banks were out of control a few years back, but they are completely over compensating now. I've had a mortgage of one type or another for 14 years and various loans and have never missed a payment on anything...EVER.
Back to the drawing board for us.

Sorry to hear that. Hopefully something will work out. I'm gathering all my paperwork now. Start ball rolling next week. If they refuse me saying I don't have enough saved, I'll say fair enough. I'll let you know.

bigdaddy2010

bigdaddy2010 wrote: »

Sorry to hear that. Hopefully something will work out. I'm gathering all my paperwork now. Start ball rolling next week. If they refuse me saying I don't have enough saved, I'll say fair enough. I'll let you know.

Latest update. Got approved in principle for 300k for the build. Bank give me 6 weeks to get paper work together so I can proceed.nonly thing holding it up is from sellers side. There needed to be a change to the folio map, boundaries incorrect. Their solicitor said it would have been done 2 weeks ago so haven't heard anything. Might pull out if not sorted in next two weeks.

Trish56

bigdaddy2010 wrote: »

Latest update. Got approved in principle for 300k for the build. Bank give me 6 weeks to get paper work together so I can proceed.nonly thing holding it up is from sellers side. There needed to be a change to the folio map, boundaries incorrect. Their solicitor said it would have been done 2 weeks ago so haven't heard anything. Might pull out if not sorted in next two weeks.

That's brilliant news delighted for you. Best of luck with the build.