what can we borrow?

History Queen

Hi,
Obviously we need to talk to our bank but before we do I was wondering if any boardsies could shed some light on our situation.

1. We are a married couple with combined income of €60000,

2. We have been offered the oppertunity to build on to my parents house (they will remain in the old part of the house and we will live in the new extension). An architect has looked at the hoise and drawn up some rough plans

3. The existing house will be transferred in to our name (is mortgage free)

My question is, when we approach a bank would we still need the full 10% deposit given that the amount we wish to borrow will be significantly less than the value of the security (house). Not having to have the full deposit just means we could get started sooner and move out of our rental accomodation much faster.

Has anyone experience of anything like this?

pwurple

I'd talk to a tax person also. Are you exempt from capital aquisition tax on the house being transferred to you? There are some rules about how long you have lived there before it is gifted to avoid that (i have 3 years in my head, may not be right, please check). If the house was gifted to you without you living there first, you may end up with a hefty tax bill to settle before even thinking about doing something to it.

A mortgage to do an extension is not the same thing as a mortgage to buy a new house, so the lightened rules for first time buyers will not apply I'd say. It will be more like applying for a renovation loan. All depends on the value of the exisiting house, how much value the extension will add to it, how much that build will cost.

You definetely would need some deposit or history of savings. You architect obviously has not engaged a QS to price out your planned extension yet?

Too many unknowns here to say much. You need to value everything, current house, future house... Find out about any tax and a projected cost of build, and then approach some banks.

History Queen

Thanks for your reply. Yes we are exempt from Capital Acquisition Tax as the value of the house is under the threshold. I guess the only way to answer our questions is to speak to some banks. Thanks again.

ainy

We are in the same position so was interested to see any replies. my partner is actually meeting with a mortgage advisor in the bank this week to discuss our situation and get advice so hopefully we'll have more understanding towards end of the week.

History Queen

Hi ainy. Interesting that you are in a similar situation. Best of luck with the bank i hope it is a relatively straightforward process.

ainy

History Queen wrote:

Hi ainy. Interesting that you are in a similar situation. Best of luck with the bank i hope it is a relatively straightforward process.

so had the meeting yesterday according to the mortgage advisor (who herself has recently done something similar) the situation like you outlined is still classed as a self build in terms of mortgage. We need 10% deposit and 10% contingency funds. I had thought the equity in the house could be used as deposit but its not the case.

We are thinking of moving in with my mother in law and saving on rent to get our savings up further but it will still be start of next year before we can go for mortgage.

History Queen

Thanks a million for the update. Best of luck with everything. Hope ye get sorted soon.