building without mortgage

auntymaggie

Quick hypothetical question. I know if you have to get a mortgage then you need to satisfy the bank (engage a solicitor, checks for stage payments, probably life insurance). Anything else? (Possibly I've left other things out, I'm not well up on this kind of thing).

If you were to build a new house solely with your own money, assuming planing was granted on land you already own and engaging a building contractor for full builder finish, what is needed. An engineer/architect to do a BER, design drawings and to ensure that all works are carried out to current regs is a must I'm sure, but what else is needed.

Would it be likely that the contractors would look more favorably of the absence of a mortgage and in return possibly come in a little keener. In general what would the advantages be. I'd imagine there are no dis-advantages to having a mortgage!

Metric Tensor

You're in a very lucky position OP. Well done!

Assuming you've already obtained your planning then you still need to lodge an appropriate commencement notice (Opt-out or otherwise) and the house must be built in compliance with the current building regulations. If you were competent you could in theory ensure this yourself but that would involve structural design, energy efficiency, etc. etc. In practice you should hire a professional to assist you engineer/architect/technician as appropriate.

Prior to moving in to the house you are legally required to have a BER Certificate (and an air-tightness test) - this is based on much of the house detailing so it would be sheer madness not to get this prepared in advance of the build to ensure everything is ok. In most cases the professional you engage will do this for you.

You also need to ensure the house complies with all the conditions on your grant of planning permission. Again your professional will assist you in making sure this happens.

With regards to the builder some less scrupulous builders might think they can cut corners or pull the wool over your eyes if you haven't engaged a professional plus or minus there being no requirement for certificates for bank payments. So again, although not mandatory having a professional on board would help. I wouldn't personally tell the builder that you are not getting a mortgage. The best ones won't mind because they will be confident in the quality of their work so it's only the dodgy ones who might think cha-ching when they hear it.

Finally you are obliged to appoint a PSDP and PSCS in line with Safety and Welfare regulations. Usually this is your professional designer and your builder that act in these roles and carry out the relevant duties. Although, as with the stuff above, if you are competent you could in theory appoint yourself - it would be crazy though unless you are familiar with all the regulations and have experience and insurance!

SO ...... to sum up ..... hire a good professional architect/engineer/technician and get their advice along the way. It will cost you a few grand but save you tens of thousands in the long run.

auntymaggie

Metric Tensor wrote: »

You're in a very lucky position OP. Well done!

Assuming you've already obtained your planning then you still need to lodge an appropriate commencement notice (Opt-out or otherwise) and the house must be built in compliance with the current building regulations. If you were competent you could in theory ensure this yourself but that would involve structural design, energy efficiency, etc. etc. In practice you should hire a professional to assist you engineer/architect/technician as appropriate.

Prior to moving in to the house you are legally required to have a BER Certificate (and an air-tightness test) - this is based on much of the house detailing so it would be sheer madness not to get this prepared in advance of the build to ensure everything is ok. In most cases the professional you engage will do this for you.

You also need to ensure the house complies with all the conditions on your grant of planning permission. Again your professional will assist you in making sure this happens.

With regards to the builder some less scrupulous builders might think they can cut corners or pull the wool over your eyes if you haven't engaged a professional plus or minus there being no requirement for certificates for bank payments. So again, although not mandatory having a professional on board would help. I wouldn't personally tell the builder that you are not getting a mortgage. The best ones won't mind because they will be confident in the quality of their work so it's only the dodgy ones who might think cha-ching when they hear it.

Finally you are obliged to appoint a PSDP and PSCS in line with Safety and Welfare regulations. Usually this is your professional designer and your builder that act in these roles and carry out the relevant duties. Although, as with the stuff above, if you are competent you could in theory appoint yourself - it would be crazy though unless you are familiar with all the regulations and have experience and insurance!

SO ...... to sum up ..... hire a good professional architect/engineer/technician and get their advice along the way. It will cost you a few grand but save you tens of thousands in the long run.

Thanks for the advice. Yes agree there will be a professional involved as you have suggested. So really from the sounds of that there are no reals advantages from having no mortgage, other than not having the hassle of dealing with the bank and no interest payments!

Of course not having a mortgage depends on the cost of the build contract. I guess you cut your cloth on the design to suit there.

Metric Tensor

auntymaggie wrote: »

TSo really from the sounds of that there are no reals advantages from having no mortgage, other than not having the hassle of dealing with the bank and no interest payments!

I'm sorry if I gave that impression.

What I listed above is a LOT easier than what you would have to do if a bank was involved.

It is much much easier without a mortgage but as you said you cut your cloth ...

auntymaggie

Metric Tensor wrote: »

I'm sorry if I gave that impression.

What I listed above is a LOT easier than what you would have to do if a bank was involved.

It is much much easier without a mortgage but as you said you cut your cloth ...

Thanks for the reply. Off the top of your head what extra would a bank likely insist on?

Metric Tensor

Off the top of my head:

1. All the relevant information regarding your and your husband's income and expenditure - a deposit of X thousand and an annual income of Y thousand.

2. Detailed breakdown of costings for the house.

3. Transfer of the site into your name - potentially incurring a tax burden on yourself. Mind you this is something you should do even if you don't have a mortgage.

4. A valuation from one of their panel of valuers.

5. Potentially building the house under the new BCARs control system rather than Opt-Out. This will cost you extra in professional fees but I'm not sure which if any banks insist on it.

6. Stage payment certificates at each stage of construction.

7. Certificates of compliance with Planning and Building Regulations.

8. And this is an important one ..... a big fat chunk of your salary every month for the next 25 years!


That's in thirty seconds off the top of my head. I'm sure there's more that has slipped my mind.

auntymaggie

Metric Tensor wrote: »

Off the top of my head:

1. All the relevant information regarding your and your husband's income and expenditure - a deposit of X thousand and an annual income of Y thousand.

2. Detailed breakdown of costings for the house.

3. Transfer of the site into your name - potentially incurring a tax burden on yourself. Mind you this is something you should do even if you don't have a mortgage.

4. A valuation from one of their panel of valuers.

5. Potentially building the house under the new BCARs control system rather than Opt-Out. This will cost you extra in professional fees but I'm not sure which if any banks insist on it.

6. Stage payment certificates at each stage of construction.

7. Certificates of compliance with Planning and Building Regulations.

8. And this is an important one ..... a big fat chunk of your salary every month for the next 25 years!


That's in thirty seconds off the top of my head. I'm sure there's more that has slipped my mind.

Thanks again for your reply. Sounds like quite a few positives.

stickybookmark

auntymaggie wrote: »

Would it be likely that the contractors would look more favorably of the absence of a mortgage

If there's no mortgage the builder doesn't have to get a professional to ''sign off'' each stage in order for the stage payment to be released. That means that the builder will tell you ''ok the foundations are done now, hand over that stage payment please'' and in theory as no independent verification is required, you could just take his word for it and transfer the money.

If there were a mortgage, an architect or engineer would have to go and have a look at the foundations, certify that they are done and done correctly, before the bank would release that stage payment.

So you could be a little more vulnerable to a builder telling you that a certain stage is done, even if it's not done right. How you can get around that is don't release any stage payments until the professional you have employed on your build has gone and had a look at the work that has been done.

This post sums up everything you need to do:

Metric Tensor wrote: »

You're in a very lucky position OP. Well done!

Assuming you've already obtained your planning then you still need to lodge an appropriate commencement notice (Opt-out or otherwise) and the house must be built in compliance with the current building regulations. If you were competent you could in theory ensure this yourself but that would involve structural design, energy efficiency, etc. etc. In practice you should hire a professional to assist you engineer/architect/technician as appropriate.

Prior to moving in to the house you are legally required to have a BER Certificate (and an air-tightness test) - this is based on much of the house detailing so it would be sheer madness not to get this prepared in advance of the build to ensure everything is ok. In most cases the professional you engage will do this for you.

You also need to ensure the house complies with all the conditions on your grant of planning permission. Again your professional will assist you in making sure this happens.

With regards to the builder some less scrupulous builders might think they can cut corners or pull the wool over your eyes if you haven't engaged a professional plus or minus there being no requirement for certificates for bank payments. So again, although not mandatory having a professional on board would help. I wouldn't personally tell the builder that you are not getting a mortgage. The best ones won't mind because they will be confident in the quality of their work so it's only the dodgy ones who might think cha-ching when they hear it.

Finally you are obliged to appoint a PSDP and PSCS in line with Safety and Welfare regulations. Usually this is your professional designer and your builder that act in these roles and carry out the relevant duties. Although, as with the stuff above, if you are competent you could in theory appoint yourself - it would be crazy though unless you are familiar with all the regulations and have experience and insurance!

SO ...... to sum up ..... hire a good professional architect/engineer/technician and get their advice along the way. It will cost you a few grand but save you tens of thousands in the long run.

Just on this point:

Metric Tensor wrote: »

. I wouldn't personally tell the builder that you are not getting a mortgage. .

You can't avoid this unfortunately. When the subject of stage payments comes up and you're signing contracts, it'll be 100% Obvious to the builder that there is no mortgage as he's not having to wait on certificates before stage payments are released. So he will know damn well there's no mortgage and he's just dealing with you to get the money released.

However during the tender process I agree there's no need to tell them you don't have a mortgage.

I would strongly advise you to give the proposed stage payments from your selected builder a thorough review before signing up to them. I didn't do this and have learned a very hard lesson as my builder went bust 1/3 into the project.

The builder will give you proposed stage payments. These will be front-loaded in his favour i.e. you're paying most of the money in the first few stage payments. So you're paying a lot more to him, than actual work he has done. After he sends these to you, send him back a counter-proposal with more of the money being paid in the last stage payment or the last 2 stage payments i.e. when the majority of the work has been done. And propose that the first stage payments are reduced.

Get as many people as possible to review the stage payments before you agree with them.

auntymaggie

stickybookmark wrote: »

If there's no mortgage the builder doesn't have to get a professional to ''sign off'' each stage in order for the stage payment to be released. That means that the builder will tell you ''ok the foundations are done now, hand over that stage payment please'' and in theory as no independent verification is required, you could just take his word for it and transfer the money.

If there were a mortgage, an architect or engineer would have to go and have a look at the foundations, certify that they are done and done correctly, before the bank would release that stage payment.

So you could be a little more vulnerable to a builder telling you that a certain stage is done, even if it's not done right. How you can get around that is don't release any stage payments until the professional you have employed on your build has gone and had a look at the work that has been done.

This post sums up everything you need to do:



Just on this point:



You can't avoid this unfortunately. When the subject of stage payments comes up and you're signing contracts, it'll be 100% Obvious to the builder that there is no mortgage as he's not having to wait on certificates before stage payments are released. So he will know damn well there's no mortgage and he's just dealing with you to get the money released.

However during the tender process I agree there's no need to tell them you don't have a mortgage.

I would strongly advise you to give the proposed stage payments from your selected builder a thorough review before signing up to them. I didn't do this and have learned a very hard lesson as my builder went bust 1/3 into the project.

The builder will give you proposed stage payments. These will be front-loaded in his favour i.e. you're paying most of the money in the first few stage payments. So you're paying a lot more to him, than actual work he has done. After he sends these to you, send him back a counter-proposal with more of the money being paid in the last stage payment or the last 2 stage payments i.e. when the majority of the work has been done. And propose that the first stage payments are reduced.

Get as many people as possible to review the stage payments before you agree with them.

Thanks for the advice. Plan to get a professional involved anyway even IF I can do it mortgage free. Builders quoting would all be well known locally and well known to be genuine. I will thread carefully on the stage payments though.

stickybookmark

auntymaggie wrote: »

Thanks for the advice. Plan to get a professional involved anyway even IF I can do it mortgage free. Builders quoting would all be well known locally and well known to be genuine. I will thread carefully on the stage payments though.

Oh believe me I did due diligence when picking my builder too! Was well known, very well regarded, I went to visit a few reference houses, all had glowing reports etc. Took me and all the other clients completely by surprise when they went under.

You'll have to get a professional involved, the builder will still want someone to sign off various stages for the homebond Insurance (at least mine did) they wanted someone (my engineer) to sign off on the foundations and the roof for the homebond insurance despite no mortgage.

And of course you'll need someone to check what the builder is doing. If you're doing for example a concrete slab first floor you'll certainly want an engineer to check the steel design and make sure the lintels over windows and that are enough to take the load etc etc.

You'll also need someone to ''certify'' that the house meets planning permission. You'll need that document if you ever sell the house or if anyone in the future ever wants to sell the house.

auntymaggie

stickybookmark wrote: »

Oh believe me I did due diligence when picking my builder too! Was well known, very well regarded, I went to visit a few reference houses, all had glowing reports etc. Took me and all the other clients completely by surprise when they went under.

You'll have to get a professional involved, the builder will still want someone to sign off various stages for the homebond Insurance (at least mine did) they wanted someone (my engineer) to sign off on the foundations and the roof for the homebond insurance despite no mortgage.

And of course you'll need someone to check what the builder is doing. If you're doing for example a concrete slab first floor you'll certainly want an engineer to check the steel design and make sure the lintels over windows and that are enough to take the load etc etc.

You'll also need someone to ''certify'' that the house meets planning permission. You'll need that document if you ever sell the house or if anyone in the future ever wants to sell the house.

Interesting.I'll need to thread carefully.

JimsAlterEgo

don't you also need certain conditions to be met if you ever plan on selling

Metric Tensor

All the building regulations and compliance with your planning permission.

You have to meet these requirements regardless. It's just that when people don't borrow to build these items may not be checked until they go to sell the building. But they should have complied from the start.

auntymaggie

Quick follow up question. Can you demolish and replace the existing house with exact same again (new stucture) without planning?

DOCARCH

auntymaggie wrote: »

Quick follow up question. Can you demolish and replace the existing house with exact same again (new stucture) without planning?

Quick answer...no.

Gumbo

auntymaggie wrote: »

Quick follow up question. Can you demolish and replace the existing house with exact same again (new stucture) without planning?

No, Planning required and then the new house has to comply with CURRENT BUILDING REGULATIONS.

auntymaggie

Thanks for the replies. That knocks that on the head.

ELBAOS

Just another thing to add, If getting a mortgage you need to get house insurance to cover house as its being built, less than €200 a year roughly so not too expensive but just another thing they require.

893bet

ELBAOS wrote: »

Just another thing to add, If getting a mortgage you need to get house insurance to cover house as its being built, less than €200 a year roughly so not too expensive but just another thing they require.

200?? 1200-1500 is what it costs.

This should be gotten regardless.

ELBAOS

Self build insurance costs that! yes I think it's a must but not everyone gets it and the banks don't insist on it! they only insist on house insurance, the op asked what do banks insist on.

Metric Tensor

Actually as ELBOAS had reminded me:

Yourself and your spouse will both be required to get mortgage insurance or life insurance to the value of the mortgage and may or may hot be required to assign same to the bank.

auntymaggie

Lots of positives to not having a mortgage. Now to see if it's possible!