Building house with our own money until we run out and then getting a mortgage...

sumosaurus

Hi everyone. Just a query about getting a mortgage after having some of the building work completed - let me explain....

Me and my wife and two kids (ages 1 & 2) currently live in Abu Dhabi. We have just agreed to buy a site back home in Ireland subject to planning. If planning is approved we plan on using all of our own money to get as far as possible. 

The reason for this is that we would like to make progress but know that we don't qualify for a mortgage back in Ireland yet. We more than likely have two years left here. We would then move back, get jobs (hopefully!) and begin putting savings together in order to qualify for a mortgage but this could be another year. 

The question is "If we build as much as we can with our money would the work done qualify as a deposit for a mortgage application? Or would we even qualify for a mortgage going down this route?"

stayback

sumosaurus wrote: »

Hi everyone. Just a query about getting a mortgage after having some of the building work completed - let me explain....

Me and my wife and two kids (ages 1 & 2) currently live in Abu Dhabi. We have just agreed to buy a site back home in Ireland subject to planning. If planning is approved we plan on using all of our own money to get as far as possible. 

The reason for this is that we would like to make progress but know that we don't qualify for a mortgage back in Ireland yet. We more than likely have two years left here. We would then move back, get jobs (hopefully!) and begin putting savings together in order to qualify for a mortgage but this could be another year. 

The question is "If we build as much as we can with our money would the work done qualify as a deposit for a mortgage application? Or would we even qualify for a mortgage going down this route?"

Banks are very reluctant to lend money mid build. They prefer if you apply at the start and ensure you have enough to complete the whole project. Your probably going to have to build up a profile here before they will be willing to lend to you.

Then again if you get a state job when you get home I.e teacher etc they might look at you differently.

Also it’ll depend on the total cost and how much your putting into it.
For example if the total cost incl site is 300k and your willing to put half of it in then banks risk is lower.

sumosaurus

stayback wrote: »

sumosaurus wrote: »

Hi everyone. Just a query about getting a mortgage after having some of the building work completed - let me explain....

Me and my wife and two kids (ages 1 & 2) currently live in Abu Dhabi. We have just agreed to buy a site back home in Ireland subject to planning. If planning is approved we plan on using all of our own money to get as far as possible. 

The reason for this is that we would like to make progress but know that we don't qualify for a mortgage back in Ireland yet. We more than likely have two years left here. We would then move back, get jobs (hopefully!) and begin putting savings together in order to qualify for a mortgage but this could be another year. 

The question is "If we build as much as we can with our money would the work done qualify as a deposit for a mortgage application? Or would we even qualify for a mortgage going down this route?"

Banks are very reluctant to lend money mid build. They prefer if you apply at the start and ensure you have enough to complete the whole project. Your probably going to have to build up a profile here before they will be willing to lend to you.

Then again if you get a state job when you get home I.e teacher etc they might look at you differently.

Also it’ll depend on the total cost and how much your putting into it.
For example if the total cost incl site is 300k and your willing to put half of it in then banks risk is lower.

I am fearful of getting caught in a situation where I have X amount of work done and then I can't get money from anywhere. We plan on putting in about 100K but that includes purchase of the site. We'd be hoping that'll be about 1/3 of total cost, similar to what you said above. Cheers for that

Boards.ie: Mark

Hi sumosaurus,

I've moved your thread across to the Construction & Planning forum where people may be better able to advise having perhaps gone through a similar situation themselves. The other advantage is that you can get independent advice here.

bfclancy

sumosaurus wrote: »

I am fearful of getting caught in a situation where I have X amount of work done and then I can't get money from anywhere. We plan on putting in about 100K but that includes purchase of the site. We'd be hoping that'll be about 1/3 of total cost, similar to what you said above. Cheers for that

must be a cheap site and a small house if 300K is going to cover it including purchase of site. i've had friends working abroad who have got mortgages in Ireland, why is this not an option for you?

sydthebeat

it would be reckless to begin a build which you havent the finances arranged to complete.
you could end up with a very expensive white elephant which you could never recoup your money from.

The financial institution would want to have a charge over the completed project, therefore they would want to see that :
1. there is suitable indemnified oversight from a certifying professional from the outset.
2. there is evidence that the funds requested can complete AND finish the whole build, within reasonable time, to contemporary standards.

if you do not qualify for a mortgage here currently, then it woudl not be a good idea to start a build under those conditions.

Gumbo

Get the mortgage at the start. The bank will insist you spend you side of the money first. That’s how UB dealt with me in 2017 anyway.

sumosaurus

I'd imagine that they got the mortgages before moving abroad for work. Applying for a mortgage from abroad requires a 50% deposit.

ballinadog

I intend to do something similar here, it’s actually more common than ya’d think. Not every bank will like to see ya coming but there’s def ones that will play ball with you.

There’s two lads that work with me that both did it that had varying degrees of hardship.

One lad inherited the site from his in-laws an put all his savings (approx 140k) in to the building and got it weathertight for that (walls, roofs, windows and doors). Then he went to banks with cap in hand for the balance to finish it and all the bank did was send out their valuer who valued what he had built at 220k and gave him what he was looking for to finish based on what he’d built as his deposit. He reckoned not all of them would entertain him but he certainly was left with options.

The second lad had a tougher time, but he was in a slightly diff position. He had the house nearly complete before he went looking for a mortgage and was actually already living in it (had only a few of the basic rooms finished, kitchen, master bedroom, bathroom) but what I believe was his downfall was he wanted to borrow more money than what was actually required to finish the works. He eventually got sorted but I do know he had a bit of heartache with them.

tedimc

I wasn't moving back from abroad, but I did find the banks would entertain you a lot more if you had decent savings built up. This reduces their risk and also proves you can put aside some money each month.

However, if you rock up with no savings after spending it all on the house - they can't say for certain that you are able to save.

But you may be lucky as in Ballinadog's first example where they recognize the value in what's already built. Thread carefully though, there is a lot of speculation about a recession looming and what impact that will have on property prices. You may spend 200k, but it may be only worth 100k. I do notice estate agents are a lot more conservative in their valuations than they used to be.