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Build on what I have or Buy?

Options
  • 07-02-2021 3:32pm
    #1
    waterfordwendy
    Registered Users Posts: 32 ✭


    Hello,

    I would like to own my own home. My two options:

    Option 1
    Self-build mortgage on a site that is being gifted to me by my parents. I believe that I will have to live in the home of a self build for 3 years? I would likely then sell the house, pay off the mortgage and purchase closer to where I work. My income and savings would not allow me to get a mortgage in this area currently.

    Option 2
    Sell the site that is being gifted to me and use the money towards a deposit on a new home near where I work. I do not have the right income to get a mortgage in this area at the moment though and will have to wait at least 5 years for my savings and salary to match, by which time the house prices could go up too.

    Can anyone offer their thoughts on this? I have it in my head that if I self-build (option 1) I will make a profit by selling it, and in turn purchase a better home than I would if I went with option 2.
    The site is there, I get planning, self-build on a mortgage of €165,000 and then sell for over €200,000 (according to the market in the current area).

    I am sure I am missing something and do not even know what questions to really ask so would love some help here.
    Thanks


Comments

  • Options
    #2
    FromADistance
    Registered Users Posts: 310 ✭✭FromADistance


    waterfordwendy wrote: »
    Hello,

    I would like to own my own home. My two options:

    Option 1
    Self-build mortgage on a site that is being gifted to me by my parents. I believe that I will have to live in the home of a self build for 3 years? I would likely then sell the house, pay off the mortgage and purchase closer to where I work. My income and savings would not allow me to get a mortgage in this area currently.

    Option 2
    Sell the site that is being gifted to me and use the money towards a deposit on a new home near where I work. I do not have the right income to get a mortgage in this area at the moment though and will have to wait at least 5 years for my savings and salary to match, by which time the house prices could go up too.

    Can anyone offer their thoughts on this? I have it in my head that if I self-build (option 1) I will make a profit by selling it, and in turn purchase a better home than I would if I went with option 2.
    The site is there, I get planning, self-build on a mortgage of €165,000 and then sell for over €200,000 (according to the market in the current area).

    I am sure I am missing something and do not even know what questions to really ask so would love some help here.
    Thanks

    Are your parents on board with option 1 & 2? I'm not so sure, if I was one of your parents, that I'd be happy with you selling on a site I'd gifted you for the purpose of building a home.


  • Options
    #3
    waterfordwendy
    Registered Users Posts: 32 ✭waterfordwendy


    FromADistance wrote: »
    Are your parents on board with option 1 & 2? I'm not so sure, if I was one of your parents, that I'd be happy with you selling on a site I'd gifted you for the purpose of building a home.

    Yes they are fine with this.


  • Options
    #4
    highgiant1985
    Registered Users Posts: 1,776 ✭✭✭highgiant1985


    waterfordwendy wrote: »
    Hello,

    I would like to own my own home. My two options:

    Option 1
    Self-build mortgage on a site that is being gifted to me by my parents. I believe that I will have to live in the home of a self build for 3 years? I would likely then sell the house, pay off the mortgage and purchase closer to where I work. My income and savings would not allow me to get a mortgage in this area currently.

    Option 2
    Sell the site that is being gifted to me and use the money towards a deposit on a new home near where I work. I do not have the right income to get a mortgage in this area at the moment though and will have to wait at least 5 years for my savings and salary to match, by which time the house prices could go up too.

    Can anyone offer their thoughts on this? I have it in my head that if I self-build (option 1) I will make a profit by selling it, and in turn purchase a better home than I would if I went with option 2.
    The site is there, I get planning, self-build on a mortgage of €165,000 and then sell for over €200,000 (according to the market in the current area).

    I am sure I am missing something and do not even know what questions to really ask so would love some help here.
    Thanks


    Option 2 - simply because why put yourself through all the hassle of option 1 to only sell then in 3 years. Search on line and read experiences its very common for self builds to have over runs or delays unless tightly managed and its often a very stressful experience. Go through all that and live there for just 3 years? What's the point. So if you're not intending to live there long term option 2 for me. House prices could have collapsed by then to for all you know so if that happens you're stuck.


  • Options
    #5
    screamer
    Registered Users Posts: 6,134 ✭✭✭screamer


    If you’re in an area with planning restrictions where only locals can get planning, that limits your options as only local people would be interested in the site and local value will limit what you get. If you build on it, and sell, value in 3 years will depend on the market, I’ve seen people do this in the past and had to sell for less than what it cost. so it’s a who knows question, and if you sell the house chances are you’ll not get planning in the locality again in future.
    Best advise I can give you is, do what will give you the best quality of life in the long run.


  • Options
    #6
    waterfordwendy
    Registered Users Posts: 32 ✭waterfordwendy


    Thank you for your help. I will have to pay 33% CGT on the sale of the site also, so that is a further loss. Does this change your mind or do you still suggest the same? I have weighed up all the steps involved in the build. As things stand I am paying a lot more in rent than I would be for the mortgage.


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  • Options
    #7
    ongarite
    Registered Users Posts: 8,215 ✭✭✭ongarite


    You would be mad to build on it to make a profit.
    Building costs are very high at the moment, you will have to build to A2 rating, nZEP.

    What size house are you looking to build for your €165,000 & does that include architect, engineer fees, etc..

    Read this thread & prepare for the worst:
    https://www.boards.ie/vbulletin/showthread.php?t=2058067907


  • Options
    #8
    FromADistance
    Registered Users Posts: 310 ✭✭FromADistance


    waterfordwendy wrote: »
    Yes they are fine with this.

    Re: Option 1, You will be able to get 10% of the completion value (completion value which is important) of a self-build back under the help to buy scheme (assuming you've paid sufficient tax). However you must take out a mortgage of a min of 70% LTV. You must also live in the house for 5 years. You've already said if you choose option 2 that you'll have to wait 5 years before being in a position to buy. You'll also have 5 years mortgage repayments behind you as opposed to paying rent. If you pick option 1, you'll have to put up a min deposit of 20% to purchase your next house (for mortgage purposes).

    It's hard to know what to do without knowing specifics but IMO, the HTB scheme is money for nothing. Of course you run the risk of property values falling but given you'd be taking on a self build and value of the completed house would be more than you could afford at the moment, surely in 5 years time, you'd have a good chunk of the mortgage paid and some equity to take with you.


  • Options
    #9
    Deeec
    Registered Users Posts: 4,761 ✭✭✭Deeec


    What age are you WaterfordWendy? If you are young and just starting out it may be better to wait a few years. Alot can change in a few years - you may be happy to build a family house in your home area in a few years. If you get planning now for a house and then sell it is unlikely you will get planning again. Also you will only be able to build a small basic house with a budget of €165,000.


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