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Self-build finance

dubstop365

Hey there,

We've just got planning permission to build our first home. It's going to be a self-build.

I have a question about finance.

We're in a fortunate position financially. We'll probably need a loan of €30k-50k max (expecting the house to cost €200k-220 to build).

As the amt of money we need is low, we don't see the sense in getting a mortgage. We've spoken to banks, and they are all pushing us that way, but we don't feel OK about signing over the title of our house to the bank for such a small mortgage.

The banks will NOT give us a personal loan to finish the house. Everyone we've spoke to said we NEED a mortgage for anything to do with a house build.

We're currently considering taking out a loan with the Credit Union.

We KNOW that the interest rate on a personal loan is higher than it would be with a mortgage, but we feel like the benefits of maintain the title to our home, as well as avoiding all the legal stuff that goes with a mortgage, far outweigh the cost of a personal loan.

Is there something we're missing or should be thinking about?

Thanks in advance!

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JimmyMW

symike wrote: »

Hey there,

We've just got planning permission to build our first home. It's going to be a self-build.

I have a question about finance.

We're in a fortunate position financially. We'll probably need a loan of €30k-50k max (expecting the house to cost €200k-220 to build).

As the amt of money we need is low, we don't see the sense in getting a mortgage. We've spoken to banks, and they are all pushing us that way, but we don't feel OK about signing over the title of our house to the bank for such a small mortgage.

The banks will NOT give us a personal loan to finish the house. Everyone we've spoke to said we NEED a mortgage for anything to do with a house build.

We're currently considering taking out a loan with the Credit Union.

We KNOW that the interest rate on a personal loan is higher than it would be with a mortgage, but we feel like the benefits of maintain the title to our home, as well as avoiding all the legal stuff that goes with a mortgage, far outweigh the cost of a personal loan.

Is there something we're missing or should be thinking about?

Thanks in advance!

What size is the house? I think unless the house is very small your build cost estimate is prob very low and the €30-50k you need may end up being considerably more, hence needing a mortgage anyway

dubstop365

Thanks Jimmy,

It's a dormer. 228 total SQM (130 SQM ground, 98SQM first floor). Our family and close friends are involved in construction and are all lined up to help out, and we're both diligent project managers. We hope to get the ground floor finished and liveable on that budget. We're not in any rush. We may be dreaming, who knows?

Gumbo

symike wrote: »

Thanks Jimmy,

It's a dormer. 228 total SQM (130 SQM ground, 98SQM first floor). Our family and close friends are involved in construction and are all lined up to help out, and we're both diligent project managers. We hope to get the ground floor finished and liveable on that budget. We're not in any rush. We may be dreaming, who knows?

Not a hope that’s been built and finished for 200k unless your doing a large large chunk of the labour yourself.

Why not get the mortgage on a variable rate, keeps the bank happy and then just pay it off quicker.

But again, you need to visit your finances, have you had quotes done up yet or a Bill of Quantites prepared?

Also, you may run into banking problems as for final sign off you need the certs of compliance. And the certs of compliance can’t be issued unless your finished.

JimmyMW

symike wrote: »

Thanks Jimmy,

It's a dormer. 228 total SQM (130 SQM ground, 98SQM first floor). Our family and close friends are involved in construction and are all lined up to help out, and we're both diligent project managers. We hope to get the ground floor finished and liveable on that budget. We're not in any rush. We may be dreaming, who knows?

Im afraid your dreaming, no hope unless your close family and friends are going to cover most of the labour free of charge, which in most instances does not happen. I have just completed 180m2 house, doing loads of work myself including concrete foundations, digger work and concrete floors amongst other smaller jobs like floor insulation sewerage works etc and I would be well over that kinda money per M2. At a min you need to be adding another 50% to your €220k budget in my opinion. As diligent project managers you should be well aware of the problems associated with unrealistic budgets.

Sorry for the bad news

dubstop365

Thanks.

My question was less about how much it would cost for us to build, or whether or how much it would cost and more about getting non-mortgage finance for the build.

Thanks for your input though.

Courtn2

Hi,

I’d second kceire’s advice re: variable rate mortgage and set the payment higher than a minimum so that you can pay off sooner (if finances allow). It’s probably the cheapest means of getting the finance and should allow you to increase if you do find you need more.

However, if you’re dead set against the mortgage as a matter of principle, then take aim at the Credit Unions- join one today, if not already in one and build up a history of depositing regularly in advance of looking for a loan. I think 30k is towards their ceiling, so it’s not a given that they’ll approve, but it’s an option to look into.

Best of luck!!!

Calahonda52

Food for thought
https://www.boards.ie/vbulletin/showthread.php?t=2057903609

dubstop365

Very helpful, thank you Calahonda52!

JimmyMW

symike wrote: »

Thanks.

My question was less about how much it would cost for us to build, or whether or how much it would cost and more about getting non-mortgage finance for the build.

Thanks for your input though.

Fair enough, was just trying to alert you to what will be a massive problem down the line.

With regards the financing of the €30-50k if the cost of setting up the mortgage ie solicitors fees etc outweighs the saving on interest between the mortgage and the personal loan, then the personal loan is the best option if you can get it. Otherwise if there are savings to be made with the mortgage you will have to weigh up if the savings made are worth the extra effort of setting up the mortgage.

dubstop365

Totally appreciate the sentiment, Jimmy! Thank you so much for all the responses...it's been very helpful!

spoke2cun

I admire your intelligence to try and stay away from the people and banks who are trying to shove mortgages down your throat. Stand clear of them. Its nothing but a land & property grab at a huge cost to you. If you're in no hurry, raise or save the money or go credit union. The cheek of the banks to not give a personal loan.

Mooooo

Play the banks at their own game. They want a secured mortgage. Go for 100k but seeing as ltv will be low get it fixed at 2% keep your cash as a buffer to do what you want with. The banks cost of funds at the minute is fcukall. Dunno will they do it but have a cut off them anyway. Go in with a proposal that suits ye. Unsustainable debt is bad but debt ye can manage is a usefull tool