# Site counted as equity



## Galway5 (16 Apr 2008)

Hi there,

Myself and the wife are thinking of building a house soon. I will be gifted the site by my uncle. I am just wondering about the mortgage application. At the moment we each have mortgages on investment properties and a joint mortgage on our existing home. I have a car loan.

My question is, would it be better for us to save to have cash for the project or to concentrate on paying down the existing mortgages, i.e. from the point of view of getting another mortgage.  Would the site be treated as equity?

Also, does anyone know what percentage mortgage you would get for a once off house build? 

Thanks.


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## Oriel27 (17 Apr 2008)

Hi Galway5, Im in the exact situation as yourself (well near enough). 
I have an investment property as well. And the bank man told me that if the rent your getting is covering your existing mortgage then your laughing. So your site is considered equity, meaning, you dont have to come up with a deposite to build. (I asked the question would i have to have 10% saved). So in your case, ensure the rent covers the mortgage properties well. 
Now what is said above, thats how it was explained to me, and thats whats keeps me going. Im in the process of getting the PP now on site, ye dont have to build for 5 years. Best to get the PP now, before John Gormely messes it up for every one....


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## Jonathan.OB (17 Apr 2008)

Hi Guys,   Yes, provided you own the site outright, most lenders who offer stage payment mortgages, will lend you 100% of construction costs.   Is the new home intended as your primary principal residence? If so, you won't have any trouble applying for the new mortgage. Like Oriel said, as long as there is sufficient potential rental income to cover each cost of each existing mortgage, the banks will treat the new self-build mortgage as your only "outgoing" as such (apart fro car loan).   So what I would advise you to do is, work on clearing that car loan as soon as possible as it may effect your borrowing capacity. And keep your finance in order. Don't go overborrowing or taking out new loans. And, it goes without saying, be sure that you do not even come close to missing a mortgage/loan repayment to your creditors.   Have you gone about planning the build yet? If so, how much do you think you will need?   J


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## Oriel27 (17 Apr 2008)

Good input Jonathon. 

Getting the planning permission sorted out, with the design of the house, road entrance, application fees to the council etc will cost about 3k max. depends on the boy you get to do this for you. See now, planners are not very busy so ye can shop around and get it much less for 3k, in my case the planner is family. 

Regards the building, get direct labor, in my case between family and extend clann members, i can put up a decent gaff for 100k. DO NOT GIVE IT TO A CONTRACTOR. they mark up at least 50% for them selves, and they source the cheapest material as well. 
Best thing is, you be the site fore/PM and source the stuff your self. 
Im getting all the building stuff across the border.


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## Berlin (17 Apr 2008)

Oriel27 said:


> depends on the boy you get to do this for you.



Does it _have _to be a boy?


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## marnif (17 Apr 2008)

Hello all,
I have planning permission on a site. The council where going to compulsory purchase the land but they have changed there mind.
Before they changed there mind I have bought an apartment in city waiting 1-2 years.
The land value would be twice the price of building the house.
Would I be able to get equity release on this?.


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## Jonathan.OB (17 Apr 2008)

Your post is confusing.   "Before they changed there mind I have bought an apartment in city waiting 1-2 years."  ?  Equity release against a site? - No.


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## Galway5 (17 Apr 2008)

Thanks guys for that. Very helpful. 

Only in the process of looking at design of house etc. now, so won't be happening overnight. But as you say Oriel want to get it moving before John Gormally gets stuck into it. 

It's probably a different post, but regarding the "housing need" how does this work. I have heard of people that are not from certain areas not being able to build on sites they have purchased, does that sound correct?

Thanks.


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## Oriel27 (17 Apr 2008)

Galway, yes there is some truth in that al right. Yee see, each of the county councils work a different way to each other. this is true. you would think they are all the same but they are certainly not. There is rule were only people from the area could build in that area.. a farmers son could build there... there is another rule were ye have to prove that ye will be working close by so to get the right to build there.. there is another rule were farmers are only aloud to use one site per farm etc. Again it depends on the county. The republic is a bit like a federation. each county applies there own rules. I know in Monaghan and Cavan ye can build were ye like. In county Meath i have heard its difficult enough. 
I heard just the other day, that Gormley boy wants to take in a rule so that you cant be any less than 500m's from the nearest house. How is that going to work!! sure thats nearly a half a mile. See just across the border, there is no building  allowed. There idea is to have everyone living on towns or hamlets.... it does make economic sence regarding services etc. they did relax the law since the formation of stormount recently, but they still prefer people to live in hamlets...


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