Applying for a mortgage

I have site and I am considering building a house on this site.

I am in the process of applying for planning permission but I have query in relation to the mortgage process.

Does anybody know if you can use the site as deposit for the mortgage?

I have visted a number of bank branches, but each representative stated that if I was to buy a home that they could only give me 90 - 92% of the price of the house for the mortgage and that I would have to make up the remaining 8 - 10% myself.

This could range between 10K - 20K, which is a lot to try and save for.

I just wondering if I build instead of buying a home that it will reduce the deposit I need.

You're very confused. You need to straighten out your thought processes before going any further.

1. If you want to just buy a house, you need to have savings. So if you want to buy a house for 100K, a Bank appears to be willing to lend you around 90K and therefore you need to have your own money of 10K. You would also need money for legal fees and basic furniture.

2. If you already own a site, then you are asking for a loan to build a property on that site. You have to be more specific with the bank when you ask how much the bank will lend you in these circumstances. You would need to have spoken to a builder or similar who can tell you the likely cost of building a house and then ask the bank if they will lend you that money. You already have the site and the bank will probably lend you a percentage of the cost of building the house, secured by way of a mortgage on the site, so you will still need savings.

mf

TCAMP01 said:

Does anybody know if you can use the site as deposit for the mortgage?

Click to expand...

If you are building you will not need a deposit but you will need savings to cover cost overruns.

The bank will lend 100% of the build costs but you will need around 10% of the build costs in savings to satisfy the bank that you could afford to finish the project if it ended up costing more than you expected.

www.moneybackmortgages.ie

I am aware that I need savings either way. I have savings but not as much as I would need to buy a house. Therefore, I just wanted to clarify if the deposit would be less or just the same amount if I decided to build on my site.

Thank you both for your advice. This was very helpful.