Best Mortgage Option for Build to Sell?

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fmmc

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Hello

Myself and a friend are about to embark on a first time, self build to sell project. We have tentatively purchased two sites to build two houses and then promptly offer them for sale. I'd appreciate if anyone could advise the best or most cost efficient way of financing this project. We do not have significant amounts of capital available for a major downpayment or deposit. Thanks in advance...fintan.
 
Interest only I would have thought. Your interest is a business expense.

If cashflow is a problem build one house at a time

Also require stage payments to finance the build...is subsidise your project and do not start building until you sell one off the plans.

Be careful, there are areas with stacks of these on the market which are resolutely refusing to shift, I am thinking of parts of east and north Galway.

Price it to sell because nobody loses money taking a profit.
 
Thanks 2Pack. I should have clarified a few items in the first post. We are not set up as a company and will need to subcontract out all aspects of the building process. Are there any benefits to creating a company before embarking on the project? We are considering building in the Monaghan area.
 
I agree that you should go interest only and one house first if possible. Regarding stage payments. It is not easy to get stage payments because the buyer does not have to make the payments until you have the Floor Area Cert and they tend to withold them until late in the build. You can get up to a max of 15% deposit on signing the contracts and this will help.
 
Have you got tax advice on trading the houses?
Revenue will want income tax rather than capital gains?
Check with your accountant......
 
markowitzman said:
Have you got tax advice on trading the houses?
Revenue will want income tax rather than capital gains?
Check with your accountant......
Click to expand...
Developing has a special income tax rate of 20%. It is not CGT and you can not offset CGT losses against it but it is just at the same rate.
 
Bank of Scotand Ireland do this type of thing. Ive submitted an application to build a corner site to existing house south dublin. Ive got approval to build and sell whereby I will pay nothing for 2 years while I build the new house and do a full repayment of capital and interest when I sell. You will need seperate title ( first call to them) and planning permission. Interest at premium on IBR.
 
I am in the same position in that I purchased a site a couple of years ago and have just applied for planning. I have contacted a number of lenders including BOS but nobody seems to give even provisional approval for loan until planning ,builder and other support services in place. I have a covenant on the land which requires that it be built on within the next year and a half so am anxious to get moving ASAP. Anyone any suggestions on a lender that might give provisional approval
 
Some useful information here on self build, and funding as well.
[broken link removed]
 
Madilla said:
I am in the same position in that I purchased a site a couple of years ago and have just applied for planning. I have contacted a number of lenders including BOS but nobody seems to give even provisional approval for loan until planning ,builder and other support services in place. I have a covenant on the land which requires that it be built on within the next year and a half so am anxious to get moving ASAP. Anyone any suggestions on a lender that might give provisional approval
Click to expand...
You can always get an investment partner if you can not find finance.
 
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