there are obvious planning issues.....
once a garage is not used as a garage, then planning permission is required for change of use.... thats something to remember, even if you decide to 'fire ahead anyway'... also, the garage should go back to use as a garage after youve completed your dwelling.
secondly, you should build the garage to something close to minimum habitable standards.. that being:
1. adequate background and rapid ventilation
2. adequate sanitary facilities
3. adequate heating and plumbing system
4. adequate insulation standards
what you are planning to do is possible and is done on the QT quite frequently.....
but secman makes a valid point...
you could purchase a suitable mobile home for around 6-8K and sell a year later at a 1 - 1.5K depreciation.
the cost increases in building a garage (assuming its around 500 sq ft) from basic standard to minimum habitable standard could be in the region of 10k... and do you really need, on a long term basis, a garage built to habitable standard??
do the math.....