Looking to build - suggestions required for mortgage

[Voodoo]

Hi all,

hope someone can help with some issues that I am having and headaches I have.

Situation: currently living in a semi-detached dormer bungalow worth between €260-280k (presumably). We have about 160k left on the mortgage.

Vision: we would like to buy a site (about 3/4 or 1acre) and have seen one for 200k but I think we could probably negotiate lower than that. We have done some basic homework - spoken to friends, read sites like this etc. and we believe that the building costs could be kept to around 175-200k this giving us an overall requirement to come up with about 365k on average in total (assuming we get the site for between 150-175k).

Problem: We are unclear how the whole process of this works. Will a bank lend us money if we use our own house as collateral against any loan to buy the land and commence any work? We have two kids and would want to stay in our current house for as long as we could without having to sell. It would seem that we could get a mortgage for about 350k in total and I was wondering, with us only having 160k on our current mortgate, how we can go about trying to at least initially, get the money together for the site. We dont have a great deal of savings - just cleared credit cards and loans and will only have between 5-10k in savings. I would even be happy to purchase the land now and start building next year if we could even manage that - problem of course with that is, we will be paying for land that is giving us back nothing.

Anyway, I am sure this is a common dilemma for people but would appreciate any advise people might have.

 

[LDFerguson]

You can raise some of the monies for the site purchase secured against your current home and the balance (up to 75% of the site value) secured against the site itself. Then you can get a stage payment loan (a loan for the building released in stages as the construction work progresses) secured on the new house as it's being built.

The feasability of your plan will depend on your income and ability to get approval for the total amount needed.

 

[angela59]

Hi Voodoo,

Some banks will give you a loan for a site only if has planning permission already on it? Are you buying subject to PP or does it have outline planning? With regard to building you say that it will cost about E175,000 to E200,000 - is this builders finish or or turn key price? If it is the first option don't forget to factor in your kitchen, floors, tiles, painting, and landscaping, fencing - it can add up - so before you jump in make sure you've accounted for everything - there is a thread about prices for building.

 

[Voodoo]

Thanks guys.

So just to confirm, I wouldnt need to sell my home now in order to secure the money for the site or the monies to build the house, simply use my existing house as collateral for the site and then the site itself as collateral for the build, drawing down in stages the funds from the build according to how the builder would want it. Is that a correct assumption?

Angela, the 200k to build was the actual finish including kitchen, floors, tiles etc. It hadnt included fencing or landscaping, the latter of which I wouldnt be too concerned about initially. Would look, to get this done within the first 36months or so.