Self Build - Mortgage

[joe316]

Hi all,

Wondering could you give me some advice, myself and my wife are planning on building a home in the next 2/3 years and I just wanted to explain our situaition.

My wife currently owns 50% of the home we are living in (with her brother inherited from her mother's passing), worth about 120k. We have saving of about 15k (planning to really step this up over the next while). I was hoping that the banks would use the collateral of our current home towards the mortgage. It will be sold when the house is built and will pay off a chunk of the mortgage straight away. I know that they wont count it completely but I was hoping that they would count it a bit.

The site costs would be around 60k and the house build between 230k and 250k.

My salary is 70k, she's currently on maternity leave at the moment but might go back to part time work in about 6/12 months (worth about 8/10k).

Thanks for any advice, will also go to a broker but just wanted to see if there was any opinion here.

 

[LDFerguson]

If I'm reading your query correctly, you don't need to use the current house as collateral. For a self-build project, banks will lend a percentage of the site cost (75%+) and a percentage of the build cost.

You will need savings and to be able to prove affordability. Stress-tested repayment on, say, €280,000 borrowed over 25 years would be €1,800 per month.

I'm assuming you're paying no rent at present. I'd suggest that you start saving €2,000 per month for the next year and then you should be ready to go. I'm assuming you have no other loans. If you have, clear them from savings and then get saving.