Self Build getting around Banks €100/squr ft policy

TippNorth

Hi All,

I'm looking for some guidance!

I'm looking into rebuilding an old house and extending it and I'm curently trying to establish a budget to see what we can build.

So I own the site and we'd like the total floor area of the finished house to be 3000ft approx. The existing building is around 1500 square foot and a considerable amount of it will be reusable. Having spoken to the bank (AIB) they base their mortgage rate for self builds as €100 per sqft. So in their eyes this size building would need a mortgage of 300k. Now I don't believe this will be the case as we will have savings on the build from the fact that a large part of existing building will be maintained & renovated so it won't be as expensive as a full new build. Additionally we wont get approval for 300k of a mortgage. We are hoping to get 230 -240 of a mortgage and have savings of 40 -50 k to add to that so max amount of funds will be 270 -280k.

How do people get around this problem? We will most like have a fixed price contract with a builder and expect quotes to be in the 250 -270k bracket. So do the banks accept justification from the architect etc to prove that a 3000 sq ft house can be built for this amount of money ?

Really appreciate help for those who've been through this before

sydthebeat

tender drawings and specification, bill of quantities and at least 3 tender quotations......

then the bank will see the true cost of the build.

TippNorth

Thanks Syd,

I suppose at this point in time I'm trying to establish a budget and I'm only starting the planning process. I'm hoping to apply for mortgage approval in principal from the bank first to get an idea of how much they will lend us. Assuming I get 230-240 from the bank and with our savings of 40k giving me 270-280k of a budget is it achievable to build a 3000sqft house in your experience? We're willing to leave less critical areas such as certain elements of decorating, landscaping etc to a later date at this stage so that we can get the key elements such as size and type of house we want within our budget .

I suppose my main fear is that we'll go though the cost of planning, architects fees and detailed design etc and will go back to the bank for full mortgage approval for our 3000sqft house with a quote of say 270k from a builder and they'll refuse us as it's below the €100/sqft threshold!

sydthebeat

TippNorth wrote: »

Thanks Syd,

I suppose at this point in time I'm trying to establish a budget and I'm only starting the planning process. I'm hoping to apply for mortgage approval in principal from the bank first to get an idea of how much they will lend us. Assuming I get 230-240 from the bank and with our savings of 40k giving me 270-280k of a budget is it achievable to build a 3000sqft house in your experience? We're willing to leave less critical areas such as certain elements of decorating, landscaping etc to a later date at this stage so that we can get the key elements such as size and type of house we want within our budget .

I suppose my main fear is that we'll go though the cost of planning, architects fees and detailed design etc and will go back to the bank for full mortgage approval for our 3000sqft house with a quote of say 270k from a builder and they'll refuse us as it's below the €100/sqft threshold!

if you go to them with planning, specifications, tender quotations, its extremely hard for them to say "no it will actually cost this".

if you go to them now with none of the above its very easy for them to say "no its going to cost this".

We're willing to leave less critical areas such as certain elements of decorating, landscaping etc to a later date at this stage so that we can get the key elements such as size and type of house we want within our budget

.

this is also something that a bank will frown upon.
Imagine they have to repossess and find half finished rooms and planning conditions not complied with, it makes a future sale a mess.

no one at this stage can tell you what your build will come in at.
you need planning, you need invasive investigative work on the existing build and you need the proposed works priced up, with a decent contingency (which is always required when dealing with existing old buildings).

basically.... get your ducks in a row first.

BryanF

just to add to Syds point re landscaping, finishes etc.

its becoming very difficult for certifers to sign off planning compliance with out all conditions met, so landscaping will need to be completed. similarly the interpretation of 'practical completion' is tightening up as the liability on the certifier forces them to require the majority (if not all) finishes to be complete.

further to this the banks have become notorious for delaying the final payment until the above is sorted, so you could find yourself in a bind where the builder wont finish until he's paid (up to date) and the bank wont release the final % of funds to allow this to happen


regarding your 100sqft issue with the bank - you could go to them with a QS letter outlining a +/-20% figure based on pre-planning drawings, but ultimately they require 3 detailed tender quotes as outlined by Syd above

galwaytt

TippNorth wrote: »

Having spoken to the bank (AIB) they base their mortgage rate for self builds as €100 per sqft. So in their eyes this size building would need a mortgage of 300k.

I don't know where AIB are getting €100/ft from - even the SCSI website which banks - should - be familiar with is working off around €135/sq ft.

That said, for your build it's neither a rebuild nor new, so you're going to have to get proper quotes for the real numbers.

kkelliher

get a detailed cost plan done by a quantity surveyor and submit it to the bank. we do it on a regular basis and we have never had any issue from a bank.

you need to cost your actual build. if you go to a bank with global sizes and high level ball park items they will use similar ball park figures and that appears to be where you are.

the actual cost of complete build in general is well in excess of 100 sq ft as a bank basis the cost on a finished product for their security.

scs figures have nothing to do with building a new home. they are insurance rebuild values for multipal estate type houses and include demolition and professional fees.