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Finance for a rebuild

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  • 28-09-2016 1:35pm
    #1
    Shedite27
    Registered Users Posts: 9,397 ✭✭✭


    We have 2 houses, one the family home (House A), one a house left by a deceased elderly relative (House B). We only need 1.

    House B needs to be knocked and rebuilt, but has a great location. We reckon that selling House A would generate the funds to cover the rebuild cost.

    Unfortunately a mortgage is unlikely (the eventual owners are my folks, who are nearing retirement), so trying to figure out what type of financing options are available.

    Ideally, we'd get a €200k mortgage (plus €100k savings) to finance the rebuild of House B, then in a years time repay the €200k with the sale of House A. Has anyone any experience in doing anything like this?

    Realistically if it was a mortgage, we'd probably be looking about 60% LTV, and to repay in about a year or so. Are there any other finance options available? I'm guessing builders aren't going to do a "pay on completion" scenario.

    (and yes, I realize that the sale of House A could go tits up and we'd end up with a mortgage)


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    #2
    SarahMollie
    Closed Accounts Posts: 2,843 ✭✭✭SarahMollie


    Would you not consider selling house A and living in rented accomodation while B is developed?

    Banks like giving mortgages because of the amount of interest they can earn over 20-30 years, so I'm not sure what sort of finance they'd be interested in giving based on it being repaid so soon. Could mean a less than desirable interest rate, if you could get the loan in the first place.

    The cost of credit needs to be compared to the cost of simply renting while waiting for the new and improved house B to be ready.


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    #3
    Shedite27
    Registered Users Posts: 9,397 ✭✭✭Shedite27


    Definitely would be an option alright, and would be a method of ensuring that House A sells for a price we want.

    Yeah I can see why it'd be unfavourable from a banks perspective.


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