Self Build mortgage - 3.5 times salary exceptions

kormak

In the arduous process of undertaking a self build using a building contractor.
Some months ago we approached a particular broker in a bank about getting a mortgage for the build. I already have the site in my name, which he advised meant we didn't need a deposit for. We provided our joint salary at initial meetings and were led to believe that he could potentially secure anywhere from 3.8 - 4.1 times our salary, which is what we need to get this house built. Jumped through a million hoops and got all documentation in, only to be told 'no sorry! it can only be 3.5 times your salary'.
Has anyone undertaking a self build managed to get a mortgage for more than this? is there any way the land can be used to bump this up a bit?
the mortgage on offer means we will have to drastically change the house to a tune of €55,000 and may not be even possible.
Would appreciate any constructive advise on this.

dellas1979

Well, my (hopefully) build is at planning at the moment. The site isnt in my name (yet). Need to figure if 1. can get planning and 2. can get the money before site is transferred.

As you know, noone tells you how to build a house. Id no idea. So I went to the bank first to just ask how much I could borrow. And I then found an architect that would design a house for that amount. I really had to stress to him that I could only get 3.5 times salary...there isnt any more money in the well. As you know, youve to fund everything yourself (architects, percolation, ESB etc etc).

I've been asking around every bank directly (no broker) and every bank is 3.5 times.

In the worst case, could you get architect to redesign to the amount you can borrow?

PS: Just to put it in perspective in another way, there is a reason they wont give you what you want. I.e., they are looking at what you can afford. Mortgage repayments shouldnt be more than 35% your salary.

kormak

When the house is built it will be worth potentially a 100 to 150k more to the bank. This is my argument. it's not so much about the 3.5 times salary and more than expected loan-to-value when completed.

dellas1979

Yes-I understand where you are coming from.

But, the banks are more interested (in the present) your ability to pay back the mortgage.

And 3.5 times salary is what they are offering (to everyone!). They want you to be able to pay your mortgage and not make it higher risk to them or yourself.

I had to shrink the size of my plans, based on I did not want a huge mortgage and the 3.5 times. Still 3 bed house, with some clever design.

If they wont give you any more, what else is the alternative? Get thick at them? This is the reality in 2017.

Trish56

All the lenders are allowed to make exceptions to the loan to income and allow up to 4.5 times income on 20% of their mortgage applications. You must of course pass the affordability, net disposable income and repayment assessment to qualify.

OP have you taken into consideration the Help to Buy Scheme where you will get a grant of 5% of the value of the property on completion.

For self build with one lender you can add in professional fees and other costs to the overall project costs.

Your broker should explain to you why you do not qualify for an exception on loan to income.