Mortgage Minefield

boysinblack

I'm currently looking to self build and have everything in order, savings, very good LTV as I own the site, first time buyer etc..

However I'm really struggling to figure which bank is best for me to go with. Non of them make it easy to figure out what rates are applicable for me and I am really struggling to figure out if I should get a fixed or variable rate mortgagee!

Can any help? Or has anyone been in a similar situation?

gogo

You can work out the rate yourself: if your site is worth 50k and the build is costing 150k, at a minimum your house should be worth, 200k upon completion. Therefore take the percentage of 150k (or what you are borrowing) against what it should be worth (say 200k) so in this example it's 75% Loan to value. The lower the loan to value the better rate you should be able to get.
Fixed rates are just that Fixed... if you fix for two years your rate won't go up or down for two years. It stays the same. The downside is, if you want to over pay or clear your mortgage, you are penalised as you are in a fixed rate term.
Variable rates are basically the opposite, the rate can go up or down, you can over pay or repay early without penalty.
On average variable rates are slightly higher at the moment than fixed, but with a new build a fixed rate can ease you into the repayments as you'll where you stand each month, without fear your rate will rise. The downside is, a variable rate can also fall, and you could have fixed in at a higher rate which you'll will be tied in to. If you do choose a variable rate you can fix it at anytime, if you chose a fixed rate, you can move to a variable rate at the end of the fixed term. Everyone is different, some people will choose a variable rate despite it being higher as they like to know they have flexibility of overpaying etc. Other will go for the fixed regardless as they have no intention of over paying or clearing early and they are happy to avail of a better rate. Hope this helps

Trish56

I find AIB or Haven if going through a Broker the best for self builds. You will need to submit detailed costings (they have a standard form) completed by your supervising Architect/Engineer when submitting your application together with a copy of planning permission. They will only accept min of €85 per sq. ft. for self builds outside of Dublin and add on 10% for cost overruns and you can also include professional fees in the project price. As you own the site you should be able to borrow up to 100% of the cost of construction subject to valuation. You can draw down the mortgage in stages on submitting an interim stage payment certificate from your supervising Architect/Engineer.

Example of building a 2000sq. ft. property by direct labour

2000 @ €85 = 170,000
Plus 10% = 17,000
Professional fees = 10,000
Value of Site = 50,000
Total Project cost /value = 247,000 (subject to valuation)
Based on the above figures you should be able to borrow 197k over a term of up to age 65 subject to income of course.

Regarding rates AIB/Haven rates are very competitive and you can also pay interest only while building up to a max of 1 year. AIB/Haven are the only lender that passed on the ECB variable rate reductions, hence their variable rate are from 2.75% to 3.15% depending on the loan to value. Your loan to value should be under 80% so 2.95% would be applicable. You can also do a split mortgage of say 100k variable and balance fixed. Rates are not expected to increase here until at least 2019 and AIB/Haven offer the same fixed and variable rates to their new and existing customers unlike the other lenders.

Hope the above helps and best of luck.

boysinblack

Thanks a million for the help guys!