Self build mortgage deposit

km79

I am hoping someone can clear this up for me so I can relax for the weekend

For a self build mortgage do I need a deposit on top of owning the site?
I was under the impression the site would act as deposit and I could then get 100% of construction costs
But some of the info is contradictory to this

Also if a valuation is needed for site who does this as I will already own it but will have purchased it at a price which would reflect its worth without planning......

It will depend on the value of the site vs the required deposit. If the site value is 10% (or 20% if you aren’t a first time buyer) of the mortgage you need then it will be the deposit (though in reality you would be better to have some cash savings too).

As for the valuation, that’s done by a local auctioneer usually, preferably a friendly one who will give it a high value after you get planning thus increasing your “deposit”.

km79

Jessie Big Seal wrote: »

It will depend on the value of the site vs the required deposit. If the site value is 10% (or 20% if you aren’t a first time buyer) of the mortgage you need then it will be the deposit (though in reality you would be better to have some cash savings too).

As for the valuation, that’s done by a local auctioneer usually, preferably a friendly one who will give it a high value after you get planning thus increasing your “deposit”.

Thanks that is what I was hoping to hear ........
I will have a nice bit of cash savings if it goes like this ......

Tbh the last site to sell around here with FPP is around the figure we need it to be valued at anyways

May not be of interest but worth keeping in mind that with ulster bank anyway who I discussed this with, if you start work on the build before going for the mortgage that if you produce the receipts the value of the work done will also count towards the deposit. I haven’t spoken with BOI or AIB yet to see if they also do this as we defiantly plan to start building prior to applying for the mortgage in order to speed up the build.

Trish56

Yes the site value can go towards your deposit depending on valuation so it's possible to borrow 100% of the construction costs. The lender will require you to show evidence of repayment capacity so if your stressed repayments are €1750 - you then need to show that you have been either saving this amount or paying rent/savings over the last 6 months.

Be careful starting the build before applying for a mortgage, if you do its important to have a Supervising Architect /Engineer who has Professional Indemnity Insurance supervise the construction from the start. You should also open a separate account for the build so that when applying for the mortgage there is a trail for lodgments made from your current/savings account and payments out for materials/tradesmen. Get a receipt book and record all payments made in cash. Retain all receipts and statements from suppliers.

km79

Thanks for replies
Was into AIB this morning and they confirmed site can act as deposit and will be based on a valuation at the time which should be fine

revoke12

km79 wrote: »

Thanks for replies
Was into AIB this morning and they confirmed site can act as deposit and will be based on a valuation at the time which should be fine

Hi there may i ask did they require you to have any cash savings so as part of the deposit? Or did your site cover the deposit

Thanks.

km79

revoke12 wrote: »

Hi there may i ask did they require you to have any cash savings so as part of the deposit? Or did your site cover the deposit

Thanks.

Depends on site valuation .......Needs to be valued at 20% as non FTB
10% for FTB
Otherwise balanced in cash

revoke12

km79 wrote: »

Depends on site valuation .......Needs to be valued at 20% as non FTB
10% for FTB
Otherwise balanced in cash

Great thank you, In a similar situation myself so was looking for clarification.