A self-build mortgage is a mortgage for people who want to build their own home exactly how they want it and where they want it. There are many similarities between self-build mortgages and regular mortgages, but there are some slight differences to consider. The application process may be different for everyone, which is why we will be with you every step of the way to get your self-build mortgage approved.
What is the first step to be approved?
If you are a first-time buyer, you will typically need a deposit of a minimum of 10% of the final value of the house, but if you have the site bought, this can be used as your deposit. For second-time buyers, the deposit would typically be around 20%. You also only pay interest on the amount you have drawn down, not the entire loan amount. You can borrow 3.5 times your salary or your combined salary if you are buying with your partner. Permanent and secure employment will be necessary in most cases. Contract workers can still be considered as every situation is different.
Documentation Needed
- Final grant or planning permission
- Map of the site
- Professional indemnity insurance
- Initial report from architect/engineer
- Building plan and costs
- Standard financial information – employment info, etc.
Normally, the money lent is released in one go, but for self-build mortgages, the money is drawn down in each stage of the build.
There are typically up to 6 stages which are:
- Buying or inheriting the site
- Prepare the site and its foundations
- Build floor level
- Build roof level
- Finish the property to ensure that it is liveable (wiring, plumbing, etc.)
- Receive certificate of compliance and have final evaluation complete
Each stage must be certified by an official certifier before payment is released. A solicitor will typically request this on your behalf.
You will need to talk to an architect or building engineer in the area that you want to build to establish the approximate site-building cost within your budget. Budgeting for overruns of around 15% may be necessary. Banks will not issue any funding until planning permission is confirmed, and they will not fund the cost of planning permission.
Insurance
Insurance is another key factor to consider. Here are some of the insurances you will need:
- Self-Build Insurance- Protects from damage while being built (flood, theft, fire, etc.)
- Mortgage Protection
- Buildings Insurance – covers the actual physical building such as the roof and walls.
There may be other insurances you need but the above are compulsory with a self-build mortgage.
Other costs may be involved and there are help to buy schemes available if you meet certain criteria. Also, only a selection of banks will provide self-build mortgages.
Talk to our mortgage specialist for more information – denis@oaktreefinancial.ie. You can also call us on 025-30588 or book a complimentary chat here.
Denis has over 15 years experience in securing mortgages for clients. Denis works with clients to help them prepare for a successful mortgage application and goes beyond the call of duty to ensure that all clients can purchase/buy their dream home.
