So, you are thinking of building your own house in Ireland.
It may seem overwhelming and confusing to know how and where to begin the process.
Unlike a standard mortgage, self-build mortgages are draw down in stage payments. These payments are spread over up to 18 months depending on the length of the build period.
The process can take a year, but it depends on planning permission, especially if there are any objections.
Properties that are not traditionally shaped buildings, for example, very modern in design compared to other buildings around them, may take longer.
Self Build Mortgages Ireland: Rise in Popularity
According to Astrid Madsen, editor of Self Build Ireland, a magazine, annual figures show 5,000 new builds in the Republic and a further 2,000 in Northern Ireland. This indicates that there is still a strong interest in new build homes.
Not sure where to start? Don’t worry, we have outlined the major steps that you will need to take below.
Payment Stages
There can be up to 6 draw down stage payments:
- Site Acquisition
- Foundation
- Floor
- Roof
- Habitable and
- Certificate of Compliance
Self Build Mortgages Ireland Application Steps
-
Get Planning Permission for Your Site
First, apply for planning permission by filling in a planning application form and submitting it along with all required documents to your local authority.
The local planning authority typically decides on a planning application within 8 weeks of receiving the application.
The application can be delayed however if the local authority requires more information, or the decision is appealed.
Note: Before you apply for planning permission, you must put up a site notice. The notice must be in place for at least five weeks from the date of receipt of the planning application.
-
Approach a Mortgage Broker / Bank
Mortgage123 will first ask you what your budget is. What can you afford?
It is important to note that you can use a gift letter and the Help to Buy Scheme together to fund your deposit.
The broker will then ask if the site is a gift , or do you plan to use the mortgage to purchase the site also.
-
Start Sketching
Release your inner artist.
Design a rough house plan. This does not have to be Picasso level but rather a rough design of what you envision your house to look like. For example:
- A two-story house
- A bungalow
- A balcony or
- A big staircase
-
Go to an Engineer or Architect
Some people use both or some may use just one. You need to have at least one however, as they will provide an estimate of how much the house will cost roughly.
The engineer/architect will then draw up a sketch for you based on the requirements and designs you have requested.
They will then give you a price estimate of what the house may cost.
-
Get Your Approval in Principle
Now that you have received your estimate from an engineer or an architect, you will send confirmation to your mortgage broker.
You will then receive your Approval in Principle for the maximum estimate amount that was given by the architect / engineer.
This amount can be reduced or increased as you go along in the mortgage drawdown stages for example if it was underestimated or overestimated in price.
-
Draw Down the Mortgage and Start the Build
Self build mortgages are released differently to a mortgage where there is a property already in place. Hence, it is important to understand that funds release only after a certain stage in the build is completed. Therefore, you will need to be always one step ahead with your funds.
Another important consideration before you start the build is to decide if you will go for direct labour or employ a reputable construction company. There are pros and cons to both approaches that we have described in our Self Build Page here.
A final valuation must be completed before your last stage payment to ensure the property is holding the value that was initially set up.
Most Common Self Build Mistakes
-
Not Getting Full Planning Permission Beforehand
Planning permission may not seem like a fun activity to complete, but it is necessary.
We strongly advise that you wait until you get all clear from your local authority before you start any work on your site.
-
Not Knowing Your Budget
Self builds can be unpredictable but that does not mean you should not plan a rough budget of total expenses. Without a budget, it can be easy to overspend. Know your means. Location alone is a huge factor. Know what your spending is VS the value of the property on completion.
It is important to also note that you can only avail of the Help to Buy Scheme with a self-build if the value of completion is a minimum of 70% of the amount borrowed. If you were not aware of this, you could easily miss out on €30,000.
-
Not Communicating with Your Mortgage Broker
Your broker is there to help you.
Don’t forget to update them to make sure they are up to date with any progress or any setbacks you may have.
At Mortgage123, we have extensive experience with self-builders, so we can offer advice and help you stick to your plan. We are here to help, so don’t be afraid to call us for a chat.
-
Not Setting a Timeline
If you are looking to start the self-building journey, then chances are, you want the house as soon as possible. That’s understandable.
If you design a realistic timeline, then that makes move in day seem like an achievable goal. If you do not make a timeline, then you run the risk of delaying each stage which will cause unnecessary stress and may tempt you to cut corners which can be risky.
We would advise you to complete your research and get familiar with each trade and then design your timeline of the build based off average completion times.
There are some great Facebook groups and Instagram profiles for self-builders which have timelines from other people in similar positions.
Self-Build Mortgage Ireland Myths
-
I Need to Be Rich or Have Inherited Land to Get a Self-Build Mortgage
There is this idea that you need to have a lot of money, be a farmer or inherited land to get a self-build mortgage in Ireland.
While these may indeed help you get started, they are not all a necessity. Yes, it does help to have inherited land, as lenders will only lend up to 90% of the cost of the site.
Also, having a large sum of savings does help, but you can also use a gift letter from a blood relative and use the Help to Buy Scheme together to get mortgage approval.
Start your self-build journey today then don’t hesitate to call our brokers on (061) 599 990 or Apply Online.