Self-Build Mortgage Guide
Building your own home can be an exciting yet complex endeavor, especially when it comes to financing. In Ireland, self-build mortgages are available to help individuals fund the construction of their own homes. Here is a general guide on how self-build mortgages work in Ireland:
What is a Self-Build Mortgage?
A self-build mortgage is a type of loan specifically designed for individuals who plan to build their own homes. Unlike traditional mortgages where funds are released all at once upon purchase, self-build mortgages release funds in stages as the construction progresses.
What documents are required for a Self-Build Mortgage?
Along with the standard documentation required for a mortgage (see our First-Time Buyers insight post) all the lenders will require the following:
- A copy of the Planning Permission
- A full list of costings for the proposed works
- Completed stage payment certificates from your Architect/Engineer
- Professional Indemnity insurance from the Architect/Engineer
- A copy of the Ordinance Survey Map
How much can I borrow for a Self-Build Mortgage?
Some lenders will allow an applicant to borrow up to 100% of the cost of construction. The maximum loan to value will be 90% of the value in repair figure (value of the property when the works have been completed).
What deposit is required for a Self-Build Mortgage?
As a contingency all applicants must have at least 10% of the cost of the works as a deposit to allow for any overspend on the project.
What schemes are available for Self-Build Mortgages?
The Help to Buy Scheme is available for all self-build mortgages. The Help to Buy will allow you claim a maximum relief of €30,000 or 10% of the property value once completed. If you own a site, please be aware that the minimum loan to value of the property when complete must be 70% to qualify for the Help to Buy Scheme.
The First Home Scheme (FHS) is another scheme that will allow applicants to bridge the gap if they are short on funding. You may qualify for funding of up to 30% of the build cost of your home. The Help to Buy (HTB) scheme is available for self build homes. If you are availing of the HTB the maximum amount you may be eligible for from the FHS will be 20% of the build cost.
What are the additional costs associated with a Self- Build Mortgage?
- Planning Permission fees
- Architect/Engineer fees
- Utility Connections charges
- Solicitor Fees
- Valuation Fee
How are the funds issued on a Self-Build Mortgage?
The funds are issued in stages. The Architect/Engineer will complete a stage payment certificate confirming what works have been completed to date and the relevant funds will then be issued. You will only pay interest on the funds you have drawn down and not the total mortgage amount.
Once all the works are complete there is usually a holdback of 10% of the costs of the works. A final valuation will be required confirming all the works have been completed before the remaining funds can be released.
Next Steps?
Contact Park Financial today for a free consultation to discuss your options about building your dream home. Click HERE to make an enquiry.
