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Self Build Mortgage Ireland 2022 – Ultimate Guide

A self build mortgage Ireland can help you get started on the exciting process of building your own home.

Self Build Mortgage Ireland

In this article we go over what a self mortgage Ireland is and tell you everything you need to know before applying for one.

  1. What is a Self Build Mortgage Ireland?
  2. What you need to know before applying for a Self Build Mortgage Ireland
  3. How much can I borrow for my Self Build Mortgage Ireland?
  4. What do I need before applying for a Self Build Mortgage Ireland?
  5. How much of a deposit do I need for my Self Build Mortgage Ireland?
  6. How do I get started on my Self Build Mortgage Ireland Application?
  7. Advantages and Disadvantages of a Self Build Mortgage Ireland
  8. Summary, Self Build Mortgage Ireland

What is a Self Build Mortgage Ireland?

A self-build mortgage Ireland is a mortgage for people building their own home.

Building your own home can be a long and difficult process, but can be very rewarding in the long-run. Many chose to build their own home as it can turn out to be cheaper than already built homes on the market.

What you need to know before applying for a Self Build Mortgage Ireland

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One of the key differences between a self build mortgage and your standard mortgage is that the funds for a self build mortgage are given out in stages of your home being built.

As your funds are in stages, you only have to pay interest on the funds you have already drawn down, not the whole amount of the mortgage.

How much can I borrow for my Self Build Mortgage Ireland?

Generally, lenders will allow you to borrow 3.5 times your gross income for your self-build.

You need 10% of the total build and site cost for a deposit.

It’s also important you have around 10% of the value of your build saved on top of your deposit to cover any unforeseen costs. The lenders will look for proof of this contingency fund.

What do I need before applying for a Self Build Mortgage Ireland?

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Before applying for a self build mortgage Ireland, you will need to;

  1. Find a site to build your property
  2. Get planning permission for both;
  • The property itself
  • Construction of the property

Note that lenders will not give you the funds until you’ve obtained planning permission. They will also not help fund the cost of getting planning permission.

You can find more information on how to get planning permission on the Citizens Information Website here.

How much of a deposit do I need for my Self Build Mortgage Ireland?

First time buyers need a 10% deposit, with a maximum Loan to Value (LTV) of 90%.

  • Loan to Value: Value of your mortgage compared to the value of your build.

This LTV is based on the cost of the site along with the cost of construction, or 90% of the site value once it has been completed, whichever is lower.

Second time buyers need a 20% deposit, with a maximum LTV of 80%.

However, many lenders allow you to use the site as a deposit if you already own it.

If you are gifted the site, this can count toward your deposit, so for example if your site is worth over 10% of the combined build and site cost, then you can borrow a 100% for your build.

How do I get started on my Self Build Mortgage Ireland Application?

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Once you have a site and planning permission, you can get started on your self build mortgage application.

Only certain lenders offer self build mortgages, Haven, Permanent TSB and Bank of Ireland.

Rates are the same as for first time buyers or movers, check out the comparison below for all the lenders who currently offer self builds.

Average Mortgage Rate (APRC) at LTV <50%3 Yr4 Yr5 Yr7 Yr
Haven Mortgages3.20%3.00%*3.20%3.20%
AIB Mortgage2.82%2.92%2.75%*3.13%
EBS Mortgage3.70%3.40%*3.60%
Permanent TSB Mortgage3.58%3.49%3.45%3.77%
Bank of Ireland Mortgage3.70%3.30%3.6%
*Green Rate, Building Energy Rating B3+

You should talk to a mortgage broker to help you choose which lender is best for your particular build.

You will need the following documents to get started;

  • Evidence of contribution
  • Full Planning permission
  • Map of site
  • Estimates of building plans and costs
  • Fixed Price Contract

Once you have these documents in order, you will get an initial offer from a lender.

After your self build mortgage Ireland is approved, you will begin to receive funds that correspond with the stages of your property being built.

There are generally 4-6 stages depending on your build, which can include;

  1. Buying the site
  2. Substructure
  3. Completion of roof
  4. Completion of floor
  5. First and Second fix
  6. Certified completion

Depending the length of your building period, these stage payments are generally spread out over 18 months.

Advantages and Disadvantages of a Self Build Mortgage Ireland

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Advantages

  • Government Incentives
    • Self Builds are included in the Help to Buy scheme offered by the Irish Government. If you are a first time buyer and plan on building your home by December 2022, you may be eligible to benefit from this scheme.
    • You can read more about the Governments Help to Buy Scheme here.
    • Unfortunately the new First Home Equity scheme is not currently available for self builds.
  • Lower costs
    • Usually building your own home will turn out to be cheaper in the long run, as it can cost less than many already built homes on the market.

Disadvantages

  • Time and effort required
    • Building your home takes much more time and effort than finding an already built home.
    • It requires a serious amount of planning and can be a very long process.
    • You have to plan out all aspects of the build such as finding an architect, getting planning permission, finding a site, finding a mortgage that best suits you, etc.
  • Risks attached
    • There are many risks that come with building your own home, such as construction taking longer than expected or going over budget.

In a Nutshell, Self Build Mortgage Ireland

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In short, the process of building your own home can be exciting and very rewarding in the long run, with self build mortgages there to help you get started on your self build journey.

However it’s important to consider the risks attached with building your own home, and make sure you carefully plan your expenses to avoid going over budget.

We recommend speaking to a mortgage advisor before starting your self build journey, so you can plan ahead and make this process as stress-free as possible.

Next Steps

Start your application online with moneysherpa here

You can book a free, no obligation video chat with the mortgage sherpa team here.

Read more about the mortgage sherpa team here.

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