From planning and design, to working with builders and tradespeople, to getting your finances sorted, building your own home is a huge financial and emotional commitment but, if you get it right can be very rewarding.

With the right advice and support at each stage of the process, building your own home is achievable, especially if you organise your finance with advice from the experts.

With our expert mortgage advisors, MortgageOne can help you get a great deal on your mortgage for self build and ensure that you get advice and support on your mortgage application at each step of the self build mortgage process.

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How does a self build mortgage differ from a standard mortgage?

A self build mortgage works slightly differently to a standard mortgage as it is usually drawn down in up to six stages, as work is completed in the home rather than being released all at once like a standard mortgage.

Your lender will also require information from you about the build, and will require each stage of the build to be certified as finds are released.

Available self build mortgage options

When getting a mortgage for a self build home, you have 4 available options in Ireland.

A fixed rate self build mortgage has a fixed mortgage interest rate for a set period of time. This type of mortgage allows you to plan your finances as your payments are fixed.

Variable rate self build mortgages have a mortgage interest rate that can change. variable rate mortgages may be lower than fixed rate but your repayments will change.

Green self build mortgages usually have a discounted fixed interest rate and are available if you are building an energy efficient home. Your home’s Building Energy Rating (BER) will determine your eligibility for a green self build mortgage.

A self build cashback mortgage will give you a percentage of the mortgage (e.g. 2%) as cash when you draw down the mortgage, this can be useful to put towards legal fees or expenses for your new home but check the terms carefully as you may find that it is expensive in the long term and adds to the total cost of your mortgage.

How much can I borrow?

As a general rule first time buyers can borrow 4 times their salary, and second and subsequent time home buyers can borrow 3.5 times their salary.

However, there can be exceptions to this as lenders are allowed to offer exemptions, based on borrowing capacity or deposit but not both, to some purchasers in limited circumstances

Your lender will also consider the affordability of your mortgage and will need to know that you can comfortably afford your monthly repayments along with your other bills and outgoings.

Lenders will also need to see that you have sufficient savings to cover additional costs and unexpected expenses that may arise during your build and professional fees. You will also need to have funds to cover stamp duty on your new self build home.

Use the MortgageOne mortgage calculator to see how much you could borrow based on your income and deposit.

Will I need a deposit for a self build ?

Central Bank lending rules dictate that you will need to have 10% of your home’s purchase price as a deposit if you are a first, second or subsequent purchaser, or a maximum loan to value (LTV) of 90%.

The loan to value (LTV) in a self build home works slightly differently, as you may only borrow a maximum of 90% of your site’s cost or value plus the construction costs, or 90% of the completed home’s valuation, whichever is lower.

This can vary depending on the lender’s criteria, and the interest rate you are offered will also vary, depending on your LTV.

If you own your own site, you may be able to use the site as your deposit.

Applying for a self build mortgage

The process of applying for a self build mortgage is trickier than for a standard mortgage for a ready built house, and there are a few more stages in the process. There are usually 4-6 payment stages at different stages of the build.

Get your finances in order. Calculate how much you are likely to need to build your home and how much you will be eligible to borrow.

Use the MortgageOne mortgage calculator to estimate how much you are likely to be able to borrow.

When your deposit is in place, or you have your site, you can begin the mortgage application process.

Your lender may be able to give you an approval in principle, based in income and other information that you provide.

You will also need to consider the type and rate of self build mortgage you wish to choose at this stage.

Complete your application by providing your lender with documents and information on your self build such as:

  • Detailed costings for the build
  • Full planning permission
  • Initial valuation report from an approved Valuer
  • Builder’s/ Architect’s/ Surveyor’s initial report

You will be able to draw down your mortgage at various stages of your build to finance the build cost. Typically these will correspond to:

Floor level

The first stage includes site preparation and laying foundations. each stage will need to be certified by an official or assigned certifier and the funds requested by your solicitor.

Roof level

Building the shell or frame of the property. The second stage payment will be made by your lender once the stage is certified.

Finished

At this stage the plasterwork, plumbing, and electrical work is finished. The property is habitable at this stage. Another stage payment will be made at this point once the work is certified.

Post completion

Final Valuation and Certificate of Compliance should be completed at this stage. The final stage payment is released at this time (usually 10% of the loan).

Government supports available

There are several government schemes to help you build a home. The schemes relevant to building your own home are:

The Government’s help to buy scheme is available to first time purchasers or those who wish to build a once off home as a new construction.

The Help to Buy scheme gives a refund of income tax and DIRT tax you have paid in the four years prior to building your home.

This is a government backed mortgage for first time buyer and fresh start applicants.

Loans are offered at reduced interest rates, with a fixed rate for the lifetime of the loan, and can be used to build a home, there are lending criteria based on income.

This is a shared equity scheme, which means that the government or participating lenders pay up to 30% of the cost of your home in return for owning a share of your home.

The scheme is available for those who build their own homes on a site that they own or are buying.

It is available to first time buyers or fresh start applicants who want to build their own home but there are conditions.

Under this scheme, you can buy a serviced site from your local authority to build your own home on. Sites are available in towns and villages at a reduced rate of up to €30,000 below the market value.

You must apply for planning permission to build on your site by three months and start building on the site by 12 months.

Self build insurance

Specific self build insurance will protect your site and new build from fire, storms and flooding, protect you for theft as well as provide liability cover for contractors working on the site. This is an essential form of protection to avoid the expense of unexpected perils which could seriously derail your self build.

Your lender will also require you to have mortgage protection insurance on drawing down your mortgage. Mortgage protection will pay the balance your mortgage if you die before you have repaid it in full, providing your loved ones with financial security.

Buildings insurance will also be required by your lender, so that the structure of your new home is protected from damage caused by storms, fire, flooding, and subsidence.

MortgageOne

Use our mortgage calculator to see how much you could borrow, based on your income and deposit, to start building your dream home. You can compare mortgage quotes and mortgage rates from the main lenders operating on the Irish market and see how much you could save.

Our mortgage advisors have insight and experience in self build mortgages and we can support and advise you throughout the self build process.

When you work with MortgageOne mortgage broker, you fill out one application for multiple lenders and benefit from our insight and expertise so that you can get your mortgage approval in place with the minimum of hassle and at a great rate.

MortgageOne can also get you a great rate on your mortgage protection cover and home insurance to protect your new self build property.

Complete our online assessment, and you can apply for your self build mortgage online or speak to a mortgage advisor and start the process today.