Hi All, I know most of you must think I’m crazy (the rest are probably off) but my wife and I bought a house (contracts signed today).
We took the plunge after renting quite happily for the past 17 years, we’ve saved up to 110% of the values of the house we bought (no mistake there) but the house we bought is well below market value (Dublin) and needs demolition and rebuild of a 40 years odd extension.
We’re about to take a small mortgage to do up the place and extension and we want to have some money put aside as we’re getting same rates in saving to those of the mortgage we’re about to take.
The question is, since the just announced banks restructuring, should I proceed with PTSB (they want the house valued tomorrow as they wouldn’t except the same crowd who did it for BOI as they’re not on their panel) or should I go with BOI (already have approval with the ending some conditions they’ve imposed).
Do out a summary table of the pros and cons of at least 3 providers.
Compare different things, such as
your ability to fix at a good rate for a good period?
what is the minimum duration of mortgage that you can get?
Can you set it up at 7 years and only that length to gain the maximum mortgage interest relief
Investigate penalties for exiting from variable to fixed or vice-versa
Investigate penalties for early pay off of the morgage.
Do the comparisons. Rate according to what you see and have facts as. Conisder hiring an independent mortgage broker to do the assessment for you (in his presence without allowing him to have to go and make phone calls! He either agrees it this way or tell him/her fuck off!)
Good list wii. A 40 year old extension would be worse than the original house seeing as build standards in 1970 were cack. I estimate €60 per sq ft to demolish and rebuild to a decent fit, more for marble/granite and atrium windows and shit. Thats around €700 per sq metre.
I advise a single contractor for the demolition and construction of new shell to plaster, they get plumbers to fit pipes and electricians to wire. The banks will believe that number if you have quotes for the job from 3 contractors. The banks will be in for around 33% of the net value of the resulting house at most anyway once that phase is finished. That Dermot Bannon guy with the RTE program has worked absolute wonders generally on budgets of €100k or less , watch his programs to see what can be done nowadays. I think he is great. I especially admired asub €100k gut and rebuild he did on a Killiney area house where the homeowner was in a wheelchair. I thought it was a simply fantastic job but of course his 10% was paid by RTÉ. This €60k job was astounding as well.
A contract like that is called “shell and core” or "wet trades only( blocks and plaster are wet and messy) " sometimes. Keep the extra 10% for “contingencies” and tell the bank it will remain on deposit with them while you build the extension and if not spent on the house by end 2012 it will be paid right off the mortgage…you can explain that you saved the cash for a Dublin house and are hardly gonna go mad spending/buying a BMW X5 each at this stage of your lives.
Homeowner manages second fix contractors which is visible plumbing and electrics and carpentry kitchen painting and tiling only, plus landscaping outside. Very manageable and you can live in the house during a lot of this phase if you have a fridge and a microwave and hot water.
There are no penalties for early mortgage pay offs with most banks. Be careful with mortgage life insurance which cn be very expensiveona rapid payoff mortgage as it is priced on term not reducing balance.
HTH, and enjoy it seeing as you paid Ca$h€€sh for it.
According to what both are saying, a month before the 2 years fixed are up (for example), I’ll be getting a letter to tell me that I’m coming out of fixed term and will be given options (?)
There should be no penalties (at least according to what they say and it seems by reading the terms of BOIs offer letter that Fixed is not worth breaking (I wouldn’t do that anyway), but paying off variable will have no penalties.
Thanks for the broker idea, I used one for the life assurance so no harm in using him for mortgage as well.