Make sure your dream home doesn't become a nightmare

All around the country there are people undertaking the task of planning and building their dream homes. Consumer advice columnist Gráinne McGuinness sets out some potential pitfalls.

 

There are many advantages to self-built properties, particularly the opportunity to design and build exactly the home you want for yourself and your family.

But self-build mortgages are more complex than standard home loans and applicants need to be prepared for the road ahead.

Unlike when you a buy a property, there is no clear single amount for the cost of a self-build.

Instead the figure you need is a combination of the cost of the site and building costs. Some Irish lenders will lend up to 92% of the overall cost, but loan approval is dependent on a number of factors.

If you have been gifted a site then you only have to be concerned with building costs, but if not, you need to factor in the price of the site and any costs associated with getting full planning permission.

Another decision to be made is whether you choose the Direct Build or Fixed Price Contract option. With a Fixed Price Contract you engage a builder or contractor to build the house for you.

They deal with subcontractors, purchasing materials and certifying each stage of building as it is completed. Direct Build means you undertake to do all that work yourself. Generally Direct Build will work out cheaper in the long run, but you also have to consider the amount of stress and hassle involved.

If you are working full-time will you have enough time and energy to devote to the project?

You should also consider your expertise in costing and project management. In either case, best advice is to budget an additional 10-20% on top of the build cost for overruns. But with a Fixed Price Contract an expert is giving a figure they commit to completing the project for, sometimes with penalties in the contract for going over budget. Juggling all the elements yourself could lead to more excess.

Whether you engage a main builder or choose to deal with subcontractors yourself — take time when choosing who to use. Ask around; nothing beats a personal recommendation.

Ensure you use a builder that’s registered with an official trade association and make sure both you and they have proper insurance in place before work begins.

Even if you go with a Fixed Price Contract, the project is still going to take up a lot of your own time. Kitchen and bathroom designs, flooring and myriad other choices need to be made, as well as site meetings and updates. Be realistic; this is going to be a big part of your life while it is going on.

When planning the spending on your self-build project you also need to be aware of your drawdown schedule. Unlike with a straightforward mortgage, the bank will not make all the funds available upfront.

Instead, you will draw it down gradually in tranches. These part-payments will be at specific stages as set by your lender. If part of your loan is for the site you will get that for purchase. From there on you will get payments as each stage of building is completed.

Stages could include floor level completed, roof level completed, plastering complete and final stage payment.

You will have to certify that each phase is finished to an accepted standard before you will be given the funds for the next stage.

If you are building using Fixed Price your contractor will be prepared for this, but if it is Direct Build the certification is another cost to be aware of.

All the main Irish lenders offer self-build mortgage options, but with varying criteria. Shop around.

If you are feeling daunted by the complexity of a self-build project there is help available online. The Irish Association Of Self Builders have a wealth of detailed advice on their site www.iaosb.com.

You can also check out selfbuild.ie for case studies and reassurance before and during your project.

DEAL OF THE WEEK

It is now at least technically summer time. You may be still sticking the heating on “for an hour” in the evenings, but it’s time to start getting ready for sunny days to come.

If your garden is in need of some TLC, Woodie’s is on hand to help with its “Festival of Summer” promotion.

The pick of the offers is the Kingston six-piece steel patio set, down from €299.99 to €149. The set includes a steel and round glass table, four chairs and an aluminium parasol. Just the thing for soaking up that last hour of sunshine in the evenings.

If your outdoor interest stretches to al fresco cooking they also have a number of barbecues on offer, including the Phoenix 2 burner gas barbecue reduced from €249.99 to €199.99.

Check out all the offers at www.woodiesdiy.com.


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