Background: I'm living in a house with a side garden I got planning permission on. Just purchased it a year ago so only 1 year down on the mortgage.
Recap: I was going to wait a year to get my finances in order but the Architect talked me into going out to tender anyway to see what prices come back. We sent out 6 Tenders and 3 responded. I can go back to the cheapest one in a year they said and get it repriced accordingly.
So i was rightly worried that prices in Dublin would be steep but didn't guess how steep!
The prices I got back needed a bit of adjusting to add the banks 10% contingency to, plus development fees, professional fees, connection charges etc. I've reflected this in the figures below
Tender #1 €466k
Tender #2 €465k
Tender #3 €390k
The house on the open market in this area would be worth €350k and I'm ignoring the value of the land in my figures above which I own. Crazy, huh?! This is a 108 sq. meter house, box shape. My own max budget was €330k so way out! The bank won't lend me enough to get this off the ground. I wouldn't feel comfortable leveraging that much debt anyway.
I'm glad I went to tender, the figures were an eye opener. But, where to go from here?! I'm mulling over my options:
- Stay in the current house and make myself comfortable. Get new windows and doors, external insulation upgrades over the next few years. Pay off mortgage a bit earlier by renting a room or two. Sell site next door before planning expires. Possibly move elsewhere at some stage...
- Reassess in 2 years - I'll have 15 years until I retire then so if I knock down the mortgage a bit, the market holds and I sell up, see if I can then pull off a build, IF the figures look any better.
- Save like crazy and in 8-10 years build the shell, get it watertight and finish over a few years. That's a longer bet and my figures say I'd need €200k to get to the shell, maybe more by then. I could sell the house and do a caravan and get a small mortgage to finish possibly.
The gas thing is I'd be moving beds about 8 meters over if I pull off the build but the effort required...!!!
So, on one hand I'm glad I've a reality check now and know exactly where I stand. I'm wondering about just paying off the current mortgage like mad to keep my options open or investing in the current house instead. There's probably some middle ground - I'd find it really difficult to sell the site right away and have someone else build on it but I'll get over that.....
I'll mull it over the next few weeks.....