Owner-Builder Home Loans

If you’re looking to build your own home but don’t want to work with a licensed builder, you need to submit your own building plans to the local council and be granted building permits. Once this has been approved, you then need to apply to the local government authority for an owner builder license.

Finance-wise, owner builder loans can be a little complex, which is why working with a mortgage broker is recommended to ensure the correct steps are taken. Hunter Galloway is a construction loan specialists and can assist you with this. Here’s some further information to get you started.

 

Getting Owner-Builder Loans

  • Bring a copy of your owner builder permit
  • Your construction cost estimate
  • Project plan

Only a few select lenders will approve owner builder loans – if you have equity, and the guidelines can be tough. Therefore by providing all the required documents and accurate information, it will make the process easier.

 

Borrowing – Owner Builder Loans in Australia

For owner builder loans, you are able to borrow 95% of the project cost if you’re a licensed builder. Otherwise, if you’re not a builder you will be limited to 60% of the land value plus construction costs.

At present, banks are extremely conservative when it comes to owner builder loans due to the high incident rate when it comes to going over budget or not following through with the building phase. Due to this, banks and building societies have removed funding for those building their own home. Yet if you are a licensed builder or have trade experience, you will be considered lower risk.

 

How can I get owner builder finance?

Hunter Galloway will help set this up for you. We will compare the most competitive lenders and look at cost estimates for the bank. We will also sort out the loan application for you.

 

Can you offer me some advice when it comes to owner builder construction?

We’ve seen a lot of good and unfortunately bad situations too, within the finance industry when it comes to owner builder loans. However, some best practices include:

  • Budget carefully – Make sure you’ve done a cost estimate before you begin and plan on the generous side rather than under budgeting. If you don’t do this properly, you run the risk of going over budget and putting a halt your plans.
  • Wait to begin construction – Don’t start anything until your loan has been formally approved. A lot of lenders won’t actually approve your loan if you’ve already begun construction, therefore, hold on!
  • Experience counts – If you feel like you don’t have enough experience, make sure you seek help from another professional. Don’t go in blind or overestimate your capabilities.
  • General rule – If you don’t have a background in the construction industry is it not recommend that you build your own home, as there are a lot of extra expenses and process that you will not be aware of.

 

What’s considered an unusual situation?

Unusual situations when it comes to owner builder loans are considered small developments – those who might not yet have a track record of successful projects, low doc owner builder loans, partially complete homes and using a guarantor with a construction loan.

Each situation is unique therefore we recommend that you speak with one of our mortgage brokers so you can be correctly assessed to set up your owner-builder loan.

 

If you’d like a free assessment – check out our page here, otherwise chat to our team of mortgage brokers on 1300 088 065.