OWNER BUILDER FINANCE

We are proud to announce that we are the only company in Australia who can offer owner builder finance of 80% of end market value for your property. We have also tied up with one of the major mortgage lenders in Australia to offer owner builder finance when used in conjunction with the owner builder system. We can offer owner builder finance of 80% of the land and 100% of construction, instead of the usual 50% of hard costs that most mortgage lenders would insist on. Owner builder loans are available in QLD, NSW, VIC, WA, TAS and SA.

The home building system essentially gives mortgage lenders the assurance that construction of the house will be completed in the event of default and repossession.

For more details on owner builder finance or how the home building system can benefit you in your next building project, speak to one of our mortgage brokers at 1300 55 10 45.

We have provided some information below to assist you in understanding the process of owner builder finance when used in conjunction with the owner builder system.

What happens now?

When you join Home Building System, you receive your start up kit, which as well as containing your guide book, discounts and various other information, also includes your quote book. At this point, send copies of your plans, permits and specifications to Intellichoice to obtain the quantity takeoff report and indicative costing for materials. We will also need them to order your valuation when you have finished your quote book. Once you have worked your way through the quote book, mail the book back to Intellichoice for processing. (Please speak to one of our mortgage brokers at Intellichoice on 1300 55 10 45 if you have any queries in relation to completing this book).

The valuer will use this information in his assessment of what the market value of your home would be if it were complete. This report is used by Intellichoice to determine exactly how much you can borrow to build your home; how much can be advanced to cover your land purchase or refinance and how much can be advanced progressively to cover your construction costs.

What does indicative approval mean?

Once the loan application has been submitted to Intellichoice and it has been indicatively approved, it means the owner builder home loan is approved in principle – depending on your joining HBS and your valuation being satisfactory to the mortgage lender, as well as the other conditions being satisfactorily met and verification of your details.

You need to be aware that the owner builder loan is not formally approved at this stage so bear that in mind when outlaying any funds towards your project. Until you have satisfied all requirements and have the formal letter of offer, the owner builder finance is only approved in principle. Any funds you outlay you may not be able to receive any reimbursement for until the owner builder finance has been formally approved and the claim for the first stage of construction is approved and processed.

When do I know if my owner builder home loan is definitely approved?

A formal approval cannot be obtained until you have finished your quote book and have provided the plans, specs and permits and the valuation is obtained.

If the mortgage lender is satisfied with your valuation and you have satisfied the other requirements in your indicative letter of offer, they will then formally assess your owner builder loan request. If you are able to borrow sufficient funds to complete your project the mortgage lender will then issue loan documents. This loan offer will outline the loan amount, term and rate along with fees and charges and any approval conditions applicable to your situation. If you are unable to borrow enough because the valuation is lower than expected or your costings too high, a mortgage broker from Intellichoice will contact you to discuss.

How are the funds advanced?

Initially the mortgage lender will release funds against the current value of the property and will need to retain enough funds to cover to the cost of your construction. They will confirm these amounts in your formal letter of offer. As your construction moves along, the mortgage lender will release the owner builder loan progressively at the end of each stage once you have sent in your purchase orders and the valuer confirms that the work being claimed for has been completed. Just be aware that if you go ahead and purchase items that you have nominated in your quote book as wanting reimbursement for, you will not actually be able to receive any funds until the completion of the relevant stage where these items have been installed.

Once the property is fully complete, send in a copy of your certificate of occupancy and you can request the mortgage lender to switch your owner builder home loan to another home loan product, such as a fixed rate home loan or a standard variable home loan. You may also refinance your home loan, but be aware that there may be costs involved in switching and refinancing the home loan. This will be outlined in your formal letter of offer, so take the time to ready it thoroughly so you are aware of all the terms and conditions. Your Intellichoice mortgage broker can help you with a home loan refinance and explain everything in plain English.

The above information is meant as a guide to assist you in understanding the process for obtaining owner builder finance. If you have any further questions about the owner builder system or need a construction loan, please speak to the mortgage brokers at Intellichoice on 1300 55 10 45. We may still be able to assist with owner builder finance even if you do not use the home building system.