In most banks in Australia, the application for owner builder home loans can sometimes be limited to those who have a license to build. It can be quite difficult to come by for owner builders who would want to go through the path of building their own homes.
Luckily, there are non-conforming lenders and financial institutions that provides owner builder home loans for owner builders that can provide security for a mortgage. Qualifying can sometimes be difficult but is not impossible. Working hand in hand with experienced owner builder home loan specialists can make a huge difference in your application.
Requirements for Owner Builder Home Loans Application
If you are an owner builder and would want to finance your project through a mortgage, here are the requirements that you need to prepare.
- Sign and sealed building plans and floor plans
- The cost estimate of materials and construction
- A valid copy of your owner builder insurance
- Copy of your owner builder permit
- Council approved plans
Getting Approved for Owner Builder Construction Loans
For licensed builders, the maximum amount of mortgage that can be approved when applying is 95% of the total project cost. This includes the cost of the land plus the cost included in the construction of the home. However, bot all lenders can provide 95% LVR. The allowable amount to be borrowed varies from one borrower to another, depending on their financial circumstance.
If you are not a registered builder, but an Owner Builder you will most likely get 60% of the projects to build cost-and that’s if you can even find a bank who provides Owner Builder Loans. At Intellichoice, we can do as much as 75% loan to value ratio (LVR) for licensed or permitted Owner builders.
You will need to show some experience in project managing a build or have someone with a background in the construction industry providing support. Attempting to build a house can be very complex and is not something to be undertaken lightly. Most lenders, including the major banks, have ceased receiving applications for Owner Builder Home Loans.
Intellichoice has specialised in providing loans for owner builders for the past 16 years and still has a range of lenders that can help secure your building loan Australia wide. Get better interest rates and deals through one of our trusted lenders.
Provide the requirements and documents mentioned above to be able to proceed with your application. It would be ideal to have the construction cost ready or the loan amount you have in mind. It will be ideal to proceed with your loan application with an experienced owner builder home loan specialist to be able to fully understand the terms and condition included in your mortgage application.
Why Have Banks Stopped Entertaining Owner Builder Loans?
Banks have ceased receiving applications for Owner Builder Construction Loans for quite some time due to the risk involved in the process. There are instances during the construction wherein people involved in the project change plans, go over budget or for some, they were unable to complete the construction right after a progress payment. This became too much to handle for banks, thus declining most owner build loan applications.
Licensed builders who have more experience in handling and delivering a construction project can be considered as lower-risk compared to owner builders. Intellichoice caters such clients as well. We have Low Doc Construction Loans available for those who fall under this circumstance.
You can also work with a licensed builder to proceed with your owner build. However, don’t start with your build project without sitting down with your contractor and your mortgage broker. Fill in the gaps of details you would want to address on your project prior to proceeding with the loan application, much more with the actual construction. Be careful when dealing with contractors. Ensure that you are indeed dealing with a licensed dealer through the suggested tips from this post.
What is a Low Doc Construction Loan?
For licensed builders who are seeking to develop a property or construct a home of their own, it would be ideal to apply for a Low Doc Construction Loan. Unlike other mortgage applications, you do not have to provide proofs of income when applying for a Low Doc Owner Builder Loans.
Learn more about Low Doc Construction Loans by visiting this link or talking to an Intellichoice mortgage broker today.
