The first step in obtaining an owner builder loan is sitting down and determining exactly what your individual circumstances are. What kind of house or renovation are you looking to do? What is your income? What are your assets? How much money do you need to borrow? All that basic information is critical to determining where is the best place to go to look for a loan.
There is lots of information that needs to be put into the equation when determining how best to go about being an owner builder. How big is the land? What kind of project you are going to complete? How much do you anticipate it costing?
Another question we ask our clients is “Why?” Why are you looking to owner build? Is it to save money? If so, have you made sure that the project makes it worthwhile?
Generally we recommend to our customers that the costs savings to become an owner builder are really only worth all the work on a building or renovation that over is in the middle to upper range or if it is designed by an architect. Of course this is a generalisation and doesn’t always hold true but is a yardstick to measure things by. One of the main reasons for this is because professional builders often have more than one construction project on their books at any one time and are therefore able to by in bulk and make savings in that way. These savings can often be greater than the surcharge that the builder puts on to manage the project.
In more expensive owner builder builds and houses designed by an architect there are often more elements that are custom built. This can mean savings made by bulk buying don’t work. So it is vital to the project to make sure the costs savings of Owner Building a house are worth the time and risk.
We also make sure that our clients understand that an Owner Builder construction loan is not like an ordinary home loan. The banks don’t just hand you the money at the start and wish you luck. Instead the loan needs to be paid out in installments, once certain requirements are met. For example a stage is not considered to be completed, until all fixtures are fixed into place. This means that you may be completely on schedule with windows and doors in place but unless they are actually fixed in, the banks won’t pay the next installment.
Unless you have been an Owner Builder before it is easy to get into trouble when dealing with finances. If for example, the bank is unable to pay until you have completely fixed in the windows and doors you will need to make sure your builder has done this. The builder’s invoice for work completed to date however may already be passed due and he or she may be unwilling to continue until he has been paid. This situation (and many others like it) can absolutely be avoided but you need to know how it all works up front and before the problems occur. There are also a number of other things that need to be put in place before they can start, things like having an owner builder licence and owner builder insurance.
Once our team has gathered as much information about your owner builder project (and you) as possible, they then make an assessment as to whether the loan is viable and if it is they put it all into a proposal document. This proposal outlines what we can do to help them, what kind of loan they are eligible for, why we recommend they go that way and what the costs of that loan (and using our services) are. We make a time with the client to go through the proposal with them so they understand the process. We make an appointment time so we know they will be in front of the computer and then email them through the proposal. This allows us to talk through all the details at a time our client is able to focus.