Kit Home Loans

What is a Kit Home?

A kit home is a standard house that is built in sections in a factory which can then be assembled on site by the owner or a registered builder. This type of DIY home construction can save you a significant amount of time and money depending on what type of home you want and where you are building.

We recommend that you only consider constructing a kit home if you have experience working in the construction industry or are hiring a builder to construct the kit for you. If you are building the home yourself then please refer to our owner builder page.

The progress payments problem

The major problem encountered by people who are buying a kit home is that lenders will not release funds until the home is complete and on site or in some cases will ask for you to pay for the kit up front using your own funds.

The kit home manufacturers normally want to be paid before the kit leaves the factory, and yet your bank will not lend until the house is complete! Because of this it is essential that you talk to us to see if you are qualified for a loan and that you choose the right lender to fund your project.

When will my bank release funds?

We can help you release funds for your project in the following situations:

If you have enough funds or equity to pay for the kit yourself up front and are using a licensed builder then we can help you fund the construction of the home in regular progress payments. The bank will ask for you to pay for the kit however will release funds in progressive payments to the licensed builder that you have hired to construct the kit for you.

If you do NOT have enough funds to pay for the kit yourself up front and are using a licensed builder then we can help you fund your construction project only if you have payment terms with the kit home manufacturer that will allow you to pay them on the completion of the home OR if you have a security guarantor.

If you are not using a licensed builder then please refer to our owner builder page.

How much can you borrow?

First home buyer: Up to 90% of the value of the land plus the cost of construction.

Investor: Up to 90% of the value of the land plus the cost of construction.

Low doc: Not available.

Discounts: Competitive professional package and basic loan discounts are available.

Note: Financing a kit home isn’t as simple as financing a normal construction project. Please talk to a mortgage broker in our office for expert advice.

Why are the banks conservative?

Australian lenders treat kit homes very conservatively as they are worried that if they release funds to pay for the kit up front and something goes wrong with construction then they will be left with only the land as security, which may be worth less than the loan amount. For this reason they generally only release funds for the kit up front if you have significant equity in your land or if you have a guarantor who can provide additional security for the loan.