How much an owner builder borrow for a home loan?

Any general questions you might have in regards to loans and finance.
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Yvonne36
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Joined: Thu Jun 23, 2016 5:01 am

How much an owner builder borrow for a home loan?

Post by Yvonne36 »

I own a 10 acre land in Golden Grove. I’m thinking of building a house myself and I want a mortgage to finance it. How much can I borrow if I take out such a loan?

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Otto Dargan
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Re: How much an owner builder borrow for a home loan?

Post by Otto Dargan »

Hi Yvonne36 and welcome to the forum.

Few lenders lend to people who build their own homes and such loans are called owner builder mortgage. If you want to take out an owner builder construction loans, then you may be able to borrow up to:
  • 95% of the project cost or 95%: If you’re a licensed builder building your own property, you could borrow 95% Loan to value ratio (LVR). This is on a case by case basis only.
  • 60% of the project cost: If you’re not a builder, your loan will be limited to 60% of the land value plus cost of construction.
  • Kit homes: Our lenders can finance these as per the above guidelines. However, you must have either equity in your property or savings available so that you can finance the purchase of the kit up front.
  • 100% loans: You could borrow up to 100% of the land and construction costs with some of our lenders if you have a guarantor.
Many lenders did not have any problems with owner-builders previously. However, several lenders noticed that many of the builders were changing their plans, going over budget, or not completing the project and it resulted in many lenders and building societies have withdrawn their funding for owner-builders.

You can also discuss things directly with one of our specialist mortgage brokers by calling us on 1300 889 743 or by filling in our free assessment form.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Yvonne36
Posts: 7
Joined: Thu Jun 23, 2016 5:01 am

Re: How much an owner builder borrow for a home loan?

Post by Yvonne36 »

The market value of the land is $150,000 and the estimated construction cost will be in the range of $450,000. I’ve around $100,000 saved with me. The 60% project cost includes the land plus construction, right? Moreover, what are the documents that I need to provide as an owner builder?

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Otto Dargan
Mortgage Specialist
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: How much an owner builder borrow for a home loan?

Post by Otto Dargan »

Hi Yvonne36,

Yes, the project cost is the total sum of the land value and the construction costs. Regarding the documents, you’ll need to provide more documents than a traditional borrower:
  • Building plans / floor plans.
  • An itemized estimate of the total cost of construction.
  • A copy of your owner builder insurance (if applicable).
  • Evidence that you are using the Home Building System (if applicable).
  • A copy of your owner builder permit (if applicable).
Also, you’ll be required to provide a copy of the council approved plans to the lender once you have obtained approval from the council.

If you’d like our help with your project then please call us on 1300 889 743 or enquire online and one of our brokers will give you a call to discuss your situation.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Yvonne36
Posts: 7
Joined: Thu Jun 23, 2016 5:01 am

Re: How much an owner builder borrow for a home loan?

Post by Yvonne36 »

Thanks for your help. I'll go through your website further and call you at the earliest. Cheers.

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