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Owner Builder Loan

Did you know that most banks only finance the construction of homes built by licensed builders?

Owner builder construction loans are available from a few select lenders if you have equity in your land, savings, or a guarantor that’s willing to provide additional security for your mortgage.

The lending guidelines can be tough but we can help!

How much can you borrow?

  • 95% of the project cost: If you’re a licensed builder building your own property. 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 upfront.
  • Low doc: Refer to the ‘Other Unusual Situations’ section on this page.
  • Owner builder development loans: Refer to the ‘Other Unusual Situations’ section on this page.
  • Discounts: Competitive professional package and basic loan discounts are available in some cases.

Why are the banks so conservative?

In the past, many lenders were happy to work with owner builders. Since then, several banks noticed that there was a high incidence of people changing their plans, going over budget or not completing the project.

Because of this, many banks and building societies have withdrawn their funding for people that are building their own home.

Lenders tend to view some applicants more favourably than others.

Applicants that are licensed builders, have experience with one or more trades or are using a program such as the Home Building System are seen as a lower risk.

For more information on different lending policies or to speak to a specialist mortgage broker about applying for a loan, complete our enquire online or call us on 1300 889 743 and we can help you get approval!

Apply for owner builder finance

Our mortgage brokers understand the process of building a new home! We know which banks can approve your loan application and offer you a competitive interest rate.

  • Choose from four competitive lenders that accept owner builder home loans.
  • Our mortgage brokers can help you organise your cost estimates for the bank.
  • Avoid delays and headaches, work with the experts!

If you’d like our help to finance your project, then please call us on 1300 889 743 or fill in our free assessment form and one of our mortgage brokers will call you to discuss the amount you need to build your home.

Small developments

One of our lenders specialises in helping developers complete small projects, ideal for builders who are making the first step from building to developing but who may not yet have the track record of successful projects to easily get approval.

  • Simple finance is available for up to four dwellings up to $1,500,000.
  • Larger development projects can be financed if you have a strong asset position.
  • Some lenders don’t need proof of income if you plan to sell the properties on completion.
  • You can borrow up to 70% of the Gross Realisation Value (GRV) or 80% of the hard costs.
  • No presales are required for small duplex, townhouse and unit developments.

You may refinance your project on completion with a standard investment loan or low doc loan and keep some of the properties.

If you’d like our help to finance your project, then please call us on 1300 889 743 or fill in our free assessment form and one of our mortgage brokers will assist you in applying to ensure that you get approval!

Low doc owner builder loans

Licensed builders completing a small development of their own

We can help you finance a project of up to four dwellings, with a maximum loan amount of $1,500,000. You won’t need to provide any evidence of your income.

You can borrow up to the lesser of 70% of the Gross Realisation Value (GRV) or 80% of the hard costs (value of land plus cost of construction only).

Do I need to be a licensed builder to get a low doc loan?

We can’t assist you with construction finance if you need a low doc owner builder loan unless you are a builder.

However, we can arrange a low doc loan for up to 80% of the land value (not the on completion value) as well as 80% of the value of any other properties that you own.

Once your property is complete, we can then increase your low doc loan to 80% of the value of your property.

For more information or to speak to one of our expert mortgage brokers, please complete our free assessment form or call 1300 889 743 and we can help you apply with the right lender. Speak to us today!

Partially complete homes

Have you run out of money half way through your owner builder project? Has your bank refused to lend you additional funds to complete your home?

Unfortunately, almost every lender in Australia won’t accept a partially built home as security for a mortgage.

You must apply for the loan either before you start construction or when the construction is completed.

However, if you need additional funds during construction we can help you in the following situations:

  • Owner builder: We can lend up to 60% of the total cost.
  • Licensed builder building their own home: 75% of the total cost.
  • Standard construction with a licensed builder: 80% of the total cost.

The above loan amounts must be enough to pay out your existing mortgage and complete the construction of your property.

There are no exceptions to the above Loan to Value Ratios (LVRs).

Please call us on 1300 889 743 or enquire online and we can assist you in obtaining the funds you need to complete your project.

Note: For partially complete homes, we’ll charge a brokerage fee as there is significantly more work involved then there is for a standard home loan.

Using a guarantor with a construction loan

If you have a friend or family member that can guarantee your loan then you may be able to borrow more than 80% of the project cost and up to a maximum of 100% on a case by case basis.

For more information, please refer to our no deposit guarantor loan page.

Standard guarantor loans aren’t available so you’ll need to apply for an 80/20 guarantor loan.

This is where the guarantor takes out a mortgage on their property and then lends this to you to make up the difference between your 80% mortgage secured by your property and the amount that you require to complete the project.

For more information on how a guarantor can help you get a construction loan, please call us on 1300 889 743 or fill in our free assessment form. We can make the application process less stressful for you!

How are the loan funds advanced?

Unlike a traditional home loan, the lender won’t pay you all of the loan funds when the loan is setup. Instead, they’ll release funds to you as construction progresses.

This is known as ‘progress payments’ or ‘construction draw downs’.

Once you have completed each step of construction, a bank valuer will be sent out to assess your work, confirm you have followed the floor plans and then authorise the bank to make the next payment.

If you have significant equity available in your land then we may be able to arrange a line of credit based on the value of your land alone.

This will allow you to build your new home without the need for the lender to monitor your progress. This is usually available when you’re borrowing no more than 80% to 90% of the land value alone.

Which documents do you need to provide?

As an owner builder 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).

Once you have obtained council approval you’ll be required to provide a copy of the council approved plans to the lender.

Value or Cost?

When lenders assess the value of a property that’s yet to be built, they ask their valuer to complete a ‘To Be Erected’ (TBE) valuation.

Typically, the valuer will look at the plans, the cost of construction and, in almost all cases, will value the construction project at the value of the land plus the cost of construction.

Lenders are always conservative when assessing the value of the property you’re using as security.

They will use the lesser amount of the actual valuation or the total of the purchase price / value of the land and cost of construction.

This is no different for owner builder loans and as a result it’s important to have significant equity in your vacant land otherwise you may be unable to obtain a loan approval.

Please complete our free assessment form or speak to us on 1300 889 743 for more information.

Our mortgage brokers will aim to assist you in getting the loan amount you need. Call us today!

What type of building license do you have?

There are many different types of building licenses with different restrictions placed on each one.

The lenders that we work with for owner builder finance tend to prefer borrowers who have an unlimited building license rather than a project management license.

If you have an unlimited building license, you’ll have a better selection of lenders to work with.

Of course if you don’t have a building licence at all then you’re still eligible for an owner builder loan, but you’ll need a larger deposit.

The golden rules

We’ve helped a lot of owner builders finance their construction project. Follow these simple rules to avoid the headaches!

Don’t run out of money
If you run out of money during construction then in most cases the bank won’t approve a loan increase for you. In other words, you’re in big trouble!
We have one lender that may be able to help if you run out of money. However, unless you’re a licensed builder yourself, they won’t lend any more than 60% of the project cost.

Don’t begin construction yet
Wait until your loan is formally approved before you commence construction.
The majority of lenders won’t approve a loan if you have already commenced construction. Unfortunately, many people aren’t told this by their bank.
Most people begin building using their savings and only apply for a loan towards the end of the project, when they run short of funds.

Budget carefully
Complete a cost estimate worksheet before beginning your project.
You’ll need to provide this to the bank as part of your loan approval. Please make this as accurate as possible and include a contingency in-case you go over budget.
If this isn’t done properly then you risk running out of money. In addition, try not to make many changes after your loan is approved because you may need to re-apply for your mortgage.

Experience counts
Are you sure you know what you’re doing?
If you have trouble creating the budget for your project or don’t have a background in the construction industry then we don’t recommend that you build your own home.
Inexperienced owner builders are almost certain to regret the decision to build their own home.

Do you need help to apply for your owner builder mortgage?

Please call us on 1300 889 743 or complete our free assessment form and one of our mortgage brokers will discuss your options with you.

Owner builder training courses

We strongly recommend that you complete the appropriate training before you begin your construction project. In some states, this is mandatory.

We recommend undertaking a course with ABE Education, a Registered Training Organisation that provides quality nationally accredited training to owner-builders in NSW and the ACT.

This training will enable you to obtain your owner builder permit/ licence and will assist with your finance approval.

ABE Education specialise in e-learning, which is simple, user-friendly and interactive. You can take as long as you wish to complete your course, as all your work is saved for the next time you log in.

Visit ABE Education website for more information. The contact details are:

ABE Education
Phone: 02 9798 5000
Fax: 02 9225 9656
Email: info@abeeducation.com.au
Website: http://www.abeeducation.com.au

How can we help?

Our mortgage brokers are specialists in home loans for people building their own home.

We know which lenders can help, how they will assess your application and even how to best present the cost estimate to ensure the loan is viewed favourably by the credit assessor.

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



Owner Builder Calculator

Owner builder details

Are you a licensed builder?
Can you prove your income?
How many dwellings are in the development?
Land value
$
Cost of construction (not inc contingency)
$
Estimate on completion valuation
$
Amount you owe on the property
$

Contact a mortgage broker

Please email me a copy of the results:
Yes No
Talk to one of our mortgage brokers about your situation: Yes No  

  • Alistair Bell

    I own a plot of land in southern QLD. I want to develop it as a hobby farm, so I’ll have some construction there which I believe will take 6 months. Will the bank view this as a issue, and whether I can lend the full amount for the construction or not?

  • If you are planning to get a mortgage to build a property on your own, most lenders will limit lending to 60% of the total land and construction value. There are 1-2 lenders that could go up to 80%, however your overall application should be very strong, like your credit history, genuine savings, financial position and employment history among others.

  • Watson

    I am looking for your help in identifying a lender to finance a project, which is to knockdown and re-build a semi-detached property in Kingsford, NSW. It’s for residential purposes and I’d like to execute this project as an Owner Builder. The estimated value of the property, post construction, is around AUD 1.5 to 2 mil and I’m looking for a loan at an LVR of 70-75%. Also looking to refinance an existing loan with CBA, which was used to purchase the land plus existing property and is now at 75% LVR.

    We have done a lot of research into this topic over the past six months and we understand the risks and challenges of an owner builder project. I personally have 15+ years of experience in managing large transformation projects for financial institutions and feel comfortable with the budgeting and legal aspects of an owner builder project. Can you guys help with this?

  • Hi Watson,

    Based on what you’ve stated, I expect we can get you approved. We’ve got a couple of owner builder specialists and as an owner builder loan is more complex, I think it’s best to meet in person and discuss it along with any other details you may have missed out. Please call us on 1300 889 743 and one of our brokers will go through your situation.

  • Lucy L

    I’m getting 2 houses ($700k each) built on land that I own. I had initially taken out a $1.4m loan with a bank and I owe $269k. My builder in in liquidation and one of my houses is partially complete. I want to build the rest of it myself. I have owner builder permits and $400k in savings although I own another investment property where I still owe $400k. Can I get $1m loan for constructing? I will of course live in the property upon completion.

  • Hi Lucy, right now the main problem that most lenders will identify is a high lend on an incomplete house. If you want to avoid an owner builder loan, you can potentially consider cash out. We do have a few lenders in mind that can possibly help and it’s likely that we can also get an exception based on the land value only. We will need to discuss your situation clearly and then speak with the lenders. Please call us on 1300 889 743 to speak with one of our owner builder specialists.

  • Ogilby

    I owe $110k on a piece of land worth $180k and I want to get an owner builder loan of $240k to build a residential house. I have $20k in cash and will be going full doc. The DA has approved it and there’s electricity, telephone and road access (spent $90k to fix all this). Can you guys help?

  • Hello Ogilby,

    It’s likely that the banks won’t accept your loan application as it is. The location may also prove to be a problem to the lenders. However, if we can change the situation then it can be more likely to be accepted, e.g. if you have a guarantor or you get a gift or loan from your parents, or you get a licensed builder. Please call 1300 889 743 to discuss this with an expert owner builder mortgage broker.

  • Austin

    Hi there, I applied for pre-approval with NAB 6 months ago and then there was a delay with council. I spoke to them yesterday and they said they don’t lend 80% for owner builder any more???

  • Hey Austin,

    Yes, that’s true. NAB have restricted their policy in this space. Unfortunately, some customers have been left in difficult situations as a result. There are other lenders that can help especially if you are a licensed builder yourself. If you’re not a licensed builder then the maximum you can borrow is now 60% of the property value.

  • Leigh Tipper

    Is there anyone who does Owner builder loans at the previous 80%. like the previous person I am in the same boat. Have 35% of the cost for land and house build. But now this has put me in the position of paying a larger amount for the house we want through a project builder.

    Leigh

  • Hi Leigh,

    Unfortunately no. If you are a builder yourself then we can lend you up to 95%. If not then you’re limited to 60%. You may be able to use a guarantor loan in some circumstances to allow you to borrow more. When the house is complete you can increase your loan and pay out the guarantor https://www.homeloanexperts.com.au/guarantor-home-loans

  • Luke Beardwood

    I am a licensed builder looking to build my own house, i work full time as an employee in the construction industry also with a good wage. I wish to borrow 85% of all construction and land costs, is this viable as i am licensed myself?

  • Hi Luke,
    Yes this is viable. If you’re using your own building licence then this is fine and we can assist you to borrow 85%. We’d need to know the full details of your situation to be sure. Please complete this form https://www.homeloanexperts.com.au/free-quote/ and we’ll complete a full assessment.

  • Deering

    I’ve got $80k savings and I need $30k to start building. I’m a registered builder but I currently owe around $60k. I can’t provide any financials at the moment I do have ATO notice of assessment. The bank I initially went with rejected my loan application so what should I do?

  • Hello Deering, you can consider getting a personal loan or a quick business loan. We can then help consolidate this for you so you can pay it off in your mortgage interest rate. If you want to discuss this in detail, please call 1300 889 743.