We are currently only accepting owner builder loans if you’re borrowing less than 60% of the total value of the land plus the cost of construction.
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.
- 100% loans: Borrow up to 100% of the land and construction costs with some of our lenders if you have a guarantor.
- 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.
You may be able to borrow up to 100% of the land and construction costs by using a guarantor.
However, it can get quite complicated when it comes to owner builder projects so it’s best to get in touch to find out if you qualify.
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Because of this, many banks and building societies have withdrawn their funding for people that are building their own home.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.
Other unusual situations
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.
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
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.
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.
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:
How can we help?
your 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.