Construction loans for owner builders are not broadly welcomed by Australian financiers. While regular construction loans have their own challenges, construction loans for owner builders are even more complicated.
Property owners who manage their own residential building project in whole or in part are considered to be owner builders.
There are a limited number of financiers that accommodate owner builders. Within the Islamic finance space, there is only a specialist financier that supports owner builders, but they impose very strict rules. These rules include prior building experience, an additional buffer of funds, or having a licensed builder supervise the project.
There is an inherent risk with owner builders frequently changing their building plans, susceptibility to cost overruns, or even not completing the construction on time and within the original budget.
For an owner builder construction loan, additional documents may be required, including:
Due to the inherent higher risks associated with owner builders, financiers typically allow a maximum loan to value ratio (LVR) of 60% to 70%.
Similar to regular construction home loans, financiers will advance funds under progress payments throughout the project. Your funds will need to be utilized first, with the financier funding the completion of the build. During the construction process, any variation to the estimated cost may need to be covered by the customer.
We aim to support Australians in achieving their financial goals and dreams. Building your own home is a personal and significant endeavour, and we understand this. We also understand the complex policies that lenders have surrounding construction loans, especially for owner builders. We are your perfect partners to help navigate these financial complexities.
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