Hi everyone,
Found this forum a couple of days ago, so much useful advice!
Partner & I would like to buy some land in Central Victoria and have a house built on it. Some conventional options are pricey for the land we have in mind, so we are looking at off-grid options. Off-grid also suits our personal preferences.
Specifically, we're looking at:
- Solar system and batteries.
- Composting toilet (waterless).
- Grey water processing system.
We can spec out all of these things to suit the house size, our budget, meet Australian Standards & EPA requirements. The local council mentions a composting toilet & grey water on their planning website so it shouldn't be a major problem for planning approval.
Our problem is that no lenders want to pre-approve Construction Loans for this kind of house. Our mortgage broker has tried a few and we talked to our own bank (Bendigo) as well. The standard conditions seem to be:
- Sealed road.
- Electricity to block.
- Septic tank.
Otherwise they say we have to present our exact case and have formal valuations done and then it goes to the bank's High Risk unit to assess it, and "maybe" then it'll be possible.
There aren't any other problems with our preferred land itself, as far as we can see (it's very close to a town, zoned Rural Living, etc.)
I understand the basic reasoning (an ordinary house has a bigger market of potential buyers, weird hippy stuff may only appeal to weird hippies) so the potential bank valuation is lower.
We don't need approval for a Construction Loan at this point. But we're looking at buying some land as a first step and it would be good to know beforehand that some lender is likely to give us a Construction Loan for the house we want, when we get to that stage (after plans, permits, etc).
Does anyone have any examples of lenders giving construction loans for this kind of thing? Any recommendations for who to approach or how to present it?
HI Monty,
The sealed access road is the main bug bear here - Thats pretty much a deal breaker - has to have suitable 2wd access.
But there are loads of properties across australia which are like what you propose - I personally have that septic system.
How big is the land?
What % do you need to borrow? (of land and of build, or total)
Other than being "off grid", what else is unusual about your construction (what makes it hippy??!! )
You will have issues with funding the solar power and the water if it is not part of the contract to build - not that it cant be done, just tricky / interesting.
Tom
plc is in Vic and I am sure more aware of the area you are looking at.
Hi Bec,
Thanks heaps for the reply!
The sealed access road is the main bug bear here - Thats pretty much a deal breaker - has to have suitable 2wd access.
I see. The property we're looking at has a dirt road but it's a fairly major dirt road in very good condition - recently graded, good drainage, etc. Not a back road or a track. Our broker did say that at least one of the lenders was going to look at some Google Maps satellite images and consider it.
But there are loads of properties across australia which are like what you propose - I personally have that septic system.
Awesome. We figure that someone has to be financing some of these builds!
Maybe we've misinterpreted "septic tank" and the definition is a bit broader, ie any approved septic system? Our mortgage broker is here in Melbourne (where we are right now) and she seemed a bit vague on this terminology. I think she mostly handles urban properties.
How big is the land?
What % do you need to borrow? (of land and of build, or total)
This block is 5 hectares (light bush) and $270,000.
We are budgeting $300,000 to build a small (3 bed, 1 bath, 80-90m^2) simple solar passive house. We know this is a bit of a tight budget but we have a recently retired (and practically minded) architect in the family who has offered to create plans, so this helps. No builder involved at this stage.
This would be our first home. We have about $130,000 for a deposit right now, but even if we buy the land tomorrow we'd probably be a year or more away from starting construction (plans, amendments to the existing planning permit, quotes from builders, initial site prep, etc.) so we will most likely have more by that stage.
At this point we really just want to know if a construction loan is possible at all, and under what terms.
Other than being "off grid", what else is unusual about your construction (what makes it hippy??!! )
Not a lot, I got the impression "hippy" was the bank's view of it.
I guess the small size is uncommon, not a lot of new 80m^2 houses in the area.
You will have issues with funding the solar power and the water if it is not part of the contract to build - not that it cant be done, just tricky / interesting.
Thanks for the heads up. Is the issue funding a build project where the funding doesn't cover everything for a liveable house at the end?
I had read that banks don't consider solar+batteries as value adding assets, so presumably that counts against any value for LVR purposes?
So the technical response is 2wd access... up to the valuer to determine that.
Again, if the sewer system is in the contract and meets code it should be fine - that in itself shouldn't be an impediment, once again, comes down to what a valuer says. I have a fancy aerated system but most locally are envirocycle.
OK so you're under 80%, thats positive too. Big block but not too big.
Yes the issue is paying trades apart from the builder - and also the valuation stacking up. comes down to what like properties can be found (tricky) to compare it to