Browse Forums Owner Builder Forum 1 Feb 16, 2009 7:32 am hi all
i know that there have been some other posts on this topic but none really answer what i need to know. We are looking at the OB path and are now turning to the question of finance. 1. what is the LVR percentage they will lend? 60%? That is what i have heard. 2. Who did you guys get finance through if you did? I googled and none of the big banks seem to advertise owner builder loans. 3. Will it be harder or easier given the current economic climate? 4. Does it make a difference if the bank can see that we have a builder "project managing"? and lastly 5. Can you get pre approval? It seems that before they will lend they want the DA approval, a comphrensive breakdown and insurance. Well buggered if I am going to do all of that if the answer will be no. Thanks!!! L Re: finance for owner builders 2Feb 16, 2009 2:20 pm We are going through the bank process at the moment and have chosen the NAB because we already bank through them and we have a great relationship with our personal banker. When we went to them initially they said that the banks are wary of OB's mainly because alot of projects take years to finish or not at all.
The NAB will lend us 80% and they only give us 12 months to complete the build. They said, because my husband is a tradie, that it will work in our favour and to make sure we had a very detailed breakdown of all costs ie: quotes for everything. Also our local bank can not approve the loan, all owner building loans have to go to Melbourne, we are in Vic, to be authorised. Should be seeing them in the next couple of weeks to get the loan, once the building permit comes through, so will let you know how we go. Re: finance for owner builders 3Feb 16, 2009 2:27 pm Owner builder loans are always harder to get. In saying that that hard work was mainly done at the start. If you have equity in other property etc that will make things much easier. As in most cases you do not have to show all your quotes etc.
I find it benificial to have a line of credit. Then as i spend the money to build the house i then borrow against that equity again. (ie house gets re valued) In terms of your Project manager he will need to be a registered building practitioner for the bank to look at it. Re: finance for owner builders 5Feb 18, 2009 9:49 pm What other banks etc did people use? We are going to speak to St George but its not looking good as it seems that it is 60% of the value of the land AND the constructions costs which is rather a problem unless you pretty much own the land outright.
L Re: finance for owner builders 6Feb 19, 2009 9:30 am we need to borrow some money soon for our construction. we have always used the cba. when we spoke to out loan manager last year he said that they will lend you UP TO 60% of the sonstruction value without you needing to show all your quotes/recipts etc. but if you need more then that value i think you have to pay mortgage insurance and show detailed quotes etc... not 100% sure on that, but i think thats what he said! Re: finance for owner builders 7Feb 19, 2009 9:47 am it occured to me last night that if we can only borrown 60% of land value and construction costs that maybe we could do that, build to the point where we can live in it (but without things like floors, curtains, landscaping etc) and then once in, refinance and get the extra $$ by way of increasing the mortgage to 80% of total completed value.
Any thoughts?? Re: finance for owner builders 9Feb 20, 2009 1:03 pm loretta it occured to me last night that if we can only borrown 60% of land value and construction costs that maybe we could do that, build to the point where we can live in it (but without things like floors, curtains, landscaping etc) and then once in, refinance and get the extra $$ by way of increasing the mortgage to 80% of total completed value. Any thoughts?? Yes. You will need an understanding building surveyor. Check with your building surveyor before you proceed on this basis exactly what he requires completed before he will issue a certificate of occupancy. Some surveyors are more anal than others. JB Re: finance for owner builders 10Apr 20, 2009 1:02 am Hi Loretta We are undertaking our first OB project at the moment and are just about to put up the frame (if it ever arrives... our first delay, of many more I'm sure!). Anwyay... in answer to your question, we have gone through NAB for finance. They will lend you 80% of the total cost to build the home (including the land). We didn't bank with NAB previously, we were through ANZ but when I rang them to ask about OB loans I was advised that they would lend 80% of the value of the LAND only! So that was no good. Friends of ours who also OB recommended the NAB, and I must say that so far they have been brilliant. Easy to deal with, accepting of our quotes (of course we sourced the most expensive quotes we could to ensure we had a bit of extra to allow for budget creep). Payments are made to us, they are a little vague about how they pay out but it seems like there are 6 main stages, deposit, slab, frame, lockup, ?? and final - we submitted our first lot of bills once the slab was complete and received more than 80% of the value of the invoices - and part of that was for the truss that we had already paid a deposit on - which makes me think they have a 'percentage' value that they work off rather than basing it solely on invoices submitted. Which of course is important as some of the work you will do yourselves - for example we sourced the site cut and setout and did the concrete piers ourselves. So we don't have invoices for that! I would be careful assuming that you would be able to borrow initially 60% and then refinance up to 80% - you might find that if your costs have run over or if there has been a downturn in the market that your house might not be valued as favourably as you would have hoped, and if you are relying on that to finish the house you might be in all sorts of bother. I would go for the 80% model upfront, make sure you pad out your invoices as much as you possibly can (ie go for the gold plated stove! ) while keeping it within your budget and a realistic value of houses in your area. Ours is probably a little higher than others in our area but still managed to obtain approval. Another thing to consider: having a little bit of money up your sleeve for when you are waiting on the bank to pay out on your claim and you need to pay your tradie who has done a great job and you don't want to keep him waiting for weeks. Or to buy that stove months ahead of schedule because it is a really cheap price. Good luck with your build, hope all goes well, and good luck with your finance!!! I can't speak more highly of NAB, they have been great. The only very small hiccup we had was the initial setup of the loan ready for paying out invoices, that took a week or so longer than we expected, but that is it. Kind Regards Mel The secret of success is enthusiasm .... http://romseyherewecome.blogspot.com/ Re: finance for owner builders 11Apr 20, 2009 10:39 am Thank you soooo much Mel. That has really made things much clearer. After doing some more research it became clear that NAB were really the only option for us. We don't yet have council approval and we need that before going to the bank but with fingers crossed it should be ok, as we do have quite a bit of our own $$. Thanks again for your very helpful post. L Re: finance for owner builders 12Apr 20, 2009 1:01 pm Hey Loretta, we went through the saem thing. We ended up going with Bank of Queensland, they would lend up to 80% of total value as well and just required a break down of costs, I suppose to assess the risk of the lend. They were also good with the paying of invoices as well. Just another option. cheers simon Re: finance for owner builders 13Apr 20, 2009 1:10 pm Hi Simon Thanks for that info - no one had mentioned Bank of QLD to me before. I will investigate! Re: finance for owner builders 14Apr 20, 2009 11:34 pm No worries Loretta, good luck with it all! Regards Mel The secret of success is enthusiasm .... http://romseyherewecome.blogspot.com/ Re: finance for owner builders 15Apr 24, 2009 3:32 pm Hi All Just wanted to update this. Went to see Bank of QLD and was told that we needed a breakdown by a Quantity Surveyor and the QS needs to be approved by the bank as well. Cheapest quote for a QS: $1200 - most quotes: $3k plus! So, we are going with NAB. This is what NAB needs, for anyone interested:
detailed expenditure budget including an allowance for contingencies (20% is normal); *see below copies of all quotations/estimates; copy of soil test and quantity surveyor’s comments; work timing schedule including an acknowledgment of agreed timing; and required insurance policies Two most recent, consecutive, computer generated salary advices detailing YTD payments for each applicant Last six months statements for all current savings and loans (including credit card statements) as applicable, excluding existing NAB facilities A recent rates council notice for existing property at Como A rental income statement or residential tenancy agreement for existing property - if applicable Identification (eg; current passport plus driver licence), not required if existing NAB customer Re: finance for owner builders 16Apr 24, 2009 5:10 pm Hey Loretta, Isn't it amazing that people who want business accomodate requests and people that can't be bothered set the hurdles so high!! Out of interest our process was. 2 x recent payslips id passport / drivers licence Copy of title and subdivision thats was for the pre approval. Approval Breakdown of costs, all I did was an excel spreadsheet and put down costs (known and estimated) labour i would do myself. Copy of plans, and they were not even finished. Bank Statements just showing our repayments on our exisiting land loan (if we didn't have one then 6 months of bank statements showing savings. However I did use a quantity surveyour or estimator. They cost me $370 and took a week. It came in over budget for I thought i could do it for, but the value is and I suggest that you get one is that it itemises every single thing that is needed to build the house and gives you a very good base to start with. All I did was copy the estimatation into excel and run my own column down the side of any differences, eg electrician estimated 10,000 all up, got it for $6,000. Anyway I just used the estimators info for what I didn't have and my own for what I did have and came out where i wanted it to allowing for a little extra. I suppose the thing about BOQ is that every branch is owned and operated they are like a franchise, so if the bank manager doesn't want your business for whatever reason thats it, if they do like ours did they will help you!. Sounds like you made the right choice. However i still recommend getting a estimator which is the same as quantity surveyor. PM if you want the details of the one I used, I just sent them everything through email. Re: finance for owner builders 17Apr 25, 2009 5:41 pm We didn't want to bothered by submitting all the quotes to the bank and then having to pay for inspection fees for various stages of the building, so we are just borrowing 80% of the value of the block for "personal investment" purposes. Once we've spent all the money and if we need to borrow more, we will just have the block (with the house on it this time) reavaluated and borrow more. We went through CBA and it was very straight forward. Re: finance for owner builders 18Apr 25, 2009 5:52 pm ahhh lucky you...you own your block 100%! me, not so fortunate Re: finance for owner builders 19Apr 25, 2009 6:01 pm [quote="loretta"]ahhh lucky you...you own your block 100%! me, not so fortunate /quote] Not 100% yet but not too far off. What saved us was that the block was purchased 8 years ago and it is now worth a lot more. Can you put either one of your parents' houses on the line to make it easier to get the loan? Re: finance for owner builders 20Apr 25, 2009 6:13 pm no, i wouldn't ask that of them. but i think we should be ok. we have substantial savings. unfortunately we also have champagne taste!! you were just referred to get advice from your solicitor. This is a legal matter. Separately, why would you use a buyers agent for a house and land package? 3 57691 Hi VK, Think it's worth investing time in an Owner Builder course to equip you with basic knowledge on Australian Building Industry and its regulations. Also, I suggest… 11 23603 |