Browse Forums Owner Builder Forum Re: banks don't like owner builders.... 6Jan 02, 2010 9:44 am Current status: Busy making the house our home Built PD Francis 29 on our 576m2 block at Reflections in Tarneit Reflections Estate Thread Our Build Thread Re: banks don't like owner builders.... 11Jan 12, 2010 6:39 am No surprise, they have almost been one of the most conservative. What I found is that once the bank 'gets it' ie the Cost plan and understands how it gives them security then the rest is easy. Our arrangement isn't with the Commonwealth! If it is any help, you can PM me some bank contact details and I can shoot them a sample to see if it might help get your finance over the line. Anywhere in Australia is fine. Builders are people too.... Re: banks don't like owner builders.... 12Jan 12, 2010 8:45 am Firstly if you have other properties, you could always use the equity in a home as collateral. Secondly, why wont the banks lend to Owner Builders when the amount of cash needed would be less than that of which a loan would need to be if the house was being built by a Builder? I guess it's the unforseen circumstances that aren't accounted for by the OB, and they may run out of money. Anyway good luck with everything and hope it all works out well. DA approved Waiting on a few more Builder's quotes. Re: banks don't like owner builders.... 13Jan 12, 2010 8:51 am mandystoj why wont the banks lend to Owner Builders when the amount of cash needed would be less than that of which a loan would need to be if the house was being built by a Builder? I guess it's the unforseen circumstances that aren't accounted for by the OB, and they may run out of money. OB is a much higher risk, so despite needing less money, the banks have less of a guarantee the house will be completed. This was the hurdle we kept coming up against when trying to go OB, that’s why we decided against it. Next time, hopefully we’ll have more money and collateral behind us and will be able to go OB. Current status: Busy making the house our home Built PD Francis 29 on our 576m2 block at Reflections in Tarneit Reflections Estate Thread Our Build Thread Re: banks don't like owner builders.... 14Jan 12, 2010 8:54 am wizard mandystoj why wont the banks lend to Owner Builders when the amount of cash needed would be less than that of which a loan would need to be if the house was being built by a Builder? I guess it's the unforseen circumstances that aren't accounted for by the OB, and they may run out of money. OB is a much higher risk, so despite needing less money, the banks have less of a guarantee the house will be completed. This was the hurdle we kept coming up against when trying to go OB, that’s why we decided against it. Next time, hopefully we’ll have more money and collateral behind us and will be able to go OB. Yeh that is what I presumed, and I have seen a few houses around that have not been completed for atleast 5 years now. One for 10 years! Poor guy is now rendering it (as the times and trends have changed) but still no where near finished. DA approved Waiting on a few more Builder's quotes. Re: banks don't like owner builders.... 15Jan 12, 2010 9:03 am Yeah there is one near my mum and dad’s house, it’s been there for that long that the wood has nearly rotted out. Current status: Busy making the house our home Built PD Francis 29 on our 576m2 block at Reflections in Tarneit Reflections Estate Thread Our Build Thread Re: banks don't like owner builders.... 16Jan 12, 2010 2:58 pm Yes, you are all correct in that an OB is a higher financial risk as they usually are not able to accurately cost their job from start to finish. It is the completion cost that will most often prevent an OB from completing and if they run out of funds and cannot borrow more then both the OB and the bank are staring down the barrel of a loss. The banks are wary because this scenario happens all too often or at the very least the bank forwards more funds just to get the project completed which leaves the OB with an unmanageable debt and a forced sale eventuates. We understand this problem and our solution is to have developed a procedure that can often assist Owner Builders to get 80% of valuation lent and on a line of credit. This is as good if not better than any deal you will get for conventional building and the criteria for getting that are exactly the same as a normal housing construction loan. Builders are people too.... Re: banks don't like owner builders.... 18Jan 15, 2010 7:40 am Good point and if you can get away with only a BOQ (Bill of Quantities) then that is a good result. As you, and others have mentioned, the banks are tightening up with OB's so they may well require more 'process' around how you are managing the rates in your BOQ to ensure that you finish on budget and that your costs are confirmed with quotes from trades before you start. Builders are people too.... Re: banks don't like owner builders.... 19Feb 07, 2010 10:47 pm Our credit union called us on Christmas Eve to advise they'd changed their policy and will only loan to OBs with a 50% equity level in the completed project. After phone calls to EVERYONE including around 6 brokers, all institutions listed here and everyone I could possible google we have just had our loan approved by the NAB. I was previously allergic to 'big banks' but I'd have to say they have been great. The application process was quite involved but basically we just had to prove that we were fully abreast of all our costs. We provided written costs for the majority of trades but used estimates based on Rawlinson's guide too and have been approved for a loan up to 80% equity. Don't give up ... it is possible to get the finance you just have to persevere. Re: banks don't like owner builders.... 20Feb 08, 2010 9:00 am I too wa svery wary of going to the banks fo rour loan to OB. However, I was recommended a broker from a work colleague and he stated that the NAB were the only ones now funding OB projects. Our application was very easy as we already had the house costed out (roughly) and just made the rest of the balance up with quotes. Heard last week that NAB have almost finished and will be sending contracts out in the next week for us to sign. No the fireplace doesn’t work. It’s been enclosed. I’m not sure what was removed, as it was done quite some time ago - well before what I can see with photos online… 2 11589 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 23657 |