Browse Forums Owner Builder Forum 1 Dec 30, 2009 8:36 pm ok so I spoke to the mortgage broker tonight. I told her that I wanted to buy some land and build a new house. She was excited. I told her that I wanted to be an owner builder and her mood changed. She 'advised' me not to take on owner building as the banks won't lend to OB's. She advised me to get a registered builder and sign a contract and we might be in business. She also said the banks were tightening their regulations around this stuff so it would become increasingly hard to do. Of course the broker only gets paid for the business that they write so they are better off going for the easier deal - I get that. So what should i do? should I simply try another broker/bank? I havent spoken to the kit home guys yet - they may have a financier? or is it possible to find a builder who will provide the contract and the build completion date whilst also allowing you to do most of the work?????????? any advice appreciated cheers Andrew Re: banks don't like owner builders.... 2Dec 30, 2009 8:48 pm We're lodging for our loan at the moment - a line of credit actually. The only way they would allow us to do this was by using the equity in another property, otherwise they wouldnt even look at us (CBA) Good luck! I would just approach each bank individually Custom European Cabinets - Melbourne Kitchen Specialist PM for business details as website currently being updated! Our Crazy Owner Builder Journey! Re: banks don't like owner builders.... 3Jan 01, 2010 1:02 am We faced similar problems getting a final topup to complete our home. Even with a total debt of less than 50% of the equity in the property (as calculated by their valuer), they were reluctant to lend without numerous conditions and only pay at completion of pre-defined stages. In the end we borrrowed 100k for the purpose of buying shares and had it approved in a few days, but they wouldnt lend the money for the house. (I was advised off the record by a bank employee to reaply and say it was for shares) Re: banks don't like owner builders.... 4Jan 01, 2010 10:09 pm We have a Viridian line of credit from CBA, but the rate of interest is higher than a normal mortgage. I know ST Georges Bank have an owner builder product which looks like a complete mare to complete but worth it in the end - they need big quotes for all the big jobs up front, I seem to remember. Our architect told me about another product but for the life of me I cant remember but if you want you can pm me and I will find out. Hope this helps Re: banks don't like owner builders.... 5Jan 02, 2010 9:37 am Can you try a credit union or similar? We are with a credit union, and I admit we have been banking with them for a long time, but they aren't as strict as big banks. You may pay a higher interest rate, but it's worth it to us for the personal service, plus their flexibility. You could also refinance with a bigger bank at a lower rate in future if you really wanted to. Re: banks don't like owner builders.... 6Jan 02, 2010 9:44 am We tried going down the path of owner builder and all the banks etc that we spoke to wanted to only give us around 60% of the value of the build, and some wouldn’t even give us that. Then there is a heap of red tape to go through as well. It’s extremely difficult these days to do, but if you have the patience (and I mean A LOT of patience) and the money behind you, then go for it, you will be much happier with the end result. 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.... 7Jan 03, 2010 7:46 pm Have posted this topic before, Bank of Queensland did 80% and would have done more, you just get a valuation show your normal proof of income etc and it is done, we did however have to cost the house out which I got done for 300 then amended it to suit. St Georges were the other one but were too fussy with the process. All I do is get something done give the BOQ a copy of the invoice and the funds are put in my account. good luck Re: banks don't like owner builders.... 8Jan 03, 2010 10:04 pm be wary of companies that offer owner builder self management packages. I had a bad experience (burnt for about 3g) with one that will remain unnamed on here that sold me a package that was useless in NSW as it only worked with victorian trades and then wouldn't offer a refund. I was put on to these idiots by an uninformed broker trying to get me O/B finance. CBA offered me construction finance in the end with an agreement that a builder gave me a fixed price to lock up, and then I could refinance at that point to do the fitout etc myself. I also got a viridian line of credit so that I could pay the builder quickly without having to wait for the bank. The bank would then top up my L.O.C upon receiving the builders invoice. Re: banks don't like owner builders.... 9Jan 03, 2010 10:13 pm I would be interested in the OB self management package you refer to - there are plenty of shonks out there to be sure. In terms of finance we have found that a detailed Cost Plan is the first major step. In addition, we have been able to negotiate with one of the big four banks to work with our systems, together with a Cost Plan and then offer Owner Builders up to 80% of valuation and on a line of credit. The interest and other terms are ostensibly the same as any other home loan. The biggest risk facing Owner Builders is running out of money due to inexperience in cost planning and site management and the banks have had too much experience in this so they naturally shy away. We have attempted to bring the Owner Builder into a better professional arrangement with the bank which in reality is safer than dealing with a registered builder who may or may not be financially solvent in any event. Builders are people too.... 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 23505 |