Quite frankly, it is not for everyone, especially for beginners who have no experience in construction or to the very least, building their own dwelling.
READ MORE: Owner Builder Loan This Pandemic: Is It Worth It?
Who is an owner builder?
An owner-builder is someone who intends to build their own dwelling from scratch. The licensed or permit holding builder is actually the owner-builder themselves.
With this, owner-builders will need to provide significantly more documentation to prove to the lenders, especially banks, that they are not throwing their money on some projects that are unlikely to be completed.
As the owner-builder, they will need to prove how much the project’s cost and they are actually knowledgeable enough about construction or have a suitably qualified construction supervisor. The latter is so important because it gives the bank a sense of assurance that the project will not run over time.
Chance of approval
Just to manage everyone’s expectations, a lot of lenders have had bad experiences with this type of loan application. That is why, it is not uncommon for banks to be very cautious on approving owner-builder loans.
Lenders will also require a mountain of documents and paperwork from applicants to make sure that the project will go as planned in a timely manner, and that the owner-builder can actually pay the loaned amount.
Application process
The application process for home loans like this didn’t quite change even when the pandemic hit earlier this year. What’s interesting, with the rigorous fiscal stimulus package rolled out by the Australian government, interest rates have significantly decreased--favoring the borrowers.
You can talk to your trusted broker today and discuss your personal circumstances. Make sure you approach a broker that specialise in this specific loan product as not all brokers are willing to take in this kind of application.
https://www.intellichoice.com.au/owner-builder-home-loans.php
READ MORE: How Do Owner-builder Loans Work?
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Darin Hindmarsh is the founder and CEO of Intellichoice Finance, a broking firm based in Brisbane. He's been providing financial and broking services in the past 18 years. Hindmarsh is also finalist in the 2020 Australian Mortgage Awards - Pepper Money Broker of the Year – Specialist Lending. To jumpstart your home loan application, visit their home loan online application page today.!