Among all loan products in the market, lenders pay extra attention to this loan application for being too risky. With this loan product, borrowers can be the contractor or they can hire professionals instead. Although the latter is commonly preferred by most lenders.
READ MORE: Save thousands as an Owner Builder
Be specific
It is a common practice by the lenders to scrutinize the details of each application to minimise the possibility of borrowers defaulting on their owner builder loans. To do this, lenders usually inspect the project’s plan, timeline, costing, and the amount that the borrower is willing to shoulder or the loan to value ratio (LVR).
For a higher possibility of getting approved, borrowers are advised to have a plan that is as detailed as possible. That is why credit-the part of the bank that assesses home loans-usually prefer having a licensed contractor to prepare the plans commissioned rather than the borrowers themselves.
Make sure it’s doable
Most lenders are also very particular with the timeline of the project to ensure that the project is done, not only in the proper way, but also in a timely manner. Lenders are also very keen on how projects are managed.
Another important aspect that every borrower must look into is the LVR as this value varies from lenders to lenders. This aspect is an important consideration because it will determine how much you need to shoulder or contribute to the project and therefore the amount of funds the bank will make accessible to you via the loan.
Prepare the required documentation
Upon application for any of these loan products, you need to prepare some documents, which will be needed as an attachment to your application. These documents include proof of your income, liabilities, and assets, equity held, among others.
Details about the project will also be required such as the drawings and the project’s plan. Costing information is another vital detail that will be asked from you if you choose this loan product. If you have already started the project, you will have to provide details on the amount already spent on the project plus the amount needed to keep the project underway until it is completed.
Intellichoice has over 18 years experience with these loan types and as such can point you towards aspects of your owner builder project that need attention to successfully acquiring your owner builder home loan.
READ MORE: Mortgage Broker Requirements: Is Your Loan Specialist Legit? | Intellichoice Finance
###
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.!