Tiny Houses are fast becoming a popular option for those seeking alternative housing solutions in today’s challenging housing market. These compact homes provide a minimalist lifestyle and financial freedom, making them an attractive solution for those looking to downsize and own their own home without the responsibility of a traditional mortgage. If you’re considering a Tiny House as your next home, here's everything you need to know about financing a tiny house in Australia.

What is a Tiny House?

Tiny Houses are compact homes that prioritise the efficient use of innovative storage solutions and space-saving designs, all within a small footprint. Ranging from as small as a car parking space to the size of a semi-trailer or shipping container, Tiny Houses offer a simplified lifestyle, emphasising quality over quantity and sustainability over excess. Typically built on trailers to bypass minimum housing size regulations, Tiny Houses are ideal for those looking for simplicity and affordability, without compromising on comfort and convenience.

How much does a Tiny House Cost?

The cost of a Tiny House can vary depending on factors such as size, construction method, and customisation options. Generally, you can expect to pay between $50,000 and $160,000 for a Tiny House in Australia, with additional expenses for upgrades and ongoing fees such as registration and land rental. Researching different companies and models will help you understand the total cost and choose the best option for your budget.

How do I Buy a Tiny House?

The process of buying a Tiny House is not that different to buying a traditional home, in that you can either buy an existing Tiny House or pay to have one built. If you opt for the latter, you can choose to use an existing design or work with an architect or Tiny House company to create a custom design.

Some Tiny House companies offer standardised designs, providing several model options to choose from. This can be helpful if you're not sure about your preferences, as it offers a middle ground between a fully customised design and a basic pre-designed option.

Can I Finance a Tiny House?

While traditional home loans may not be available for Tiny Houses, which are classified as caravans, there are alternative financing options to consider:

• Specialist financing: Some Tiny House companies offer in-house financing options with manageable deposit requirements and competitive interest rates.
• Unsecured personal loan: A loan that doesn't require any collateral, such as a house or car, to secure the loan but is based solely on the borrower's creditworthiness, income, and financial history. Typically these loans have higher interest rates compared to secured loans but offer more flexibility in how the funds can be used.
• Access equity: If you own land or an existing home, you may be able to leverage the equity to finance your Tiny House by refinancing and increasing your existing loan.
• Chattel mortgage: A finance agreement that provides funds with competitive interest rates to buy an asset – such as a Tiny House on wheels – where the financed asset acts as security for the loan.

While a Mortgage Express broker can work with you to find financing solutions for Tiny Houses, the preferred option is a ‘cash out’ on an existing property.

Embracing Affordable Home Ownership

Regardless of the complexities of financing, Tiny Houses offer a viable path to affordable home ownership in Australia. Tiny Houses may also be suitable for retirees looking to downsize their existing home without forsaking convenience and comfort.

By carefully researching and getting expert guidance, it’s possible to successfully navigate the financing process for Tiny Houses. Consult with a Mortgage Express mortgage broker today and get personalised advice and assistance with financing for Tiny Houses.

While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.

Finservice Pty Ltd (Mortgage Express) is authorised as a corporate credit representative (Corporate Credit Representative Number 397386) to engage in credit activities on behalf of BLSSA Pty Ltd (Australian Credit Licence number 391237) ACN 123 600 000 | Full member of MFAA | Member of Australian Financial Complaints Authority (AFCA) | Member of Choice Aggregation Services.