Sep 16, 2019 1:21:39 PM

Owner Builder Loans

Topics: First Home Buyer, Buying and Selling Property, Home Loans 0

Looking to create your dream home but not sure where to start? Being an owner builder could be an option. Doing the work yourself has its benefits – more control over the project, greater satisfaction on completion, and potential cost savings - but there are a number of risks too. To help you determine whether an owner builder loan is the right finance option for your project, here are some things to think about.Owner Builder

Overseeing your home build
Building your own home is understandably fraught with challenges. As an owner builder, you’ll be responsible for obtaining building permits, supervising or undertaking the building work, and ensuring the work meets building regulations and standards. The success of your project will largely come down to your skill, experience and time.

On the up-side though, as an owner builder, you’re in control of the finished product which can be hugely satisfying when you’re designing and building your ultimate dream home. You could even save thousands of dollars by doing the work yourself; not just in labour costs, but also by taking on those time consuming tasks like selecting fixtures and fittings, materials and flooring, and shopping around for competitive prices.

Tougher lending conditions
When it comes to finance for an owner builder loan, it’s important you talk to the right people as only a few select lenders offer this type of lending and lending conditions are much stricter for owner builders.

Most banks will only finance the construction of a home when it’s being built by a licensed builder. Owner builder loans are available from a few select lenders provided you have equity in your land, savings or a guarantor willing to provide security for your mortgage.

What’s more owner builders can usually only borrow up to 60 per cent of the build cost versus up to 95 per cent if going through a registered builder. So it’s important you have enough equity or savings to cover the remaining cost.

Finance options
Lenders tend to view licensed builders as more experienced and hence are seen as a lower risk. Owner builders don’t necessarily have the skills and experience so many lenders are hesitant about approving this type of lending.

At Mortgage Express, we understand the processes involved in building a new home and we have access to lenders who are experienced at lending to owner builders. Our team of brokers will work with you through the loan application process and discuss interest rates and terms to ensure you fully understand what you’re committing to. It’s vital you talk to our brokers first to ensure the success of your owner builder loan application.

If you need advice around buying your first home or you’re considering growing your property portfolio with an investment property, it’s worthwhile talking to our team of brokers about your finance needs. Contact Mortgage Express today and we’ll put you in touch with a local broker who can meet you at a time that suits you.


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 (AFC