Getting approval for an owner builder loan

Achieving approval for an owner builder loan can be a long and tedious process. The more you know and the extra time and effort you put into your application can be the very difference for getting a yes or a no. This article has been put together to assist you with your owner builder loan application.

What make a successful owner builder loan application

Before we can start ticking off each stage, you will have already got plans and a budget in mind for your project. At the very least draft plans.

A good drafts person or architect should be able to assist you
in designing the project to suit an already determined budget.

Once you have plans and a budget we can continue!

preparing cost estimates:

The most important aspect of an owner builder loan application is how detailed you are with you cost estimates. This stage needs to be well prepared, as it will assist you with your application and throughout the entire build. To prepare project cost estimates we need to be very familiar with the stages of construction and the trades associated with these various stages. Certain types of owner builder loans will base their progress payments on these construction stages:

1. Preliminaries – 5%
2. The slab or structural floor – 20%
3. Wall and roof frame – 20%
4. Lock up – 20%
5. Fix out and fit off – 25%
6. Practical completion – 10%

And the trades generally associated with these stages:

1. Concreter or carpenter and initial services rough in
2. Carpenter
3. Roofing installers, carpenters, bricklayers and services rough in
4. Electrician, plumber, carpenter, joiner, tiler and flooring installers to name a few

Once we are familiar with these we need to start chasing quotes from these trades to complete the works. Generally 3 quotes from different trades will suffice. Once these quotes are returned they will form part of your project cost estimates. The more detailed your quotes are the better your cost estimates will look to the financier. This is the longest stage to complete, however can be the one thing that makes or breaks your owner builder loan application.

Fast tracking your owner builder loan application

Below is a list of items your financier might ask for. Have these ready to go before booking an appointment to help fast track your owner builder loan application:

• Copy of your drivers license
• Tax account summaries, to ensure you don’t have outstanding tax owed
• Copy of your passport
• Your last 2 payslips
• Your latest bank statement
• You latest home loan statement
• Receipts of invoice already paid. Only invoices relevant to the construction project you are apply for finance for
• Your detailed project cost estimates. With quotes from trades with an abn.
• An owner builder certificate
• Owner builder permit
• Insurance for an owner builder
• Approved stamped plans
• They will usually also ask you to fill out a fact find where they will want details of all you income and expenses.

For your convenience we have built 2 templates to help prepare to an owner builder loan application:

1. Project estimated costs: a template ready for you to enter your estimate costs.
2. Fact find sheet: a template ready to record you income and expenses.

*Disclaimer: This post is general in nature and does not constitute as advice but merely from experience only. For advice we recommend contacting a mortgage broker or your bank. We hope the information presented in this article has helped you get approval for an owner builder loan.