Help trying to finance an owner builder loan

Discussion in 'Loans & Mortgage Brokers' started by 92dyl, 6th Oct, 2018.

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  1. 92dyl

    92dyl Member

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    Hi PC, I need some advice regarding owner builder loans and i thought A few here might have some ideas for us to look at.

    Me and my wife originally sat down with a broker from rams regarding our plans with our ppor and that we wanted to owner build as I am a carpenter. They said fine we can do it sonwe went out spent all the cash needed to get plans drawn up and submitted to council.

    Right now they are due to come out of council very soon, however rams have come back and said they cannot do anything for us now.

    A few details of our situation and plans:
    - 300k mortgage with rams
    - home valued at 425k
    - we wanted to get a construction loan of 200k to extend and renovate our home
    - structural renovation, extending frontwards, sideways and to the rear.
    - i am a carpenter by trade, currently working full time as a foreman now for a large building company.
    - i have all the qualifications to get my builders license myself, however i need another 3 months more experience. So we wanted to owner build.

    The only drama we are experiencing is the owner builder aspect. The area, plans, our income, etc is fine.
     
  2. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Do you have a company entity which you are the director of and can do a fixed building contract between the company doing the construction and you the individual?

    We have a lot of owner builders who have the above scenario and there are a couple of lenders that have this niche where they will treat it as a normal app (including RAMS mind you).
     
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  3. 92dyl

    92dyl Member

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    Yes i do have a company entity set up still. Only problem is the company hold a carpentry license and not a builder license.

    I could get the builders license in probably in 4-5 months, however that changes our life plans pretty drastically.
     
  4. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    In that case, Heritage would be an option.

    They will lend to owner builders at 80% provided you are a registered builder. You will need to provide normal build loan documents such as contracts, specifications, progress payment schedules, etc. PP's will be a bit of a pain as Heritage does an inspection for each claim but I think thats fair considering the risk associated with owner builders.
     
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  5. 92dyl

    92dyl Member

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    Thanks for your replies! Unfortunately i will not be eligible to become a registered builder for at least 4-5 months from now by the time paperwork is completed and processed. I was hoping I could get finance as just an owner builder to help start the project sooner.
     
  6. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    If you want to do the loan now then its Heritage - the big problem with Heritage is their servicing calculator so hopefully thats not going to be a roadblock.
     
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  7. 92dyl

    92dyl Member

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    Thanks so much again for your replies Shahin. I will add them to my list to call. Cheers!
     
  8. Joynz

    Joynz Well-Known Member

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    Could you stage the reno so you need to borrow less?
     
  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Why not just use Shahin?
     
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  10. 92dyl

    92dyl Member

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    No not really. I can leave the landscaping, driveways etc. but thats about it.
     
  11. 92dyl

    92dyl Member

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    I am assuming if he could help or is interested he would of mentioned it?
     
  12. The Y-man

    The Y-man Moderator Staff Member

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    No self promotion allowed.

    The Y-man
     
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  13. Ethan Timor

    Ethan Timor Well-Known Member

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    Shahin knows his stuff. Definitely worth contacting him and see if/what he could do to help you out.

    Another scenario that might work for you: do you have a mate that is a builder? He can sign as the builder and subcontract the work to you. He’ll probably want some project management fees for his trouble but this could be a quick and easy solution to get you across the line finance wise.

    Good luck and please do come back to this thread and tell us how it was all resolved eventually :)
     
  14. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Nodrs gulls here ;)

    Ta. Rolf
     
  15. Brendon

    Brendon Well-Known Member

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    Don't know if it would end up shooting you in the foot but could you max out your borrowings now, you could have another $40k equity available, maybe more if you could get a better valuation elsewhere.

    Use that cash to get the project going, if you're doing a lot of the work yourself it should get you a fair way. Then once you have the builders licence finance it through that?

    It could cause issues trying to get a valuation/end valuation on a half finished extension would be the main issue I would think but it would get the project going immediately.

    The other option, which you're obviously trying to avoid, is wait the 4-5months and use that time to plan/prep the project immaculately to save time and money once you have the green light.

    Do you have enough cash to at least do the site clearing, some demo work, set out etc?
     
  16. tobe

    tobe Well-Known Member

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    You don’t want to try and finance a partly completed property. That’s just as hard as financing an owner build.