Land loan

I'm looking to purchase some land and then owner build.

What kind of LVR is possible for the land, I understand no bank is happy to do a loan for owner builds. Is it better to get the highest lend on the land and finance the build myself? I don't have the full amount to complete the build unfortunately

 

What do you specifically mean by an owner builder? Do you mean you want to do the entire build yourself?

Are you a builder with your own ABN?

Some lenders such as Westpac and St George have a niche whereby if you are a builder and can prepare a fixed price building contract between the company and yourself then they will treat this as a normal construction loan rather than an owner builder.

 

Don’t do it.

if you must, then yes, get an 80% land loan and try and find enough to get the house to certificate of occupancy.

Once you have this you can get finance for the rest, landscaping, floor coverings and the other bits and pieces.

 

If you have land and get a partial build done, MKM will fund the rest of the build, generally to a max of 75% of the completed value.

But oddly, they wont do a construction loan that hasnt commenced yet...they only take on incomplete builds....

But why would you want to place yourself in that position? Get a fixed price contract from a builder, and fund it as a construction loan with a conventional lender... If you are a licensed builder , contract it to yourself and do as @Shahin_Afarin has suggested, Otherwise.... yeah no.

Everyone owner builder thinks they are different and wont make the same mistakes others make, but owner builders who aren't real builders , almost without exception, underestimate costs and confuse their ambition with their ability. The idea that they can cut conventional corners to save money almost always becomes a more expensive outcome for them.... My general advice would be that if you don't have at least 115-120% of what you estimate the build cost to be in cash , it's almost certain to be a bad idea. And you are already saying you don't even have 100%.... so that should be all you really need to know

 

Not entirely true, lots do it but LVR usually restricted to 60% of the completed value, some lenders will even go up to 80% LVR

 

From a valuation perspective, there are a lot more involved than your standard TBE reports.
Owner Builder need a lot more information and documents, 9 out of 10 instructions are returned to the bank due to insufficient documentation, delaying the finance process..

 

What additional information do owner builders need to supply compared to a standard builder contract/finance app? Owner Builder certificate?
The fact that they're more likely to be sent back for more information request may just be due to the fact they're not experienced in what's actually required for an as if complete/construction valuation?

 

Owner builder cert isn't the big thing, the valuer is more concerned about the asset being complete or incomplete. Being an 'owner' builder there is flexibility during the construction process... re the required docs even the experienced broker & bank/builders don't provide the complete docs. I think it is largely attributed to the numbers, not a lot of owner builder requests come through.. I'd say under 5-10%? opposed to a run of the mill application?

Overall, it isn't a big deal.. just that valuers are measured on turnaround SLA.. and having something sit there for days which is beyond the valuers control is a little frustrating..

The problem is, most owner builder documents provided usually/always leads to an incomplete product. The usual conversation during inspections goes along the lines of, 'Mr builder whats the plan for the bedroom BIR? and the appliances etc' response is 'Oh yeah, I will get around to it, haven't decided how big/small/brand I want yet'.
Yes, it's a small part of the house, but still an 'incomplete' house..

Additional information;
Australian Banking & Finance Industry – ‘Residential Valuation Standing Instructions V2.2.1’
P.31 (PDF won't let me copy, but below is the link)
https://www.api.org.au/sites/defaul...instructions_version_2.2.1_23_august_2019.pdf

The big thing is the 'quotations from all subcontractors'...

 

So all standard requirements for any build valuation really, need to have certified plans, complete list of specs (fixtures and fittings etc.) and build contract with progress payment schedule clearly defined.
Does sound like some builders want to do their own thing when it's their own house they're building and may not be as strict in regard to sticking to the original plan/specs etc

All of this is good info for the OP should they choose to go down this path.

 

Yes, but valuers hardly get certified plans.
With progress payment schedules, they should also be industry acceptable, i.e. front loaded schedules will be knocked back and items need to be on installation not on delivery.

Agree