Build or Renovate Your Own Home


First, I need to clarify that there are:

    • Owner Builders
    • Owner Builders that are hands on and build and
    • Builders.

Renovations can be minor non structural home improvements or Structural changes and improvements

And Lenders look at all these very differently. Let’s look at what the implications are for borrowing based on this.

An Owner Builder means that the owner of the property is the person/s responsible for the management of the construction.

They, cost it up, get the quotes, choose the subcontractors and pay them directly. They are ultimately responsible for what happens. Some Owner Builders like to get in and do some of the bits that they are legally allowed to. If you aspire to be a hands off or a hands on Owner Builder then you have to meet a few additional requirements if you hope to be approved for a construction loan. Basically you need good equity in the property or a large deposit. For major renovations and additions, the property should have a low debt level compared to it’s value before you start smacking it about with a hammer. Don’t go too far into Design before you speak to us to ensure you meet current lending policies.

If you plan to use a builder to take on the construction or major renovation then this is fairly straight forward. This is a construction loan. The lender controls the release of money directly to the builder. They do this to ensure the project is getting done to a predetermined Building Contract. This protects you too as your Authorization is needed before they pay the builder, so if you aren’t happy you can put the brakes on. There are generally four payments made at set stages such as “Footings”, “Lock-Up” “Fit-out” and “Practical completion”.