Finance

When it comes to securing Finance for an Owner Builder, it is not as hard as once thought. Australian Owner Builders can help. We have been providing home loans for many years, and in case, there are ways to impress your bank manager and improve your chances of being granted the funds. If you want more information attend one of seminars to find out more about finance!

Think of yourself as a small business person. If you were, and were about to approach the bank for a loan, you would arm yourself with a properly thought-out and printed business plan. An Owner Builder project is similar in many respects- it needs a plan detailing the allocation of money that must be spent wisely, and accounted for.

If the bank can be presented with a document that shows you are serious about the building project, with costs listed, labour strategy noted, and with some written idea about how the work will be planned and executed, you are in with a chance.

The best advice we can give you is that you enlist the help of a building professional, who will estimate the project's various costs, splitting them up into material and labour. Show where these items will be procured (the names of suppliers), and make a logical document from all your facts and figures. The bank will be impressed by anything you can do to indicate that you are capable and responsible person when it comes to the management of a financial operation (and that is what Owner Building is).

Friendly Tips for Owner Builders seeking finance:

1. Make yourself fully aware of the leader's conditions when taking out a home loan. Read all information carefully, and beware of the lender's draw-down requirements (when and how you may be allotted the money in progress payments). In some cases, lenders will want to have your building inspected by its own valuer or other executive-after all, a substantial amount of money is being invested, on trust, in your abilities to manage things successfully.
2. The official interest rate is set by the Reserve Bank after taking into account many economic indicators. The rate you are offered (by the bank etc) will move up or down in response to the Reserve Bank's deliberations in changing the official rate, as it must do from time to time.
3. To prepare for an interview with your bank, you need to know the amount you wish to borrow.
4. You will be expected to supply details of income, and perhaps proof of your financial viability. This might include your employment history, or, if you are self-employed, details of financial statements/performance verified by your accountant.
5. Your assets will need to be known by the bank, because in the event of a foreclosure on the loan, i.g. if your project fails to proceed to completion, the bank must have some idea of the security your assets provide.
6. Attend our seminar to learn more about finance!

Some mortgage industry terms:

1. Fixed interest:
   Interest rate rises and falls do not affect your repayments during the period the loan is fixed. There are usually exit penalties and there may also be penalties for making extra payments.
2. No frills:
   Variable interest loans that usually offer low rates but some may carry extra charges for additional payments. Usually they do not include the flexibility of other variable rate products.
3. Standard variable:
   These usually allow you to make extra payments (so that your loan will be paid off quicker) with no penalties. The interest rate will be a little higher.
4. Split loans:
   With split loans, you may choose to receive half the loan at a fixed rate and the other half variable. Which is best, fixed or variable? It is a moving target and no-one, not even your bank, can predict the interest rate with precision.