Owner building can save money, but it removes the fixed-price builder and warranty insurance lenders rely on.
With a small group of lenders, usually at a lower loan-to-value ratio, often around 60 to 70 per cent, and with detailed costings, the owner-builder permit and a contingency. Some lenders will not fund owner-builder work at all.
The saving on the build needs to be weighed against a larger deposit and a tighter loan.
Part of the construction loans guide.
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is an indicative borrowing figure at today’s typical rates. Lenders typically count around 80% of rental income, which is why an investment purchase can lift your number, your real figure comes from a proper assessment.
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In NSW an owner-builder permit is required above a threshold value of work, and obtaining it involves completing the required training. None of this is a lending question, but all of it affects whether the lending is available.
Home warranty insurance rules also differ for owner builders, and there are consequences at resale within a defined period that your solicitor should explain before you commit.
Owner building typically saves the builder's margin and project management cost. Against that, set the reduced borrowing capacity, the longer build time, the cost of your own time, and the risk that trades quoted individually total more than expected.
It can absolutely be worth it for someone with genuine construction experience and time. It is rarely worth it as a way to make a marginal project work.
Four things, and the first two decide whether the file is possible at all.
Sometimes: some lenders permit it and many decline. Those that do lend at lower maximum ratios and want more documents, including your permit and detailed costings, so find out which lenders participate before committing to the path.
Expect a lower maximum loan-to-value ratio than for a builder-contracted project, so more of your own funds go in; the reduction depends on the lender and the project. Quantify it early, because it can cancel out the savings owner building was meant to deliver.
In NSW, above a threshold value of work, yes, and obtaining it requires completing prescribed training. There are also consequences for selling within a defined period after completion. Your solicitor should walk you through both before you commit.
The rules differ for owner builders compared with licensed builders, and this affects both the lending and any future sale. It is one of the specific areas where advice from your solicitor is worth more than a general explanation on a website.
It can be, for someone with genuine construction experience, time available and a project of manageable complexity. It is rarely the right answer as a way to make numbers work that otherwise would not, because the reduced borrowing capacity and longer timeline often absorb the saving.
Charles can tell you what it does to your borrowing capacity before you commit, so the saving is compared against the real cost.
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General information only, not credit or financial advice. Professional lending policies, eligible occupations and loan-to-value thresholds vary by lender and change over time. Eligibility is confirmed against current lender policy in an assessment; nothing on this page is a promise that any lender will approve any application.
