Preparation is the key to being a successful owner builder. This is a common theme of the information you find here on Scope Drafting and Design.
Nowhere is this more important than when you are planning your finances. Here are a few questions to ask yourself to ensure you have your finances sorted:
- Can I afford to build the house I am having designed and drafted on the block I want?
- Have I considered all the costs involved so that I can fully finish the project once I start?
- Can I afford the ongoing costs of this home?
- Will my finance arrangements enable me to commence and complete an owner builder project?
Scope Drafting and Design can help you design your home within your budget and guide you to the resources you need to ensure your budget is correct.
In most cases the major factor in determining a budget is your bank or financial institution. This can be a difficult process for owner builders. Why?
Well, banks are pessimists and always assume the worst. They assume you will fail as an owner builder and will not complete the house. How does this affect your loan? If you do not make your repayments and the bank forecloses they want an asset to sell. Remember they have factored in that you will not finish your house – and a half finished house is not easy to sell.
This can be overcome in 3 main ways:
- Provide other assets as security to cover the building loan
- Provide quotes for the work you will be doing from all the trades involved and then have the bank pay out those trades after the work has been done
- Pay for the work yourself in stages and then have your house re-valued and refinanced to reflect the new value.(Warning: This last method can adversely affect your credit rating due to the constant finance applications)
Please remember this is general advice and not intended to be financial advice. Please speak to your financial institution for specific information.
Come talk to Scope Drafting and Design to find out how we can help you owner build, or design and construct your dream home or renovation.
Remember we don’t charge to talk and our advice is free, so pick up the phone or drop us an email.
Till Next Time