Important Advice for Owner-Builders: Finance before you Build your Dream Home

Apr 12


Frank Zelasko

Frank Zelasko

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Building your home is a dream for many. But, before starting the work of land excavation, you must obtain finance. It will help you avoid financial restraints in future and ensure that your dream home doesn’t become a nightmare.


It is a dream for owner-builders to build their very own new home. There is no greater satisfaction for owner-builders than to admire their new home. Building a new home requires great amount of work and money. Often owner-builders spend their money on the following things:

• Excavating their land; and
• Pouring the slab.

It is only after they have completed the above-mentioned work they realise that:

• They have run out of their own funds;
• They have no money left to finish building their new dream home; and
• They require finance for completing the project.

Can Owner-Builders experience Problems while getting Finance?

The short answer is yes. Owner-builders often realise that:

• Many banks do not like to lend to owner-builders, Important Advice for Owner-Builders: Finance before you Build your Dream Home Articles and if they do, they will usually lend around 50-60% of the value of the land plus costs (This is often not enough to cover the construction of their new dream home);

• They are often being loaned money by the banks for something that does not yet exist; and

• They need to convince the banks that they can get the job done on time, and within budget. To avoid financial problems, you must prepare beforehand and start working on getting owner-builder construction finance.

Quick Information

Here is a list of things that you need to consider and which can be helpful to you as an owner-builder:

For an Owner-Builder Project:

• Funds are usually advanced in five progress stages;

• Lenders/credit providers will only pay out once each stage has been fully completed; and

• Before a stage is paid out, a valuer needs to sign-off on each completion stage.

As an Owner-Builder You will be required to:

• Pay a deposit, when you order the materials. This means you will require a large percentage of your budget (sometimes 50%) at the start of your building project.

Preparing your Building Project Documents

You should approach the building project in the same way as a building contractor would. This means preparing:

• Your professional "plans" and "specifications";

• A detailed and accurate building "cost estimate"; and

• A proposed "construction schedule".

So, before you start excavating your land and pouring the slab, make sure you have your dream home completely designed, built and paid for, on paper.

Seek Expert Advice

Being an owner-builder can be (and often is) a wonderful and satisfying experience that can save you money and will result in building your dream home. But, when things go wrong, it can take an immediate toll on your finances.

So, get expert advice right from the start. Employ the services of a finance broker who specialises in owner-builder finance, and who knows exactly how to help you.