At the time of writing this the royal commission into the banking industry is nearing completion. This has resulted in considerable changes to lending policy. It appears that for many it is harder to obtain finance due to new more stringent LVR (loan to value ratios) and a more conservative assessment of the applicant’s ability to satisfy the servicing of the loan requirements from most lenders. However hopefully as time progresses many of these constraints will go back to how they were.Storybook clients who want to embrace Owner building have to satisfy different requirements in respect of LVR than those who engage a registered builder.
Firstly, let’s look at the LVR for Owner builder applications. When you add the value of your land and the cost of construction together that will give the security value you are providing your lender. The required deposit (equity) you have is higher for the Owner builder unless they are registered tradespeople themselves in which case lenders may make certain concessions. For most of our clients though the deposit needs to be a minimum of 30 to 40% of the security value.
The LVR when a registered builder is engaged reduces the deposit requirements to a minimum of around 20 %. Although the builder price may be 20% higher than an owner builder price many of our clients go with this option even though they would prefer to be an Owner builder because they cannot obtain the finance otherwise. Fortunately, though when you compare a builder built Storybook home with other Custom home builders you will find that our option is still extremely competitive.
In the current financial climate, it is more important than ever to select a home that has great resale appeal and provides genuine affordability. Our beautiful custom Storybook homes are cheaper than you think no matter what your budget range. Make a free appointment to discuss your project with your nearest Storybook consultant today.