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Kit home/other pre-manufactured home finance

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Many Australians are turning to kit homes and other types of pre-manufactured homes and dwellings to realise their home ownership aspirations. And for good reason. Depending on your individual circumstances, these types of homes and dwellings can significantly save you on build costs and get you into your dream home much sooner.

Types of non-traditional homes and dwellings
Pre-fabricated or modular homes These are generally designed in modules in an off-site factory and then transported and installed on site. While designs can be modified, there are some restrictions because they need to be transported using a truck to site.
Kit homes Kit homes arrive on site in pieces - pre-cut to specified sizes and are then constructed on site. With kit homes, you do have the opportunity to become an owner builder and construct the home yourself or you can hire a builder to do it for you.
Manufactured/mobile homes These are relocatable homes. They are generally pre-fabricated on a steel frame in a factory and are transportable using their own wheels.

A customised approach to finance

SERVICE ONE home lending specialists are well equipped to help borrowers with their non-traditional home finance requirements. This is built on an understanding of how financing for these types of homes differs from finance for a traditional house purchase. As such, a tailored and simplified service to address these needs is offered.

Just as these homes have a staged process of delivery, funding using a SERVICE ONE Alliance Bank loan works in much the same way. Funding is released in stages starting from the mortgaging or financing of land. From there further finance is attained at the various stages of material delivery and not after construction. Lastly, funds can also be attained once the build is completed and the finished home is valued and has an Occupancy Certificate.

  Licensed builder or owner builder?
If you go down the path of a kit home, you will have the option to appoint a licensed builder to construct the home for you or you can become an owner builder and do it yourself. Whatever you choose will impact the finance process as generally, you have the capacity to borrower more using a licensed builder.

A range of home loan options for you

SERVICE ONE Alliance Bank home loan options offer borrowers a range of benefits and flexibility, including:

  • the choice of fixed and variable loan rates (or a combination of both with a split loan)
  • redraw and offset facilities on the majority of loan options
  • loan options for not only owner occupiers, but for investment property purchases, and
  • a family assist option to help children get into the housing market sooner.

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To speak to a SERVICE ONE lending specialist about your home finance needs, phone us on 1300 361 761, visit your local Advice Hub or Support Centre or complete our short online enquiry form.

  FAQs:
Q: Can SERVICE ONE take security for the mortgage on just the building?
A: No. Security over the mortgage will consist of both the land and the home/dwelling constructed on the land.
 
Q: What is LVR?
A: This refers to Loan to Valuation Ratio and is essentially the percentage of the property value that you're borrowing. For instance if your loan is $350,000 and the value of your property is $500,000, your LVR is 70%.
 
Q: What is LMI?
A: This refers to Lender's Mortgage Insurance. This essentially protects the lender for loans that have a higher LVR because of the higher risk. If your loan is subject to LMI this premium is generally capitalised into the loan. A larger deposit against your home purchase will reduce your LVR and potentially eliminate the need for LMI.
 
Q: Are there any lending restrictions based on LVR?
A: Yes. Generally you can borrow up to 80% LVR. If you are looking for kit home finance and you're using a licensed builder, you can borrow up to 92% LVR (but anything 80% or over will require LMI).
 
Q: What does the lending process for non-traditional homes normally consist of?
A: This can vary depending on your particular circumstances, but generally, the process starts with an application submitted to SERVICE ONE and we'll then conduct an initial assessment around affordability and serviceability. If the numbers look good to us, we'll then issue a conditional approval, meaning the loan can proceed based on a number of conditions (like proof of income, valuations and other documentation requirements etc.). Once these are all fulfilled, an unconditional approval is granted and loan funds are disbursed direct to vendors in the form of progressive payments based on progress valuations. 
 
Q: When is final payment generally made?
A: Once a Certificate of Occupancy is granted.
 
Q: What types of loan products can be used to finance these dwellings?
A: The majority of SERVICE ONE Alliance Bank home loans are available to finance these non-traditional homes - they are just deemed for construction purposes. 
 
Q: How do I know if a kit home or other pre-manufactured option is right for me?
A: Unfortunately we cannot advise you with this. We do work with a number of suppliers and Members have indicated they have saved significant amounts of money on build costs and also cut the build timeframes down significantly with non-traditional homes such as kit homes. You will however, need to make your own inquiries with suppliers direct. We do recommend you understand the various warranties that are applicable on these builds.

Terms and conditions apply and fees and charges are payable. Lending criteria apply. Full details available on application. This is general information only and should only be used as a guide. 

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