SPECIALS

Check out the latest kit home specials...


Full Doc and Low Doc Financing: Preparing for Your Kit Home Part 2

In the previous post: We talked about choosing a building block for your kit home and what to keep in mind when designing your kit home .

Some believe that the Colosseum was financed by a raid on King Herod’s temple. Luckily kit home owners have it a bit easier today with 2 popular financing options available to them.

Despite all the power they had, Roman emperors still had to find a way to finance all the great structures they desired. The Colosseum’s construction, for instance, is rumoured to have been financed by a raid of King Herod’s Temple in Jerusalem.

Nowadays financing is a bit easier (and safer). Financial institutions provide future kit home owners with two popular options to finance their kit homes:

1.      Full document loan

A full document loan is often used by individuals that have a stable, regular income to repay their loan amount. To apply for a full document loan to finance your kit home you will need to prove your employment with payslips or business financials (self-employed).

Note: To be able to apply for a full document loan, you’ll generally have to supply the following:

  • Copy of licence, passport or birth certificate
  • Rates notice for all properties owned
  • Most recent loan statement for all loans
  • Most recent credit card statements
  • 6 Months loan statements for loans being refinanced
  • Proof of rental income for all properties
  • Self employed – 2 years tax returns or assessment notices
  • Employed – 2 payslips and letter of employment
  • Or last 2 years tax assessment notices
  • Insurance certificate notices for all properties
  • Purchasing contract if buying a property

Full document loans often have standard interest rates associated with them.

2.      Low document loan

A low document loan is another option for kit home financing for individuals that have an Australian Business Number (ABN), but cannot provide proof of a stable, regular income. You can, however, afford payment on your home loan according to the lender’s terms.

Here are three main low document loan types:

Asset Lend

An asset lend requires the least evidence of income, but will finance only a part of your kit home. These loans are secured against the property itself, and generally carry a high interest rate.

Self-declared income

This type of low document loan simply requires a signed declaration of income. You can loan up to 80% of your kit home value, but this usually comes with higher interest rates.

Account statement

An account statement low document loan requires a bit more documentation in accompaniment of the kit home loan application. This could be a letter from your accountant, or anything else to similar effect. Interest rates for this type of loan are closer to standard interest rates.

Note: When you’re applying for a low document loan, you’ll generally have to supply the following:

  • Copy of licence, passport or birth certificate
  • Rates notices for all properties owned
  • Most recent loan statement for all loans
  • Most recent credit card statements
  • 6 Months loan statements for loans being refinanced
  • Proof of rental income for all properties
  • Purchasing contract if buying a property

Remember Your Building Block!

Just like the Roman emperors that built the Colosseum –a father and son team, in fact – you’ll need some land to build your kit home. These are formally known as building blocks[u3] . Remember to keep their cost in mind when planning the financing of your kit home.

In all events, consult a number of financial institutions to ensure that you get as much of your kit home financed as you can, while getting the best possible interest rates.

A summary of this post can be found on the Owner Builder Finance page.

If you missed our previous post, read “Are King of your Castle? How to Prepare for Your Kit Home – Part 1 click here

Comments are closed.