1. Renovating Or Upgrading Other
2. ›Renovating What Type Of Loan Is Best

Renovating - what type of loan is best?

The benefit of using a builder to renovate your home is that lenders will generally lend you more money than if you are an owner builder. Using a licensed builder means that you can obtain a fixed price contract for the agreed work and your lender will pay the builder when certain stages of the build have been meet, e.g when your roof is water tight if putting on a second storey. These stages are known as "Progress Payments". At the end of your build process the lender would have paid many (often up to 6 or more) Progress Payments to the builder thus ensuring for you and them that the homes renovation has been done to plan and price.

Using a licensed builder and a fixed price contract does mean that changing your mind on what you would like can be costly - also the lender may need to approve any changes to the pricing outside of what has been agreed to in the contract.

If you decide to become an Owner Builder, e.g take responsibility for the building process yourself and manage the process from the first stage to the last stage lenders will generally offer you less in terms of a loan amount and will want information from you about what the renovation is specifically doing for the homes value.

Being an Owner Builder can sometimes save you money on a build, this is normally the case when you know the building market and have the necessary knowledge and skills to negotiate through the variety of tradespeople that may come on site to help you. By negotiating directly with each tradesperson (known as "Contractors") you cut out the middle man effectively saving money.

Remember though - this process can be very time consuming and you will save money if you know the market, if you are not aware of the building process then often the mistakes you may make from lack of knowledge are more costly to you than the money you saved from not hiring a builder.

The benefit of being an Owner Builder is that the process is lead and managed by yourself, therefore you are in control and have the ability to change items within the renovating process should you wish to.