Prefabricated housing is a trend that isn’t going anywhere. It might still be new to the ears of most Australians, but experts estimate that it currently represents about 3% of all houses in the Land Down Under. Considering the perceived 10% to 20% increase in demand in the next 10 years, there’s no doubt prefab is the future of Australian housing.
But if there’s one thing that’s slowing down its growth, it’s financing. Make no mistake; more and more lenders are beginning to fund the construction of modular and kit homes, however, they’re still not that flexible in many ways.
According to system-built country homebuilders, here are some of the challenges you may encounter:
When the Lender Doesn’t Know What a Prefab House Is
The truth is, the majority of lenders still have no concrete knowledge what prefab housing is and how it works. As there is more than one type of prefab dwelling, you have to be clear about the nature of the prefab home you intend to buy and how its building process goes.
It’s not uncommon to hear only one of two applicants of the same prefab home gets approved. This goes to show how communication is key, especially for such an unconventional property.
When the Lender Doesn’t Want to Provide Funds before Building
In most cases, you have nothing but vacant land when you apply for financing. The problem is, some lenders would only release the funds once the house is completed. Unless you could get construction loan-style financing, you might need to think of another security you could use on your loan.
When the Lender Requires High Credit Score
Because prefab is still relatively a new idea, conservative lenders would want to lower the risk by raising credit requirements. This can be a dilemma if your credit rating is less than pristine. If you can’t make up for your bad credit with plenty of genuine savings and strong employment history, keep shopping around for other lenders.
For the record, any application for all types of home loans would always involve some challenges. It may be harder to find a lender for a prefab home, but nothing is set in stone; make yourself an attractive borrower and make flexible arrangements with both your lender and builder.