FINANCING YOUR GRANNY FLAT

You are no doubt wondering: “Can I afford a granny flat?”

We cannot answer that for you as everybody’s circumstances are different., however we have developed a network of brokers who can assess your individual situation and guide you through the process of applying for finance.

In the meantime, the information below will answer some common questions about financing granny flats.

FIRSTLY, HOW MUCH DOES IT COST TO BUILD A GRANNY FLAT?

At P J Cook Building, we take pride in providing upfront pricing for your new home or investment so there are no hidden fees or surprises after signing our building contracts.

Unfortunately, it is not always like that across the industry. While the lure of a lower initial price tag sounds appealing, some builders will lock you in to a contract before hitting you with additional unexpected costs within your final building contract proposal. As the saying goes, if an offer seems too good to be true, it probably is.

On average, our range of 60m2 2 bedroom granny flat designs costs between $130,000.00 to $140,000.00. This includes our quality list of standard inclusions [which other builders offer as upgrades or within promotional offers], site costs, design, approvals and construction: full turnkey, ready to move in.

Read our Essential Guide to Granny Flat Pricing for more detailed information about costs.

HOW EASY IS IT TO GET FINANCE FOR A GRANNY FLAT?

A lender will generally consider your income and expenses as well as your access to savings, self-managed super, assets or equity in other properties. They will also look at your history and credit rating.  If the granny flat is being built as an investment property, the lender may consider the future rental income in your favour.

  • EQUITY OPTION

If you already have equity in your primary home [i.e. it is worth more than you owe the lender], you may be able to draw on that to finance the build, sometimes up to 100% of the value of the granny flat.  A property valuation will be necessary to establish the available equity. A top-up loan with the same lender will not require a new loan application so this is often the easiest route. You could also consider a line of credit but those loans have higher interest rates.

  • CONSTRUCTION LOAN

If you do not have enough equity in your primary home, our broker can help you organise a construction loan.  The lender will consider the finished value of the granny flat and the value of your existing home. Construction loans are released to the builder in stages.

We have briefly listed the stages below that most banks generally approve:

1. Deposit
2. Slab down
3. Frame
4. Lock-up
5. Fit off
6. Practical completion

During construction, you can enjoy interest-only repayments, with the capital repayments added on completion.

HOW LONG DOES IT TAKE TO ORGANISE FINANCE?

It generally takes 3-4 weeks depending on the amount of information that has to be gathered and submitted.

Are you ready to explore the opportunity for a high-quality granny flat addition to your property? For personalised financial advice, simply call us on [02] 4342 0853 to be introduced to a broker and set those wheels in motion.