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Transportable, relocatable and tiny homes - Construction Lending Part 4

Funding Relocatable, Transportable and Tiny homes.

These are three types of builds that are becoming really popular obviously as there’s a lot of efficiency (financial, time and environmental efficiencies) that can be made when things are built off site, in a specific location where they’re meant to be built. The builders and other tradies are all in one place together and they can do lots in a much quicker period of time. It is a way to get a really cost effective house on to site. The main consideration from a lending point of view is that banks can’t take security over that house until it’s on the land and connected to services. So this lead to banks not lending money until the house is actually on site. So often that can be a problem because the builders are building the houses and they want you to make payments before they bring the house to site.

Transportable Homes

A transportable home is a new home that is built away from its final site and then relocated to a new location when completed. It is then set down on a foundation or piles, connected to services before decks and other exterior features are added, ready for moving in. Our good friends at Elevate Homes have taken this to the next level with some amazing architecturally designed transportable homes.

Transportable homes can be. great way to get a well built, brand new home at often a cheaper price and in a quicker timeframe than one being built on site.

Relocatable Homes

These are generally defined as homes that are second hand, picked up and moved off site where they were built and then resettled at another site. These are often older homes and villas that are in a run down state but with some TLC can be bought back to life. 

They are often very cheap to buy and come with transport and resettling costs included and so can look very appealing as a low cost option for getting a house on site. 

Considerations when funding transportable & relocatable homes

If you already own a property or a piece of land which has no mortgage on it which is unencumbered or you already have a house that has a mortgage on it but the lending is actually lower than the value of the house there are ways we can make that work where you loan against that property or you loan against that section and then to get the transportable built and then on to site and get connected and then refinance out of that point. 

If you don't have security available already, there are some relocatable or transportable home companies that are happy to work with you on that so have a discussion with them first. 

Something to consider when you’re looking at relocation, the banks are definitely a little more cautious to lend on that and until it’s on site, you'll need to be able to fund that part of it yourself. We have had success with a few clients on doing this sort of thing so if you think this is n option available to you, reach out, we'd love to help.

What loan to value ratio can I borrow to for relocatable homes?

The banks will generally lend up to on 80% of the value of the land but they wont lend any more until the kit set or relocatable is on site and connected to services (you need to ensure that you have funds to be able to fund everything needed to get to this point). 

The bank will then lend up to 50% or 70% of the final value of the project once it is connected to services and a valuation is provided. Generally they will release funds on progress payment valuation reports or builders invoices that are well planned out in advance. 

Tiny Homes

With tiny homes, and anything else is on wheels, the banks are going to struggle to finance against that because they can’t take security over it. If they needed to take over ownership of the tiny home, they might go to where it should be one day and the tiny home is no longer there. Tiny home lending might come under other types of lending. 

Again, if you already have a property that can be used as security, it could be possible to loan against that property to go and build or buy a tiny home. If you’ve got no exisiting property that the bank can take security over then it’s really difficult to fund that in a traditional mortgage way. You could however look at funding a tiny home in some other way just like you would on a caravan. Have a chat with us and we’ve got organisations we can connect you up with that will look at funding that sort of thing. 

If the tiny home is actually gonna be sitting on a ground and its not movable and same as the other ones we can, if you’ve got something that we can use as a security, property we can use as a security, we can get lending for that you build your tiny home and then maybe there might be some lending that we can get.

So that’s a little bit of a rundown on how you can fund transportable homes, relocatable homes and things like tiny homes. If you want to discuss these as options, touch base and we can see what options are available. 


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