A fixed to the land outcome
Will it be permanently affixed?
Lenders are far more comfortable where the completed dwelling is permanently fixed to the land and forms part of the security, rather than remaining a moveable chattel.
MODULAR HOMES
Finance for modular and prefabricated homes
Modular building is faster and often cheaper. Financing it is neither, unless you approach the right lenders.
IN SHORT
Modular homes are financed differently because the build sequence is different
In a conventional build, value accrues on your land as each stage is completed, so a lender can release funds against work it can inspect and value. In modular construction, much of the house is built off-site in a factory — on land the lender has no security over.
That creates a genuine problem for standard construction lending: the lender is being asked to pay for something that is not yet attached to the security property. Manufacturers often want substantial payment before delivery, which compounds it.
It is very much financeable, but the pool of lenders willing to do it is smaller, and choosing the right one at the outset matters more here than almost anywhere else.
WHY IT HELPS
What has to line up
The right manufacturer
Does the builder work with lenders?
Established modular builders who regularly deal with financed clients usually have payment schedules that lenders can work with. Those who demand full payment up front are much harder.
A workable payment schedule
When does money need to move?
The gap between the manufacturer's schedule and the lender's willingness to release funds is where these transactions succeed or fail.
HOW IT WORKS
How it usually gets structured
There is no single approach. The workable structure depends on the manufacturer's terms, the land position and which lender is involved.
- Land is settled first, or already owned, and forms the security
- Some lenders will treat it as a construction loan with adapted stages
- Others lend against the land and release funds on delivery and installation
- Deposits to the manufacturer often need to come from your own funds
- Final valuation occurs once the dwelling is installed and connected
IS IT RIGHT FOR YOU
Whether modular will finance
This tends to suit you if
- You already own the land — which removes one of the harder moving parts.
- The manufacturer is established — with experience of financed clients and a staged schedule.
- The home will be permanently fixed — and connected to services on a standard title.
- You have funds for the early payments — before lender drawdowns realistically begin.
Worth weighing up
- Fewer lenders participate — and their policies differ considerably.
- Up-front deposits can be large — and may need to come from your own savings.
- Relocatable dwellings are harder — if it is not permanently fixed, most mortgage lenders will not fund it.
- Valuation can be conservative — particularly in areas with few comparable sales.
How working with us actually goes
Step 1
We start with a conversation, not an application
Step 2
We work out what you can borrow and what it costs
Step 3
We prepare the application and deal with the lender
Step 4
We stay across the loan long after settlement
COMMON QUESTIONS
Questions we get asked about this
Why is modular harder to finance than a normal build?
Because a large part of the value is created off-site, on premises the lender has no security over. Standard construction lending releases funds against work that can be inspected on your land.
Lenders that participate in this space have adapted their processes; most have not.
Can I finance a transportable or relocatable home?
It depends heavily on whether it will be permanently fixed to the land. Where it is, and it forms part of the property, standard mortgage lending becomes possible with the right lender.
Where it remains relocatable, it is generally treated as a chattel and financed quite differently, at higher cost.
How much deposit will I need?
Usually more than a conventional build, both because of lender caution and because manufacturers typically require early payments before any drawdown is available.
The exact position depends on the land, the manufacturer's schedule and the lender.
Does the land need to be owned first?
Not necessarily, but it is considerably simpler. Where land is being purchased at the same time, the land settlement and the build funding have to be sequenced carefully.
Talk to us before committing to the manufacturer, because the order matters.
Will the finished home value up properly?
Generally yes where it is a permanent dwelling on a standard title, though valuers rely on comparable sales, which can be limited in some areas.
A conservative valuation is one of the more common complications, so it is worth anticipating.
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GET IN TOUCH
Find out where you stand before you commit to anything.
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(02) 9659 1694Important information
The information on this page is general in nature. It has been prepared without taking your objectives, financial situation or needs into account, so it is not personal advice and you should consider whether it is appropriate for you before acting on it.
Any rates, figures or examples shown are indicative only. Lending is subject to approval, and lender eligibility criteria, terms, conditions, fees and charges apply. Talk to us about what your own circumstances allow.