Financing Your Granny Flat

Building a granny flat in your backyard has never been more worth it.

Whether you’re hoping to make a little extra money from AirBnB; help your parents retire in comfort; or boost the overall value of your property, a modern granny flat can suit your needs and situation.

But how do you go about getting a granny flat loan? What are the costs? Is it difficult? At Backyard Grannys, we want to make your end to end experience as easy and seamless as possible. Read on and learn everything you want to know about financing your granny flat.

How Much Does a Granny Flat Cost?

When people think about building costs, they forget about things like site costs and council fees; while base building costs begin at $109,500, you’ll end up paying around $140,000 on average. Sometimes more, sometimes a little less. It really depends on what you want, where you live and the challenges of your property!

To learn more, check out our ultimate guide to granny flat prices.

Obtaining Finance: How We Can Help

Every build has its own financial blueprint – your final loan depends on your current situation. Do you have any equity available? Will you need to refinance your home? Do you have any savings tucked away for expansions? Is your self-managed super-fund accessible?

Backyard Grannys have mortgage brokers, which we regularly work with, dedicated to finding the right finance deal to suit your budget. Our brokers are experienced in financing granny flats and homes and have access to over 30 institutions and banks, finding the best options so you can begin your build with confidence and clarity.

Granny Flat Finance: Your Options

There are three ways our clients commonly fund their granny flat costs. While our broker will find a solution that ticks your boxes, these options are the most straightforward – take a moment to learn a little bit more about them.

Equity: If you’ve been working hard to build equity in your home, our broker can leverage the amount. Say you need $130,000 and your house has rocketed in value – shooting from $400,000 to $550,000 – it may be possible to draw down the equity and finance your granny flat, increasing the value of your home.

Refinancing: Not enough equity? Our broker can help set you up with a traditional construction loan. You may need to refinance your current property, with the addition of the construction loan, unless you’ve paid off your home or investment.

As part of the construction loan financing method, you use a payment schedule: This means you only pay for the build according to its stages. There are two design and eight building milestones – upon the completion of each stage, you’ll be invoiced for an amount.

Who is Eligible and How Long Does it Take?

Before signing any contracts, Backyard Grannys recommends chatting with our broker first. You don’t need to be contracted already – we’d much prefer our clients begin their build with a realistic dream in mind. How a lending institution views you will depend on many things, like income, payment history, credit rating, expenses and examples of financial security. 

How long does it take to Obtain Granny Flat Finance?

On average, you’re looking at around three weeks. The first one or two weeks will be spent gathering the financial details required by the chosen lending option – there is no one size fits all timeline, unfortunately. A single person with one bank account, a traceable history of pay slips and few existing commitments will have a different application than a self-employed business owner with a family trust, a few investment properties and multiple bank accounts. 

Once all paperwork has been gathered, verified and submitted, lenders can usually approve a loan within five business days.

Are you excited to take the next step? Why not make an appointment with our broker and review your financial situation? Once you know your lending number, our expert team will match you with the right granny flat for your property.

Give us a call on 4947 2800 or fill in the form below.