Find out how to refinance and use your home loan equity to get more funds to build a granny flat with Savvy.
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If you’re thinking of taking out a loan to build a granny flat on your property, there’s more to think about than just available space. Savvy can help you compare all the different loan types available, saving you money by making sure you have access to the lowest interest rates and best home loan deals around. Start comparing with us today.
The options you have available to get a mortgage to build a granny flat will naturally depend on your current financial situation. Ideally, you’d be able to use savings to pay for your granny flat to avoid paying the cost of borrowing additional money. However, if you don’t have sufficient savings but have got some equity in your home, possible loan options include:
That will depend on how much you intend to spend building your granny flat. You will still need to retain the equivalent of 20% of the value of your property as security, so you won’t be able to use 100% of the equity in your home. To calculate the free equity in your home available to use, multiply the value of your home by 0.8 and subtract your outstanding loan debt. This will give you an indication of your usable equity.
If you intend to convert an existing rumpus or family room into a self-contained flat, you may only require a small loan of $20,000 to $50,000 to construct your granny flat. However, if you’re considering a separate structure in your backyard and intend to build a self-contained unit, you may be looking at needing an additional $100,000 to $150,000.
There are also ready-designed or ‘flat-pack’ granny flats available which can be installed in a few short weeks if you have the available space on your property. These range from $80,000 up to $250,000 or more depending on how many bedrooms you require and the design you choose.
Apart from your construction loan for your granny flat, the main costs you’ll encounter are getting plumbing, electricity, gas and phone and internet services. How difficult or expensive it will be to extend these services from your main house into the granny flat will depend on your property layout and the location of the accommodation you wish to build.
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Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
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© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
