Navigating Financing for Modular Homes
Modular construction is a sophisticated and efficient method of building that is transforming how Australians create their dream homes. Rather than constructing everything on-site with traditional builds, this method involves building the entire home off-site in a controlled environment, where quality, precision, and timeframes can be carefully managed.
Once completed, the modular or prefab home is split into modules and is transported and assembled on-site to form a finished home. As a method of construction, modular delivers clear advantages: faster build times, minimal weather delays, superior quality control, and a stronger focus on sustainability. These benefits are why more homebuyers across Australia are turning to modular construction as a smarter, more modern way to bring their vision to life.
However, misinformation and rumoured challenges surrounding modular home financing are a serious issue. One that often causes property buyers to overlook the modular home solution. But, despite what some may think, securing financing for your modular home journey has never been easier, with major banks now offering financing options.
The key to securing financing for your modular home is understanding the process, your specific modular home financing options, and what’s required of you to begin.
Understanding Financing for Modular Houses
Navigating traditional lending frameworks for modular homes can appear more complicated due to the unique situation that modular homes present. While in the construction phase, a bank will use the mortgage on the land and property built to date as security for conventional homes. Modular homes, however, are built off-site in a factory, and banks are only able to use your land as security during the construction phase.
With the majority of the build taking place off-site, there is no mortgage or security for a bank while it’s still under construction. As a result, some banks are reluctant to release progress payments until the modular home has been installed on the building site or the project is completed.
How to Finance Your Modular Build
To finance your modular home building project, you can apply for a construction loan.
Construction home loans are typically structured around a property’s on-site construction milestones, including slab, frame and lock-up. Funds are released during each of these milestones, with interest-only repayment periods typically offered during this phase to ease the financial burden.
As they are constructed off-site, modular home loans generally have different milestones than traditional houses. Rather than slab, frame, and lock-up milestones, modular builders can elect new milestones, such as module completions, in order for the loan to be better aligned with the modular build process. However, it’s important to remember that banks generally cap the amount of funds that can be accessed during an off-site construction stage.
Once the modular build is completed, delivered, and installed, the construction loan can be converted or refinanced into a standard home loan mortgage.
How It Works
There are several key stages to financing your modular home.
Initial Discussion
The first step is to have an initial discussion with your bank. It’s important to clarify in your initial discussion that you are requesting finance for a modular or prefabricated home, not a kit home. Kit homes are owner-assembled with pre-cut materials supplied and delivered on-site, often requiring an owner-builder permit.
Pre-approval can be granted in this discussion, and should be based on the initial estimate of your project cost. Banks typically require deposits of around 20% of the total cost of your modular home project.
A formal valuation is not yet required at this stage.
Application
When satisfied with proceeding with your loan, you will then be required to submit a formal application to be approved. The timeframe for this step can vary depending on your circumstances and your bank’s processes. Generally, you will need to submit a set of documents, including proof of income, employment details, and credit history. Your bank will then assess your financial situation and borrowing capacity.
Valuation
To ensure your project plans represent market value, your bank may conduct a desktop valuation. Property valuation is a standard practice for construction financing, however, the unique modular build processes mean this will occur remotely.
It’s important to work proactively to avoid any confusion or inconsistencies during the desktop valuation. Provide in-depth documentation, such as floor plans, inclusions, and specifications, to ensure your bank has a detailed understanding of the project. Offer clear, proposed payment schedules, as discussed with your modular home builder, and ensure your bank has direct access to the company.
Approval
Once the above steps are completed, your bank will be able to approve your loan application, allowing construction on your new dream home to begin.
No Hidden Costs Make Financing Easier
One of the major differences between modular and traditional home builds lies in cost transparency. In a traditional build, it’s common for homeowners to encounter unexpected add-ons, upgrades, and escalating costs throughout the construction process. With Westbuilt’s modular approach, that uncertainty is removed.
All inclusions, finishes, and customisations are clearly defined and agreed upon during the contract stage — before the build actually begins. This upfront clarity means no hidden surprises, better financial planning, and a smoother, more predictable building experience from start to finish.
Westbuilt’s Modular Home Financing Solutions
At Westbuilt, our modular home designs focus on luxury, high-end living, and style. Our modular house prices are not ‘cost-effective’ alternatives to traditional builds. Our modular home designs are an innovative, sustainable, and smarter way to build dream homes. We can assist in helping you finance your build, from lender advice to bridging loans.
We are committed to ensuring every aspect of your build goes smoothly, not just the build and installation. As experts in crafting dream modular homes, we offer financing expertise tailored to your custom home and ensure you have the finances needed to build.
Have More Questions?
Whether you’re looking to find out how much do modular homes cost, package enquiries, or more, contact Westbuilt today.
