Looking For Tiny Home Financing? Here’s How You Can Do It.

Ready to go tiny, but concerned about tiny home financing?

Tiny house living is a movement happening now, both globally and in Australia, and more and more people are seeing the benefits of this new lifestyle. If you’ve decided to go tiny, the next step is to get the facts – costs, payment plans, and financing options (loans, mortgage etc.) for your tiny house.

While the money needed for a tiny house may not seem so tiny at first, preparing yourself with the right information will help you navigate your way with confidence, make sound choices, and form an effective plan to build your new home and live in it.

This article will help you to take care of the three fundamentals when it comes to owning a tiny house on wheels (THOW):

• Costs to build/buy one
• Payments methods
• Finance options

How much does it cost to build a tiny house?

In general, anywhere from $50,000 up to $160,000. It depends on the design – already existing, customised, or somewhere in between.

Existing designs cost anywhere from $67,900 to $160,000 depending on the complexity of the “base model” design and the add-on features you include.

For instance, Aussie Tiny Houses charges $67,900 for its least expensive model. On top of this, you could add on additional features like air conditioning ($2,650), external storage ($3,500), water tank ($1,600), solar package ($9,845) to name a few.

Another company, Hauslein Tiny House, charges $115,500 for its most expensive model. Similarly, you have the option to add other features for extra costs on top of this base model.

It is important to understand that building a tiny house consists of three phases: lockup, shell, and turnkey. Companies can have separate prices for each of these three phases.

The inclusions for each phase/stage can differ from company to company so it’s super important to do your own research but in general, you can expect to find the following at each stage:

Lock-up:

• Trailer
• Frame
• Windows and doors
• Cladding
• Roof

Shell:

• Everything included in the Lock-up stage +
• Inner linings (floors, walls, ceiling)
• Insulation
• Completed electrical and plumbing work

Turn-key (Full build):

• Everything included in both the Lock-up and Shell stages +
• stairs/ladders
• Cabinets
• Appliances (oven, cooktop, toilet, etc)
• Benchtops, sinks, taps, door handles and other fittings
  

For existing designs, you also have the option of a DIY “pre-fab” tiny house. These pre-fabricated models come ready for you to assemble, a little bit like Ikea furniture! The company Spark Tiny Homes offers a flat pack ready to assemble model at $28 080 + GST. Check out our article on Awesome Australian Prefab kits for additional resources.

Finally, consider also checking out eBay for existing designs.

A customized, or bespoke design can be more costly as it requires architectural advice and expertise. You would need to work with your builder to get the cost estimates and further tweak a few things to balance between your budget and the design you want. This cost could be anywhere from $35,000 upwards, depending on how much you get them to build for you.

You could also consider a hybrid model of an existing and custom design. You would buy the home at lock-up or shell stage and finish it off. This way you save on costs whilst still getting to add your own touches to the home.

What payment plans are available?

Now that you have decided on the design of your tiny house, you will want to know about the payment plans that are available to you. Choosing the right payment plan is important if paying full in cash is something you can’t or don’t want to do.

The good news is that you can find tiny house suppliers/builders that have payment plans supportive of your financial situation. Paying in 2-5 installments is possible depending on the company you choose.

Here are two examples of vendors that accept a 5-installment payment plan:

Aussie Tiny Houses:

1. 20% deposit to lock in a building slot, order your trailer start the design process
2. 20% when the trailer arrives on site to start building
3. 20% when the frame stage is completed
4. 20% when the lockup stage is completed
5. 20% when completed and ready to be delivered

Häuslein Tiny House:

1. $1,000 holding deposit to secure your spot in the build queue
2. 40% of contract amount due one month before building
3. 20% at Stage 2 of build
4. 20% at Stage 3 of build
5. 20% at the Final Stage of build and before delivery

Also, some companies can take payments in 2-3 equal installments. To work out a favorable plan for you, be sure to speak with your potential builders. They could be understanding of your situation and be flexible with their payment terms.

What tiny home financing options do I have?

Besides using your savings, there are three other sources of tiny home financing /taking loans for your tiny house:

1. Caravan loan
2. Specialist finance
3. Unsecured personal loan

1. Caravan Loans

Home loans are not an option because Tiny Houses are classified as “caravans” in Australia. You can, however, apply for a caravan loan. This type of loan is similar to a car loan or a secure personal loan.

Interest rates on caravan loans can be anywhere from 4.45% to 14.00%. Your tiny house mortgage amount will depend on the amount you borrow and the loan term.

Typically, to be eligible for a caravan loan, you must be at least 18 years of age, be an Australian resident, have a good credit rating, and be able to provide the evidence with bank statements, payslips, and copies of other credit contracts.

If you are considering getting a caravan loan, be sure to compare all the providers and by interest rates, criteria for consideration, minimum and maximum loan amounts, and any other costs like monthly service fees.

This site gives you the names of caravan loan lenders, their criteria, loan calculator, and other useful information. Here is another site you can use to quickly compare the interest rates and monthly payment amounts across caravan loan lenders.

2. Specialist Finance

Tiny house companies and finance companies are starting to work together to make it easy for their customers to get loans. The advantage of this loan option is that your tiny house company will help you, advise you, and work with you to get this loan.

Aussie Tiny Houses offers competitive rates with payment terms of up to 7 years with funding from  $2,001 to $70,000. The exact amount and the interest rate will be determined based on their criteria like the customer’s credit rating. For a loan amount of $50,000, if you took a 7-year loan term, you would end up paying $225/week.

Häuslein Tiny Houses also lists their finance providers and their terms. For instance, Regional Australia Bank offers tiny house loans starting from 6.47% interest rate, with a 30% deposit, and a loan term for up to 7 years.

Be sure to ask your company about any finance providers they are already working with, or that they know. This could save you a lot of time and work.

3. Unsecured Personal Loan

While unsecured personal loans might be easy to get, you end up paying a higher interest rate over time. This is done by the lender to compensate for the risk of the borrower not having to put up any collateral.

If you are considering this type of loan, start comparing the lenders.

The interest rates can be anywhere from 5.49% to 8.99%. The amount and the interest rate you get depend primarily on your credit rating and current earnings. You can use Mozo, or Rate City to see a quick list and comparison of lenders for unsecured personal loans.

Consider Insurance

And finally, given that you will spend a significant amount of your money on your tiny house, you might also want to consider getting insurance. As mentioned above, tiny houses are considered caravans, not homes in Australia, so you will want to look into Caravan Insurance as a starting point and then have a chat with each lender to confirm whether or not they will insure your tiny house.

Key Takeaways:

• The cost of building a tiny house can range from $50,000 to $160,000
• The costs depend on the type of tiny house – an existing design, custom design, or hybrid of the two.
• Payments plans can go anywhere from 2 to 5 installments depending on the tiny house company.
• Besides using your savings, you have 3 main options to finance your tiny house: caravan loan, specialist finance, and unsecured personal loan.
• As tiny houses are legally classified as “caravans” in Australia, applying for a home loan is not an option. Therefore, you can apply for a caravan loan, which is similar to a car loan or a secure personal loan with an interest rate from 4.45% to 14.00%.
• Specialist finance: Many tiny house companies have partnered with finance providers to make it easy for their customers. You will need to check with your builder/company to find out the interest rates and payment terms for this type of loan.
• For unsecured personal loans, the interest rate can be anywhere from 5.49% to 8.99%. You will want to compare the terms and conditions of all the loan providers.

Got a recommendation on tiny home financing or who to work with for funding?

Help your fellow aspiring tiny dwellers and comment below.