Prefabricated homes are also known as prefab homes and actually comprises two disctinct methods of construction. What they do have in commin is that the house is built in a factory in sections and is then transported to site on one or more trucks. Once on site the house is set into place on piers or on a slab and is a permanent dwelling.

Kit home or owner builder variation

This is where sections such as walls, roofing and floors are built in a factory and can be purchased by owner builders to construct their own home. This cuts out a lot of the labour for the owner builder and is kind of like putting together a jigsaw puzzle. Effectively this type of housing is built on site.

Manufactured home or modular home variation

In this construction method the entire house is built in a factory and is transported to site using one or two sections not hundreds of smaller pieces. This construction method is usually not used by owner builders but is more seen as a cheaper alternative to a site built home.

Borrowing money to build a prefab home is a little different to a standard construction loan. UK, USA & Australian lenders often confuse prefab homes with other types of properties such as temporary housing, mobile homes or manufactured home parks which are all considered to be less desirable security for a loan.

In addition to that most lenders cannot release funds prior to the house being on site which creates a temporary cash flow problem where you need to pay the builder for the house before the bank will release the money.

Because of this many people have great difficultly getting a loan.  Don't worry you can still get the job done using these simple tips:

1. See if you can borrow just using the value of your land.  This works if you have a lot of property but not much debt.

2. Get a guarantor or family member to help out until the house is on site.

3. Talk to a prefabricated home loan mortgage broker.

4. Negotiate to see if you can pay a small deposit, and pay the rest once the house is on site.

5. Borrow using a different property as security.

6. Use short term financing such as credit cards and personal loans to pay for the house then refinance these debts into a home loan when the house is on site.

7. If you are building as an owner builder then apply for an owner builder loan.  In Australia these are readily available and you can borrow up to 75% of the total cost of the land and the construction or even more with a guarantor.  Australian lenders look more favourably on your application if you are using the Home Building System. In the US the amount you can borrow depends on the state the property is in and the lender you are using.

We strongly reccommend that you talk to your bank or mortgage broker before taking any of these actions.  As you can imagine this advice is general only and is designed for people living in the US, UK & Australia so it may not work for you.

So why do many people choose a prefabricated home over normal construction? Below is a list of advantages you gain from building a prefab home.

1. Cheaper to build.

2. Faster to build, often in as few as 6 - 10 weeks.

3. Perfect for rural locations with few available tradespeople.

4. Not affected by bad weather during construction.

The disadvantages include:

1. Brick & other heavier building materials can't be used.

2. Some design limitations because the house needs to be transported to site on a truck.

3. They can be more difficult to finance. We recommend you contact a specialist for a prefab home loan.

4. There is a social stigma surrounding this method of construction because of the poor quality houses built in the past.  Although methods & designs have changed these stigmas remain. 

• Transportable Home Finance
  Information on how to finance prefab housing (both owner builder & manufactured or modular homes) in Australia.
• Manufactured Housing Industry Association of NSW
  The industry body for NSW manufactured homes. This doesn't cover the owner builder construction methods but does go into detail about manufactured home parks.