Here’s an overview of what’s involved if you’re considering building a new home for the first time.
What’s your budget?
The first step to building a home is deciding what you can afford to spend. When buying a home that’s already built, determining how much money you need is quite straightforward. However, it’s not so simple when building. Once you’ve finalised your budget you’ll know if you need finance. Your mortgage broker can help determine your borrowing capacity to get your build underway.
Select a home building option
When it comes to building your own home, there are several ways to go about it. You can select a house and land package, or you can work with a designer and custom-build your property on your own land. Some people choose kit homes or modular homes as they are faster to construct – most of the components are prefabricated and delivered to the site to be assembled – but talk to us before you choose this option as not all lenders are enthusiastic about this type of building project.
There are plenty of useful websites where you can find estimates of how much it costs to build the kind of home you want. Remember – you can explore these options more effectively once you know exactly how much you can spend.
Find the right block of land
Some people buy their land before choosing the home they want to build. Others choose the home design first. Either way, make sure the home design will work on the block of land you choose. A site that has a steep slope or an unusual shape, for example, may be difficult to build on. It’s a good idea to seek professional advice from a reliable builder to make sure your land and home design are compatible.
Choosing a builder
It’s important to do plenty of research when selecting your builder. You could ask friends and family for recommendations or go online to research builders. Be sure to check out other homes the builder has constructed. Also, check in with the Master Builders’ Association to make sure your preferred choices are legitimate and have received no major complaints.
It’s a good idea to get quotes from several different builders, complete with detailed plans, price breakdowns and a timeline for completion. You should also have your solicitor or conveyancer check the documentation before you commit.
A construction loan is the most popular option if you are building your own home. Construction loans are different from regular home loans. The lender releases portions of the loan, or progress draws, throughout the construction process. These are only paid once an inspection of the build has been completed at certain stages. This helps to keep your project on schedule and protect both you and the lender from less than honest builders.
Usually you pay interest-only during the construction, then repayments convert to principal and interest upon completion.
There’s nothing more exciting than watching your home grow from the ground up. For an honest and unbiased opinion, talk to Think and Grow Finance today on 03 8390 5855 or email email@example.com