Construct and Finance
Building your new home is often an exciting and satisfying project. The desired outcome is usually to have a brand new home, built the way you want it. It takes time (6 – 12 months is common) and there are a lot of decisions to make along the way. Having a new property built to the design you like, with your chosen materials and in the colours you want, make it a very attractive option.
In order to construct your home you’ll need some land to build on and you must use a licenced builder. You can go about it two ways.
Firstly, you can select a builder and choose a plan from a number of different home plans the builder has available. This is the easiest and most economical way. Some builders also often have a selection of land available for you to build on.
The alternative is to have an architect draw up plans to your specifications and then ask different builders to quote on the plans. Once you have decided which is best for you and arrived at the total cost, you can ask your lender to approve a construction loan. The lender will require as a minimum:
Full plans and specifications
A copy of the builders insurance
Fully executed building contract and tender
The lender will require an independent licenced valuer to confirm the building price and suitability of the land and dwelling. Once approved and construction has started, the lender will pay the builder in stages after carrying out progress inspections. You will be required to contribute your full deposit prior to the lender advancing any funds from the construction loan. If applicable, First Home Owners Grant and Stamp Duty Reduction Scheme is payable and available at the first progress payment upon laying of the slab.
Upon completion, the builder will be fully paid and you can pick up the keys. Now the work of establishing a new home starts. Make sure you have accurately budgeted for the cost of landscaping, curtains and carpets etc. If the cost of these is high and is included in the building loan amount you may have to provide invoices and evidence of installation to the lender prior to release of funds. Most lenders will not do finance with owner/builders. Those that do, usually max out at 80% Loan to Value Ratio (LVR), sometimes lower.