Planning to build

Opting to build a home often requires more time and effort than simply buying an established property. Everything from the number of bedrooms and bathrooms to smaller details like installing double-glazed windows requires careful planning.

The most important part of financing these dreams is to get your loan pre-approved before you start shopping for your new home and land.

However, choosing to build does mean you will be able to create the home of your dreams.

Sorting out your construction loan before you take those steps is important as it means you can have the confidence of knowing how much you can afford to spend.

Knowing your limits will allow you to be realistic about plans, while also letting you work within that budget to build the home you’ve always wanted.

What’s your price range?

When the time comes to determine the cost of buying land and building your home, you may want to get the experts involved.

Your mortgage will likely be part of your life for at least two or three decades, so getting the professionals on board to help with this initial stage is a wise way of planning for your future.

The amount you can borrow will be determined by a number of factors, such as your career status, income, initial deposit, construction and land preferences, and whether you have dependents, are applying as a couple or on your own.

Subject to builder’s requirements, you can expect to make six payments throughout the construction of your home.

These are:

• Slab work (15%)
• Framing (20%)
• Brick work (15%)
• Lock up (20%)
• Pre-paint (20%)
• Completion (10%)

As the builder is paid by the above increments the lender will charge you interest on the outstanding balance. This means your monthly repayments will go up each time there is a claim made by the builder until the final drawdown when you will start making regular full repayments.

Where to build?

Buying land to build on can give you a greater choice of locations for your dream home than finding an established property and settling on the area.

It’s best to start your search for the right location by establishing your needs and wants.

You’ll want to think about the shape and size of the land, as well as the facilities in the area that you will require in the future such as schools, public transport and supermarkets.

Once you decide on a land lot, you will need to pay a deposit to the land agent.

How do you choose a builder?

Finding the right builder will make a huge difference to your construction experience, so it is worthwhile to research contractors in your area, talk to as many as you can, and only settle on one once you have found someone who you can rely on and work with to meet your expectations.

If you have already bought your land, you can invite builders to conduct soil tests, a site survey, and prepare a price tender for your project. Depending on the state that you are looking to build in you may find builders have different requirements relating to upfront fees. It is a good idea to invite tenders from two or three companies so you can compare services and prices. Once you decide on a tender and sign the documents, you will be expected to pay the builder their deposit.

They can then proceed to arrange working drawings and building agreements, which is also when you will be required to provide your builder with a letter of finance approval. AAA Mortgage Solutions will arrange this letter for you.

From here, your plans should start to fall into place, as you sign off on the building agreement and colour selections and those forms will be lodged with your local council for approvals.