5 steps to building your first home

You might decide that rather than buying an established property as your first home, it would better suit you to build.

With the current state government grants and federal government HomeBuilder boost on offer building your first home may be the right choice for you.

Building allows you to customise your home from the outset, creating a brand new property that suits your needs and lifestyle without having to renovate. However, building is a big project that requires understanding, planning and careful management.

Here are 5 steps to help you understand some of what is involved when planning a new build.

1. Ensure you have a home loan pre-approval first

Construction finance can be complex and the amount of deposit required will vary depending on the lender you approach.  Talking to a lending specialist who offers strong guidance on construction loans may be a good starting point.

LJ Hooker Home Loans lending specialists have access to a construction home loan designed to suit first home buyers. This loan has a low deposit option that may help you step into the property market.

2. Do you qualify for government grants?

Eligibility of a first home owner’s grant may mean you require less deposit to build your first home. You may also be eligible for the Federal Government HomeBuilder boost. A lending specialist will take you through your eligibility, help you build a budget, and also help you apply for any grants you may be eligible for.

State governments also offer stamp duty concessions for first home buyers. It may all seem daunting but don’t worry! Your lending specialist will take you through all the options!

3. Finding the right block of land

Sometimes it is beneficial to buy a house and land package as opposed to a private block. However, you may prefer to finance your dream block first, and then take your time in choosing the right home and builder. It’s a good idea to speak with your lender to understand how your loan will be structured and what will work best for your personal circumstances.

When choosing a block of land it is important to consider:

Does the block come with a soil report? The type of soil you will be building on can impact footing costs.  Is the block flat? Land with slope can mean expensive footings or retaining costs so do your research.

4. Selecting the builder

Make sure you do your homework when selecting a builder. Ask questions around whether they provide a Fixed Price Building Contract. Make sure you understand what is and what is not included in the price.

Other questions you may want to ask prospective builders are:

• How much time should I allow to finish the build?
• What is the quality of the fixtures and fittings included?
• How easy is it to vary selections on fixtures and fittings?

There are many areas where you can go over on your budget so talking to a lending specialist that specialises in construction can help guide you through the process.

5. Building your dream home

Most construction loans work on a progressive payment process. Payments are made to your builder from the loan account at each major stage of construction.  You usually make interest only repayments on the loan balance during construction.

It is a good idea to ensure you have some cash in reserve to assist you as you get towards the end of the build, especially if you are paying rent. It’s also important to keep a contingency fund for any unexpected build costs that may not be covered by your loan.

All up, building your first home may not be as hard as you think! And the state and federal incentives currently on offer may help you take that first step.

The key is to prepare carefully, do a budget, and read over all documents before you sign. The first step should always be making an appointment with a lending specialist to go over a budget, and find out how much you can borrow. This will also involve a deposit analysis and plan.

It can all start with a simple phone or web based chat.

This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice. You should always undertake your own independent property research.