It’s an exciting time when you decide to build your very own home, however, there is a lot to consider, research and work on, including financing your home. The key to any big decisions, such as choosing a lender, is to do your research and compare options so that you know what you can access and are entitled to. Ultimately, everyone has different needs and circumstances, so it is important to go through the home finance process patiently, so that you can find the right plan and lender for you.
Here are the key steps and tips you should take into consideration when financing your new home.
1. Plan Your Budget
Once you have decided that you want to build a house or purchase a new home, you will have to determine what you can afford to spend. This means that you have to see what your able to save within your desired time-frame, and how much your lender is willing to fund you given those savings.
Saving a house deposit can seem like an impossible feat at times, however with government incentives such as the First Home Owners Grant, Super Saver Scheme and Stamp Duty concessions, you could be closer than you think. There are also some extremely affordable House & Land Packages that are well below the median house price in each state.
2. How Much Can You Borrow
Now is the time to speak to your lender and determine exactly how much you can borrow. Alternatively, if you don’t have a previous bank or lender, you can start looking for one. The best advice you can get about this stage is to compare your options in order to get the best deal for your needs. Speaking to the team at uno Home Loans is a great place to start. They are able to compare up to 25 lenders so that you know exactly what is available for you.
As a general rule of thumb, you should be able to borrow up to 5 times your gross annual income less any credit card limits you may have. But note this is only a very general rule of thumb and all lenders will evaluate your borrowing capacity on a case by case basis.
3. Pre- Approval
This can vary depending on whether you are applying for a conventional loan or whether you need a construction loan. Each lender will have different pre-approval needs and processes but make sure that you understand their specific terms, conditions and clauses. It is important to be informed throughout the entire building process so that you protect yourself and your family. This is where your broker can add tremendous value.
If you are purchasing a House & Land Package, make sure that you have pre-approval before you start looking for and talking to providers. This will mean that you can secure a price as soon as possible. With packages moving quickly in most markets and land prices on the rise, you may need to move swiftly to secure your desired package, so best to have your lending pre-approvals sorted upfront.
4. Building Your Home
Make sure that when you are looking for a house design to fit your block that you understand the base price of the home advertised normally excludes a number of necessary inclusions such as driveways, landscaping, fencing, blinds, etc. Generally, people who don’t budget for a big enough buffer to cover these type of things in their budget will go over what they are approved to borrow and may then need to seek more borrowings or struggle to complete their project properly.
If you are purchasing a House & Land Package then there will a bit more security in borrowing money, especially if it’s a fixed price turn-key package such as the ones you can access through iBuildNew. Lenders are more favorable towards such packages as there are no hidden surprises!
5. Conveyancing & Building Inspections
When you are budgeting, always remember that there are additional costs associated with purchasing a House & Land Package or building a home. Having some money set aside for conveyancing and the land titling process as well as building inspections is vital.
Before building can start on your land you will have to have it titled. For a fixed rate for a conveyancer, make sure you have a chat to Titlexchange. They can help you with land titling and building contract reviews at a competitive price through their marketplace of qualified conveyancers.
How We Can Help?
Interested in comparing builders and developers to find the perfect home for you? Head over to www.ibuildnew.com.au and compare side by side. Alternatively, if you would like personalised advice and recommendations for your requirements and budgets, have a chat to one of our consultants on 1800 184 284 or book a call online. And if you are an investor, ask about the full turn-key packages that have been exclusively made available to iBuildNew.
Having trouble understanding how to finance? Download our FREE guide today to get a comprehensive overview of what you should expect and prepare for.
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Zoe Langenberg
Zoe is passionate about coffee and interior design. You can find her most weekends exploring an art gallery or devouring a good book.
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