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BUILD 2025: Financing you build
Building your dream home or renovating your existing one will be the biggest financial investment you make. It’s important to get your budget and financing right.
FIRST, CONSIDER ALL THE COSTS
Before approaching lenders, understand your project’s total cost. This includes not only buying your land and paying for materials and labour, but also professional fees (architects, engineers), permits, and other expenses. Some examples of additional costs of building include:
Stamp duty
Conveyancing
Government record searches
Registering plans
Development application fees
Building approvals
Certificate and inspections
Building certifier fees
Rent or other mortgage payments during the build
Moving costs
Landscaping
TAKE INTO ACCOUNT ALL POTENTIAL COSTS ASSOCIATED WITH YOUR BUILD, AND PLAN FOR THE UNEXPECTED.
Tip: Budget 10-20% extra for the unexpected. The path to your dream home is not always smooth. Build in a contingency in your budget to cover potential material price increases and labour/ subcontractor shortages and in case you change your mind on certain inclusions in your build.
FINANCING A NEW BUILD VERSUS A RENOVATION: WHAT’S THE DIFFERENCE?
New build: Financing a new build involves a construction loan, released progressively during the build.
Renovation: Renovation loans can be either a separate loan or drawn down from your existing home loan.
IT CAN TAKE MONTHS TO OBTAIN FINANCE IN SOME CIRCUMSTANCES; MAKE SURE YOU START THE PROCESS EARLY.
EXPLORING YOUR FINANCING OPTIONS
Several options exist for securing finance in the ACT.
1. Construction loans
Specifically designed for new builds, these offer staged payments as construction milestones are met.
2. Home loans
For renovations, a standard home loan might suffice, particularly if you’re using existing equity. If building new, you will likely purchase your land using a home loan, but a construction loan may be a better choice for building new in order to save on interest.
3. Government grants and schemes
The ACT Government offers various grants and schemes that can assist with home building and renovations. You usually have to meet certain criteria to be eligible for these.
What affects your ability to secure finance?
• A good credit score significantly improves your chances of approval and secures better interest rates.
• Having all required documents to hand such as payslips, tax returns, and proof of deposit help make the application process smoother.
FINDING THE RIGHT LENDER
Several banks and specialist lenders operate in the Canberra region. Research lenders specialising in construction finance to find one who understands your specific needs. Seek professional advice from a mortgage broker; they can help you navigate the complex world of finance and find the best option for your situation.
