THINGS YOU NEED TO KNOW
BEFORE YOU BUILD
MICHAEL STARR FROM LJ HOOKER SHARES HIS TOP-TIPS FOR FIRST-TIME HOME BUILDERS. KNOW HOW MUCH YOU CAN AFFORD
TOP TIPS
If you’re serious about building a home, the amount of money you can afford to spend has to be one of your first considerations. For most people this means getting a home loan, and so, getting a pre-approval is the place to start. Contacting a mortgage broker who is experienced in house and land finance and can offer a variety of lenders is
• Be aware that any credit cards, car loans, and personal loans, etc, can be viewed by the bank as if they were ‘maxed out’ to the limit. This can be the difference in getting approved for the amount you need or whether you can obtain finance at all.
often a key contributor to whether you can get finance approval. Different lenders may have small variances in their lending criteria and the broker will be able to guide you on how you may best fit with a particular choice. Once you’ve found out how much you can borrow, you can start looking for a property that matches the amount you can afford. Six Mile Creek Estate
• Work on your deposit — the bigger the better. A big deposit will open more options to obtain better finance deals. If your deposit isn’t large, ask your broker and parents if an Equity Guarantee is an option. Equity Guarantees are often a great way for parents to help first-home buyers to enter the property market.
UPGRADES, ADD-ONS AND ADDITIONS No matter the house and land price you end up negotiating, the reality is that the lender will conduct a valuation (and other
checks) to make sure the property will be worth enough to cover the loan; and that the deal is sound enough for them to lend you money. If you’re serious about entering the market, perhaps have a small deposit, and want the best chance of getting your finance approved — don’t go overboard with extra house inclusions. The lender will usually be comparing your proposed deal with other comparable existing properties sold close by, which may or may not have non-standard additions. The valuation often doesn’t discriminate between expensive upgraded roof tiles and standard tiles — isn’t a roof a roof? If you want upgrades and are working to a tight budget, consider leaving out items that can be added once the build is complete. Only include structural items that should be incorporated in the building of the home. Maybe the built-in barbecue or the European kitchen appliances could be a future purchase? Better to have a standard oven rather than no house because you can’t get finance. If you do add in a few upgrades to your build contract, and the valuation comes in lower than you had hoped, be prepared to compromise on removing expensive items, which may help the deal progress.
HOW SOIL QUALITY AFFECTS YOUR BUILD What should I know about foundations and soil quality? In brief, a soil test will be conducted on your land so that an appropriate slab design can be produced for the conditions. This typically occurs when you pay an initial deposit ($1,500 or so) to a builder to perform that task, amongst others such as a contour survey. When you’re initially getting quotes from a variety of builders you should understand what they’ve allowed for in terms of the foundations/slab. This is important because there can be significant differences in the final price, depending on the soil conditions.
