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Building or Renovating Loans
Building or renovating your home is an exciting experience. There are some great reasons to choose to construct your home. When you’ve decided building or renovating is the way to go, give us a call and we’ll take care of the home loan part.
Some great reasons you should build your next home
By building you can customise the home to your taste
Rather than inheriting someone else taste, you customise the home exactly to your needs and desires. Your bedroom can be bigger or you may like a bigger bathroom with a relaxing spa. Maybe you’ve always wanted a custom built study or exercise room or just wish you could have higher ceilings. When you build, the sky’s the limit. Carpet, windows, more walk in robe space for clothes and shoes, kitchen cupboards, laundry sink, chrome door handles, groovy light fittings….everything is completely up to you.
Building a home can be cheaper than buying an established home
Fees for building a home are cheaper than when buying a home. The main saving is with Transfer Stamp Duty & Registration Fees paid on the purchase price of property. When you’re constructing a home, you only pay the stamp duty & registration fee associated with the purchase price of the land, whereas with an established home, you pay it on the total value. As an example, let’s say you are looking at an established home costing $350,000 or a Construction where land is worth $200,000 and build is $150,000. The total Transfer Stamp Duty & Registration Fees for the established home is $15,989, whereas for the land it is $8,014 = a saving of $7,975, which could be used to cover the cost of some ducted air-conditioning!
No one has ever lived there before … just you
Wouldn’t it be great to know that the first time you sleep in your new home no one has ever lived there before? There’s something special about creating family memories where in a home built by you.
Many people ask us about the building process so just for you, we’ve put together a brief guide to what you can expect if you decide to build your next home or investment property.
The Process for Building a Home
The building process changes from builder to builder, but this guide will help you gain a good understanding of the common process.
1.Get your home loan pre-approved
Before you start looking at land and houses, talk to your broker about getting a pre-approval. This way you’ll know exactly how much you can borrow before you start shopping. It’s really handy to know what you can afford before you start making offers.
2.Find a home you love
Most people choose to build their home through a well known builder. It’s certainly more cost effective to find a home which has already been designed through a builder and obtain a fixed price contract. If you want to put your own flair to your home, builders are generally very happy to do this and the price of the home will be adjusted accordingly. Any changes in price should be clearly explained and documented by your builder. Make sure you let you lender know of any changes along the way.
3.Then you’ll need some land
There are a few different options for buying land. You may find a block of land for sale, find an older home that you could buy and demolish because the land is the right size and in the right area for you, or you may buy your land as part of a house and land package with a builder. Whether you decide to buy your land first or buy a house and land package, Assured can find a loan option to cater to your needs and can help guide you through the building process.
4.Pay your deposit
To go ahead and secure your land, you’ll need to pay a deposit. This amount will vary but generally will be around the 10% mark.
A soil test is literally a test to confirm what type of soil you are building your home on. This is extremely important to determine the expected soil movement you are about to build on, and has a large impact on how the foundations (the base which supports your house) are constructed. A soil test is usually compiled through a visual assessment, a soil profile compared to the data of building performance on a similar soil profile, and laboratory testing. The results of the soil test can affect the contract price to build your home.
6.Sign a Contract to purchase your land or house and land package
Next you’ll be required to sign a contract. Always sign your contract subject to finance even when you’ve had your loan pre-approved. This way, if in the unlikely event that your finance is not formally approved, you won’t lose your deposit on the land.
7.Settlement of land
Before you can commence building, you will need to finalise the settlement of your land, this way the land literally belongs to you before the builder commences work on your new home.
After your soil test and preliminary drawings have been completed, the drawings are then sent away for slab (foundation) and/or subfloor design work.
9.Development Applications and Council Approval
When it comes to gaining permission to build from your council, there’s a lot of paperwork! Luckily your builder will submit all the approvals for you.
This is probably the most fun part of building your new home. Selections is the process of selecting all the finer details that will make up the interior and exterior of your home. Things like choosing the colours for your home, which you will do with the help of a trained consultant. Selecting your brand new floor coverings like carpet, floorboards and tiles, and you’ll also choose your kitchen cupboards, splashbacks and taps. You’ll have a great time putting your home together and be proud that you had so much input into the final design. Remember to let the lender know of the changes, as usually there is a change to the overall contract price.
11.Lets get building!
Once the builder has received all the necessary approvals (council, lender and you) orders are placed for labour and materials and the building of your new home can begin.
During the building process, when a significant stage of building has been achieved, the builder will require a payment from your lender and this is known as a progress payment. For example when the slab has been built, the framework completed, brickwork finished plumbing finalised etc. A valuer will inspect your building site to ensure the builder has completed the works to their satisfaction and then authorise your lender to make a payment. There are commonly around 6 payments made in the process of building including your final payment.
13.Handover – It’s time to move in!
After all your hard work, handover day will be a rewarding experience. You’ll be given the keys to your new home and you’re ready to move in!
Your Construction Home Loans
Assured offers a wide range of home loans suited to home builders and renovators.
Interest Only Home Loan
An interest only mortgage will help you maximise the cash flow on your property.
Standard Variable Rate Home loan
A Standard Variable rate mortgage is traditionally the most popular type of home loan offering plenty of useful features and flexibility. The rate goes up and down depending on the market. A variable rate home loan can be linked to an offset account, helping to reduce your overall interest.
Standard fixed Rate Home Loan
Fixed rate mortgages offer you the security of a fixed rate (which means set repayments) for a given period. This means you have the peace of mind when it comes to budgeting, knowing that your repayments aren’t going to change on you for the term you have selected. Fixed rates can range from 6 months to 10 years.
Basic Variable Rate Home Loan
A basic variable rate mortgage is simple to understand and easy to use and is ideal for borrowers who are looking to make minimum payments and require less flexibility than a standard variable rate loan.
Line of credit
A line of credit allows you to only pay interest on the money you actually utilise. These products allow you to utilise the equity in your property. You can use these funds for any personal purpose and like a credit card, any principal repaid is available to redraw.
Low Doc loan
A Low Doc loan (low documentation) requires a declaration and BAS statement. They usually come with a higher interest rate. Assured offers a broad range of low doc loans, which are ideally suited to self-employed people unable to provide evidence of income.
Our handy Home Loan calculators can help guide you when deciding to purchase an investment property. These simple calculators generally require a small amount of information yet offer you some valuable results. Feel free to take a look at our full range of home loan calculators.
Building can be an extremely satisfying experience. If you’re excited about building and would like to know how much you can borrow, talk to one of our friendly consultants who will give you all the information you need.
Thinking of renovating?
It’s on the House!
Use the equity in your home to improve your home! Depending on the amount of equity in your home, by refinancing to a lower rate home loan, your monthly commitments may not even need to increase.
With little or no increase in your mortgage repayments Assured Home Loans’ “It’s on the House” program is ideal for people who want to improve their home and lifestyle without over-extending their budget.