Building 101 – Here’s why finance is the first step to building your new home

It might be surprising that finding a block isn’t the first step to building a new home.

Why? Because building involves two big purchases – buying your block and building your new home. As builders, one of the first questions we’ll ask you is, ‘what is your budget?’

So, we believe knowing what you can afford (in total) is the real first step to building a new home.

As some of you know, our offices are right next door to finance brokers, Revolution Home Finance, in Cooee. For this blog, we grabbed a minute with Revolution’s Director, Issy Reeves. Issy has worked with hundreds of clients building new homes.  In Issy’s experience, understanding finances and budget is a crucial step towards building a new home.

In short, here’s Issy’s top 3 reasons for seeing a mortgage broker (or bank):

  1. Knowing what you can afford (and if you have enough for a deposit) can help you set your building budget;
  2. You’ll suss out any potential challenges to finance (so you can sort them out before you miss out);
  3. It will give you an understanding of different lenders and their lending rules/policies (so you can keep this in mind when searching for the ideal block).

Here’s why these 3 things really matter.

Knowing what you can afford will save you from falling short of your dream.

In Issy’s experience, helping clients determine how much they can comfortably borrow for the total build is vital, ‘Buying a block is only part of building a new home,’ Issy says, ‘You don’t want to get stuck with land you can’t afford to build a beautiful home on.’  Alongside determining borrowing capacity and budget, Issy says it’s also helpful to get an understanding of different loan types and the process of taking out a loan.

Seeing a broker (or bank) will help you understand any challenges to financing your construction loan.

‘Lenders want to know you can service a loan (pay it off) comfortably. They’re going to look at how you spend and save your money, your credit history, and your employment circumstances.’ Issy says.

Lenders can also be picky about how you finance your loan deposit. For example, it’s common knowledge that Federal and State governments have grants available for first-time builders and/or owner-occupiers.  But, did you know lenders don’t always count grant dollars towards your deposit?

According to Issy, brokers can quickly help you navigate the grant schemes and bank requirements so your loan application is more likely to be accepted.  ‘It’s like setting up a favorable social media profile before applying for a job’, she says, ‘Talking to a broker can help you get your financial profile ‘just right.’

It’s a smart move because if you’re ready to borrow, you can comfortably talk to a builder about your budget  Then, when the right block pops up, building your dream home is one step closer!

Be aware of comparing apples with oranges. Get to know the different rules and policies of different lenders.

Issy’s final is tip is to be savvy when comparing lenders. We all know lenders have different interest rates, but did you know lenders have heaps of other different rules to determine how much they’ll lend you? Lenders will even consider the suburb you want to build in or the type of road your block is on!

Issy recommends seeing a broker (or at least speaking to your bank) and asking the right questions about their lending rules and policies. ‘It’s our job to see through the minefield of different rules and policies lenders have,’ Issy says, ‘understanding them can prevent you from missing out on funds or paying too much in interest or fees.’

So there you have it – 3 compelling reasons to sit down with your broker or bank today.

To keep in touch with more from Issy and the Revolution team follow Revolution Home Finance on Facebook or visit their website.

To stay up to date with future Building 101 releases?  Follow us on Facebook and Instagram

Blog post written by Karli Franks.  

Photography by Sam Guy @bowerpix



The Build Process

We want every new home buyer to understand that building a new home is a realistic and very affordable option. Here’s how to start…

A mortgage broker will help you to know where you stand financially and what you can afford to spend on your build.   We can put you in contact with a local mortgage broker who will help you understand your options and secure the most suitable loan for you.

Find a block, Own-A-Home can help you to find “the one”.

Darrel or Brennan will meet you at your block or a block you’re considering, to provide a free block inspection. We’ll talk through potential home designs, preliminary costings as well as opportunities and potential limitations of the block. We will also recommend if any additional inspections or testing should be done before you make a final purchase decision.

With a design in mind Own-A-Home will provide you with a cost estimate for the build of your home. We’ll work through different ideas and designs to meet your budget.

Make the move! With an estimated cost for your land and build combined it’s time to buy your block.

Planning, designing and starting your build…

Own-A-Home and a local draftsman will work with you to turn your ideas into a custom designed plan for your home. During this stage a soil test and topographic survey will be completed to assist with the designing process.

Once you’re happy with the floor plan and outside elevations of your home, Own-A-Home will provide a detailed quote that will be used as a basis for your contract with us and finance for your build.

Before we can go any further, your plans will be submitted to Council to gain the approvals and permits required to begin your build.

We’ll work with the Council and Building Surveyors so this is a great time for you to start thinking about colour schemes, fittings and fixtures and the overall interior design of your new home!

As soon as the Building Permit is received we’re ready to begin. Own-A-Home (Tas) will set you up with your own log in to our online app so you can start making selections and track your build.

Contact us now for more information.