Building a home is a time filled with excitement and possibility. If you are a first-time builder, you may find yourself asking – how much does it cost to build a house? The answer can vary, but it is important to understand the key steps to financing your new home. With proper understanding of your budget and loan potential, you will be breathing easier during the organisation of your finances.
Planning Your Budget
It is one of the scariest parts of building a home, but planning your budget does not need to be overwhelming. It is most helpful to speak to a financial broker about what is possible and they usually can compare upto 25 – 30 home lenders with best solutions for you. . It will make considering your income, costs of living, and current savings less daunting than doing it on your own. Ask yourself if your savings line up with your desired time-frame, or whether you might need to allow yourself an extended period of time. Always keep in mind land titles are usually pushed out so in a lot of cases it can be best to pay a deposit in today’s price whilst having time and flexibility to keep saving whilst waiting should you have the pre-approval. In any market, building doesn’t tend to reduce as this is always still driven by trades wages and supplying materials so it’s important not to compare building to established homes.
Particularly for first home buyers, the bigger your deposit, the better and easier it will be to manage and borrow money. Take care of any existing debt and be smart about your money as soon as you can. Create good saving habits and be aware of where your money is going. Monitoring your income and spending habits is a great first step, as it helps you understand your money and where you can cut costs and save more effectively.
First things first, you need to be eligible to take out a home loan. Finding a great broker that specialises in construction loans is imperative to your whole experience. A broker will firstly weigh up your borrowing capacity. This can be based on your current assets, level of income and living expenses – managing your credit cards well and taking care of existing debt is also a helpful step in increasing your loan potential. Loans are determined on a case-by-case basis, and given the banks have tightened up with lending, it’s so important to have a track record to show savings so they can see you could service the loan. If pre-approval is looking tight, banks at the moment are currently going through every purchase, so try to avoid spending money on things that some might consider unnecessary to a well balanced lifestyle.
You can apply for a pre-approval loan before you have found your home, in fact both go hand in hand because the guide for approval results in choice of home due to affordability. This can often ensure less hiccups down the line in the sales process, particularly when purchasing house and land packages. Securing a price on the package you want as soon as possible is beneficial, as packages do tend to move quickly. Knowing the terms, conditions and clauses of your specific lender is a good idea to ensure that this process is fault-free. Make sure you ask for construction loan experts because this can be different to standard loan applications and the set up for this can be considered more complex so it’s important to get the right referral for assistance. Consult with our team should you require suggestions for expert assistance. When waiting for unconditional approval, it’s seems like stating the obvious yet a lot of buyers have made the mistake of getting new credit card or upgrading your car which will impact on the final approval.
Researching hidden costs is a smart planning strategy. Considering less-thought-of costs such as site costs during land preparation and last-minute alterations should be considered before they pop up. It is essential to note that the initial price of a build included completed features.. Ensure that these costs are accounted for in your planning stage – this will help your finances remain under control. It is also a good idea to allow flexibility to your budget ahead of time to avoid any struggle with additional payments.