Whether it is buying an apartment in the heart of the action, a townhouse on the city fringe, or a family-sized home in the suburbs, the time is right for a first home buyer to build their dream home and take advantage of great interest rates and deals.
But what can a first home buyer do to turn the dream of building a home into reality? Credit Union SA CEO, Grant Strawbridge, shares his top tips.
Save a deposit
One of the best things an aspiring first home owner can do is save the biggest deposit they can. By taking advantage of the ‘First home buyer super saver scheme’ you can save for your first home using your superannuation account, providing a simple, tax-effective way to save. Talk to a financial planner who can develop a plan that’s tailored to your needs and circumstances to help you achieve your specific goals. The more money put away now means the less you need to borrow.
Research your options
Selecting the right home loan can be complex, however it is important to compare the interest rates of as many loans as possible to make sure you're getting a competitive rate. Understand the difference between variable and fixed rate loans, interest-only and investment loans to find one that matches your needs. Also make sure that you research special deals such as cashback loans and grants that may be available to first home buyers.
When building, stamp duty is only payable on the land rather than any total house and land package – which can substantially reduce the amount you might need to get started. Other up-front costs you’re likely to face are legal and conveyancing fees. Ask your conveyancer for a written estimate of their costs, which should include a breakdown of the likely payments to the local council, water and electricity companies.
A construction loan is a tailor-made option which allows you to draw down funds to pay builders’ invoices as various stages of work are completed. It can save you money because you only pay interest on the money you’re using for any particular stage. This means money stays in your pocket for longer, and until the work is finished loan repayments tend to be interest-only. Product offerings vary, so make sure that you check that the loan you are applying for is right for your needs.
Apply for a grant
Currently the South Australian Government’s First Home Owner Grant is available for people who are buying or building a new residential property.
It is a great idea to consider any likely lifestyle changes when settling on a home design. Perhaps you need a spare room for the in-laws when they visit, maybe a home office should be on the cards, or a double garage might be needed to safely store vehicles and other valuables. It is far cheaper to factor that in before the build than after.
When building a home, often the costs of carpet, curtains, stormwater, driveways, landscaping, paving and fencing aren’t included in the build price. Understand what is included in your package and consider putting aside funds to cover the costs of things that might be needed to help make you more comfortable once you’ve made the move.
This is general advice only and doesn’t take into account your objectives, financial situation or needs. Conditions, fees and lending criteria apply and are available on request.
Before making an investment decision based on this information, you should assess your own circumstances or consult a financial planner.