Top tips for building a property
Attracted by the promise of modern bells and whistles with years of hassle-free maintenance, a growing number of savvy homebuyers – including those doing it for the first time – are opting to build brand new properties.
But with so many choices to make, it can be a very daunting process. So with that in mind, here are our top tips for smoothing the ride.
1. Shop around to take advantage of low interest rates
The current low rates make this a fantastic time to build. But it’s still important to do your homework, so shop around to understand the different finance deals on offer and identify the best for you.
The loan you’ll require is generally a ‘construction’ loan, which allows you to draw down funds to pay your builder's invoices as various stages of work are completed. This benefits you in two ways:
Your money stays in your pocket for longer, as you only pay interest on the components of the build that have been completed.
Until the work is finished, your loan repayments will likely be interest-only, meaning you’ll have lower repayments during the build.
2. Get a pre-build financial health check
A financial health check will review your spending patterns and give you a very clear picture as to how much you will be able to borrow for your build. It’s also a good idea to have finance pre-approval in place so that you can shop for the right parcel of land confidently.
3. Consider a turnkey solution
Many residential property builders opt for ‘turnkey house and land packages’ as a smart strategy because it delivers a finished house that you can immediately move into at completion.
The build contract can include the tiles, carpets, window dressings, paths and driveway, fencing and landscaping. The designs, colours and finishes are done with an experienced design team, which is a perfect solution for a busy home-builder wanting a brand new property with all the mod cons.
Keep in mind though, that if you want to deviate from the plan in any way, or customise your build, you will need to factor in the additional costs.
4. Check local council policy on developments
Building is part of a highly regulated industry and there are a number of approvals required before a project can get off the ground. Typically, a council will determine if your plans align with all relevant council criteria, zoning requirements, laws and policies before you’re given a green light – especially if you want to sub-divide, build to a certain height or deviate from the character of the suburb.
5. Understand the value of property in the area
To help you make informed decisions regarding your build, consider the nature of other properties in the immediate area and speak to real estate agents about local demand and values.
Accessing independent information from a source such as CoreLogic RP Data can also help, providing information on average property values, demographics and suburb reports. Some financial institutions, including Credit Union SA, provide free access to these reports.
6. Shop around for building quotes
A successful homebuyer will shop around for the best financing option and the same approach should apply when selecting a builder.
Speak to a number of them about your wants, needs and ideas and get their professional advice before making any decisions so that you understand your options and can be sure a suitable solution exists to satisfy your specific objectives.
7. Pay close attention to build quality along the way
Ensure you closely monitor the build quality of all fixtures and fittings and ensure the signoff process includes verification that the standard of work meets your expectations.
8. Avoid changes of mind
Unless absolutely necessary, you should avoid changing your mind, as significant construction cost variances can be caused by altering even small details part-way through a build. This can also lead to issues if finance was approved to the original build specifications and costs.
9. Speak to an expert
INFORMATION YOU SHOULD KNOW
This article is intended as general information only and has been prepared without taking into account the personal financial situation, objectives or needs of the reader. Before acting on this information, you should consider its appropriateness, having regard to your objectives, financial situation and needs. You should always seek professional advice or assistance before making any financial decisions.