Financing a construction loan

Is it better to build or buy? There’s no right or wrong answer to this as it depends entirely on your personal circumstances and choice. Some people prefer to concentrate on their own design, making personal choices from scratch. Others prefer to purchase an established home and renovate over time.

But if you decide to build a house, this can be one of the most exciting projects you’ll ever undertake, but it can also be stressful, and there’s a lot to think about.

A construction project is always phased, with the first stage being the purchasing and preparation of the land. If you decide to purchase the land first and wait a while before building, this will not qualify for the First Home Owners Grant (FHOG). FHOG can only be applied for in the construction phase.

A loan to purchase land is also subject to the same conditions as if you were purchasing a house, in that there are regulatory government fees to be paid for transferring ownership of the land. When applying for a loan to purchase the land a lender will consider the value of your deposit and overall borrowing capacity. How much you borrow for the build is also dependent on your ability to service the loan and the value of the deposit to be paid.

The construction process itself is staged, with various progress inspections throughout. During this time you will still need to pay for a roof over your head and put food on the table.

If you are considering building a house and want to discuss options that meet both your current living and future building requirements, please give us an obligation free call.