Perhaps it’s the knowledge that everything will be fresh and new, or the freedom that comes with being able to design the property to suit your own tastes and lifestyle needs. Always dreamed of having a lap pool? Why not! Like the idea of a home studio? Let’s make it happen!

When building your own home, there’s a new chapter to begin, new adventures to be had and new memories to make. So, whether you’re planning on doing the building yourself, or you’re purchasing off-the-plan, talk with us now about securing the right finance!

Building your own home

When you build a new home, the right loan could potentially help you save a lot of money on interest. For example, a construction loan allows you to borrow in stages, while your home is being built. Rather than providing the full loan amount at once, the lender breaks the loan down into “progress draws”, and pays these to the builder in stages throughout the construction process. This arrangement means you only have to pay interest on the loan amount you have actually used.

Your lender will usually require council-approved plans and a fixed-price building contract before they will approve a construction loan. The lender’s valuation expert will use these to help estimate the on-completion value of the property, and the lender will then assess the final loan application on whatever is less – the land price and cost of construction, or the on-completion value.

The advantages of construction loans

With construction loans, you only pay interest on what you’ve actually drawn down, not the maximum loan amount you’ve signed up for. What’s more, loan repayments are usually interest-only during construction.

As each phase of construction is completed, the lender’s valuation expert usually inspects the building progress on behalf of the lender and then authorises the next draw down on your loan to pay to the builder. Then at the end of the construction process, you can choose the type of loan you’d like to use moving forward – this could be a fixed rate loan, a variable rate loan, or another type of loan, depending on your circumstances and objectives. (So do talk to us about your options before you decide.)

Perhaps the biggest benefit of a construction loan is the way your builder is paid. Construction loans help to give you a level of protection, because cash is not paid to the builder until the work is completed and inspected at each stage. This can often help to prevent construction falling behind schedule, or potentially aid in early detection if there are any issues with the build or the quality of work.

Some lenders charge a slightly higher interest rate for construction loans, so it pays to ask us to shop around amongst lenders. Talk to us and we’ll ensure you have the right kind of construction loan for your particular needs and are fully aware of exactly how much it will cost. If necessary, we may advise you to use another loan alternative, like setting up a line of credit facility, for example.

Buying off-the-plan

Buying off-the-plan is a term used to describe buying a home from a developer before it has been built. If you’re buying property off-the-plan, you’ll only have to pay the deposit up front. However, organising your finances may not be quite as straight forward as with purchasing an established home, as there is usually a considerable period of time between paying your deposit and final loan settlement. You will also need to get advice from a solicitor regarding the details in the contract for your off-the-plan home purchase, to make sure you and the developer are on the same page regarding what the price includes before you sign the contract.

As your mortgage broker, we are here to explain the process of buying off-the-plan, help you line up your professional team, and help you find the most suitable loan for your needs and objectives. We can also help you arrange your deposit, whether it’s in the form of a bank guarantee, deposit bond or cash, and oversee the payment process for you. It’s also very important to organise conditional loan approval (finance in principle) with your chosen lender before construction of your off-the-plan property begins, so do give us a call before you sign on the dotted line.

Talk with us about finance before you get started!

There are many important things to consider when buying off-the-plan, or building your own home. For example, once the property is built, most lenders will require a valuation on the finished product before approving your final loan and proceeding to settlement. If a problem arises, such as the value of the completed home is less than you anticipated, construction is delayed, or the build costs more than you expected, having a finance professional on your team could make all the difference to the outcome.

If you’re a first-time buyer, you may also be eligible for the First Home Owner Grant (FHOG) when building your own home or buying off-the-plan. You may qualify for stamp duty concessions or exemptions in some circumstances, even if it’s not your first home. Speak to us and we’ll help you check what concessions you may be eligible to receive.

It pays to get professional advice about your finances when building your own home, and planning ahead is the key to success. Construction loans can be complicated and the timing can be tight with off-the-plan mortgages, which is why it’s a good idea to call us for help. We’re here to give you support throughout the process and help you secure a suitable finance solution for your needs and goals, so if you’re ready to stop dreaming and make building your own home a reality, please call us today.

Pop quiz time, hands on your buzzers, first-timers. Do you: 1) Continue living off two-minute noodles for another five years and hoard your pennies? 2) Cash-in your grandpa’s beloved stamp collection? Or 3) Ask your mortgage and finance broker about this mystery thing they call the First Home Owner Grant (FHOG)? That’s right, Option 3 is the winning answer and the good news we have for you is that the First Home Owner Grant has recently increased in many states of Australia!

What is the first home owner grant (FHOG)?

The FHOG is a national initiative designed to help young go-getters like yourself to swing a leg onto the property ladder. You can use the one-off grant as part of your deposit, or put it towards other purchasing costs. There are some major provisos: it must be used to buy or construct a brand new home that has not been previously occupied or sold, and it must be used as your place of residence. In some instances, substantially renovated properties that have undergone major structural changes may qualify.

Who is eligible?

Naturally, the Australian Government isn’t going to give away money to everyone who asks for it. The eligibility conditions for the FHOG are quite strict.

To be eligible for the FHOG, you or your spouse must:

• Intend to live in the home as your principal place of residence (PPR) for six to 12 continuous months, depending on the state or territory, within 12 months of settlement or completion of construction.
• Be aged 18 or over.
• Be an Australian Citizen or Permanent Resident.

You don’t qualify if you or your spouse have previously:

• Received a FHOG in Australia already.
• Owned a home in Australia, either jointly or separately, prior to July 1, 2000.
• Occupied, for a continuous period of at least six months, a home in which either of you acquired a relevant interest on or after July 1, 2000, in Australia.
• Depending on the state or territory in which you purchase your home, other conditions may apply. So please talk to us if you’re unsure if you’re eligible for the FHOG.

Could there be more good news?

Yes! The FHOG is currently under review, so it’s worth visiting your state’s office of revenue website from time to time to see what’s on offer. You may even want to consider moving interstate. How much you can get or save as a first home buyer, often depends on where you want to live.

It’s definitely worth checking out, because you may find you’re eligible for other big savings, like on stamp duty fees in some states. For example, from July 1, the Victorian Government is going to be scrapping stamp duty for first homebuyers for properties up to $600,000, with further discounts for new or existing homes between $600,000 and $750,000. Stamp duty is usually one of the biggest expenses if you’re buying a home, so this may make all the difference to your ability to climb onto the property ladder sooner rather than later.

What’s available around the nation?

The winner of the “most generous” award goes to the Northern Territory. Those wonderful peeps who call the Red Centre home are offering $26,000 to eligible first-home buyers, regardless of the value of the property. In Queensland, first home buyers can receive $20,000 until June 30 (then its $15,000) for properties valued up to $750,000. If you can live with the weather, Tasmania may be the place to buy, with no value cap and a $20,000 FHOG until June 30, when it reverts to $10,000.

In South Australia (SA) and Western Australia (WA), the FHOG is $15,000. In SA, the value cap is $575,000, while in WA, it depends on geographic location (for Perth, its $750,000). Victoria and NSW offer a $10,000 FHOG for new homes valued up to $750,000, but from July 1 the FHOG will double to $20,000 for new homes built in regional Victoria. Lastly, the ACT offer $7,000 for properties up to $750,000. (Data current March 2017).

We’re here for you.

Talking to a mortgage broker about purchasing your first home is always a great idea. We’re happy to give you the benefit of our knowledge, even if you’re not quite ready to buy. You can ask us to help you create a budget, establish a plan to clear off your credit card and other debts, and save a deposit. When you’re ready, we are here to help you secure a loan and choose a home that you can realistically afford, given your income and personal financial circumstances. Get an expert on your team by calling us today!