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.

It sounds simple, right? In fact, buying a property off the plan can be a lot more complicated than it may first appear. In this article we give you five tips on how to get it right.

What is buying off the plan?
Buying off the plan means signing a contract with a developer to purchase a property that has not yet been built. Instead of inspecting a completed home, you choose the property by inspecting the developer’s designs and plans, or by visiting a demonstration home or show room. Apartments are the most common type of off-the-plan property purchase, however you can often buy units, duplexes and townhouses that are a part of a larger development.

Tip #1. Do your research.
Putting down your deposit on a property that proves to be worth less than the original agreed purchase price could be a disaster, as you may not be able to get the finance you need to complete the sale. That’s why it is vitally important to do your research very carefully to ensure you’re buying a property that will have the value you expect when the purchase is completed.

To be sure you get it right, you should research the suburb’s capital growth rates and rental yields. You should also find out how many other, similar developments are planned to find out how this will affect sale prices, clearance rates and vacancy rates in the area.

Tip #2. Reference check the developer.
Choosing the right developer is just as important as choosing the right property. Everyone has heard stories about dodgy property developers and the way to avoid being caught out is to reference check them carefully.

Do a background check on the developer for bankruptcy, criminal record, complaints with your local building authority and ask to speak with previous clients. Ask the developer how long they have been in the industry, how many projects they have completed and visit their previous work to inspect the quality. Find out what professional industry associations they have.

Most importantly, ask the developer to provide proof of their financial status. You don’t want to run the risk of the developer going into liquidation before the property is finished.

Tip #3. Be sure of what you’re buying.
When buying off the plan, it pays to be very thorough and detail minded. You need to determine exactly what you are going to be getting for your money, so ask a lot of questions about what is covered by the purchase price and what isn’t. You should be careful to ensure that everything your developer agrees to provide is written down in the contract. Be as detailed as you possibly can in every respect.

Tip #4. Get a solicitor to check the contract.
Because they are so very detailed and comprehensive, contracts for off the plan purchases can be complex and lengthy. To make sure everything is correct, take the contract to a solicitor you can trust to check it carefully. Read it yourself and ask your solicitor to explain anything you don’t understand before you sign on the dotted line.

Tip #5. Pre-inspect prior to settlement.
Another thing that you must remember to include in your contract is a pre-settlement inspection. This will give you the opportunity to go in and check that everything the developer has agreed to deliver is there in the property. You can also take along a building inspector to help you check for defects or finishes that are not up to standard. If everything is not in order, you can delay settlement until the developer rectifies the problem. Including a pre-settlement inspection in your contract is essential to protecting yourself from having to take possession of an uncompleted property. You don’t want to hand over your money until you are completely satisfied you’re getting everything you’re paying for.

If you’re considering buying off the plan, it’s also a good idea to get pre-approval on a loan before you sign the contract. You can then keep this up to date whilst the property is being constructed to be sure you can get finance when needed. We’re here to help you crunch the numbers and make sure it’s the right purchase for you, so please call us today.