Daydreaming about building or renovating a home or investment property?
Most people like the idea of building their own home but don't really know where to start. Likewise, when buying an investment property, many people would like to purchase a newly constructed home-which usually results in a better rental income, but the developer has usually already moved on, leaving behind many possibilities to improve the property and increase its value.
Build the house of your dreams
A construction loan allows you to buy a property and build on it, or renovate an existing structure to improve its aesthetics and value.
If you are looking for a block of land to develop and cost your own design
- You can custom design a home to your needs rather than using an off-the-shelf design
- It can be a very time consuming process as land and building contracts are negotiated separately with different parties
- It’s generally more expensive to custom build, however, the end result might be a property with better street appeal and all the bells-and-whistles, giving it much greater value.
If you want to buy a house and land package- it can work one of two ways:
Settlement of land & the build funded on an ongoing basis:
- Lower stamp-duty costs: the stamp-duty is only payable on the value of the land
- Higher costs during construction – interest is payable on the progressive loan balance
Settlement on completion of construction:
- The loan is not drawn down until the completion of construction, resulting in lower expense during course of construction
- Stamp-duty is payable on total cost-including improvements
Steps to building a new home or investment property:
- See a mortgage broker to calculate what you can afford
- Locate the land and do some research on new home values and development rules, etc
- Engage an architect or reputable builder to assist in development of a concept and cost the project – and if you want to keep it simple, look for a property that is being sold off the plan whilst keeping affordability in mind
- If your circumstances have changed or a lot of time has passed, speak again with a Mortgage Adviser to reaffirm the availability of finance and obtain pre-approval
- Execute a contract with your builder or real estate agent – the inclusion of a subject to finance clause is always recommended
- Start the development application or building.
At LKFS, we have over 21 years experience in dealing with lenders, so you can rest assured that we will always get you the best deals. Feel free to contact us today on 1300 930 106. Alternatively, you can find more information here.