19 May Ready to think about Finance? Start here.
Thinking of building, but you don’t know where to start? Don’t worry you’re not alone.
A lot of customers / owners come in and enquire about building, but don’t know where to begin. First things first, before you go out and start look at land and house designs, what is your budget? What can you comfortably afford? A lot of people enquire and want their dream home, but when they talk to their Bank / Mortgage Broker it’s not attainable or they can afford a lot more than what they originally thought. So firstly, contact your Bank / Mortgage Broker, make an appointment to discuss your finance options.
A good Loan Manager / Mortgage Broker will explain the following to you:
- Size of deposit required;
- The types of loans out there;
- Fixed vs Variable loans;
- Repayments – Principle & Interest vs Interest Only. Principle and Interest refers to payment both the interest and principle component or your loan. ‘Interest Only’ repayments are just paying interest not the principle of your house. Therefore, you are not paying your house off;
- Loan Terms – 20, 25 or 30 Years. The shorter your loan term the less interest you end up paying over the life of your loan, but your repayments will be higher.
- Repayment Options – weekly, fortnightly, monthly.
- Costs / Fees associated with the loan. Such as establishment fees, on-going fees, stamp duty, mortgage insurance (if applicable)
- If you are eligible for the First Home Owners Grant (FHOG), and how that works.
- Some councils also have incentives for First Home Owners at the moment, providing owners with the extra funds to go towards building their first home. So, it may be beneficial to contact your local council to see if they have any incentive programs running you may be eligible for.
- They will also match the best loan option for your financial circumstances now and into the future.
If you can’t afford to build your dream home now, your Loan Manager / Mortgage Broker will be able to inform you of what size deposit you require and help you implement a savings plan to achieve your goal.
If all is well with your finance your Loan Manager / Mortgage Broker will obtain a pre-approval from your bank for you. This pre-approval amount will give you what your house and loan budget is. They are usually subject to deposit, valuation of the property (land and house plans) and may have other special conditions in place. Again, your Loans Manager / Mortgage Broker can explain this to you.
When you have your pre-approval amount you can start looking at land and house plans. At Oakvale Homes we do have a few Mortgage Brokers we can recommend to help you. If you are looking around please ensure you seek independent financial advice. We are unable to provide this to you. We are also more than happy to help you locate some land and customise a plan to build your dream home.
Keep an eye out for our next Blog – What to look for when purchasing a block of land?