Building First Home & Looking For Advice

Ljagolombago on 28/05/2016 - 10:13
Last edited 28/05/2016 - 11:08

Hey everyone,

I'm new to the 'forums'. I use OzBargain on the daily but I've only started to become more aware of the discussion section. It just so happens I'm looking to build my first house and I'm a bit all over the place in terms of where to begin. I live in WA, Joondalup right now. In an ideal world I'd like to build close to the beach, or at least on the beach side of the Mitchell Freeway. Main reason is that I work up this way. It's a bit up in the air as to whether this will be an investment or an actual place to live. I know that can influence the decision and some borrowers need to know which one you'll be looking for. For talking sake, lets just say it's for living in and obviously, making money on in a few years time.

I'm on a salary of $62,000 a year and the deposit I have is only small at $7000, possibly $8000 the more time goes on. I'll be doing it on my own so there is no joint income, it is just the $62,000. I do run a small business on the side, but really it's void because it doesn't see profit as I've only started.

I guess I'm just looking for advice, is there any up and coming locations or any borrowers that are more suited to me, or even any more grants other than the FHOG? So far I've only really looked at my banks mortgages (Westpac) and Keystart.

Thanks for taking the time to read, and for any advice you may have.

Cheers,
Jay.

Home & Garden

Comments

  • Ughhh on 28/05/2016 - 10:21
    -1

    Pretty sure $10k is not enough for a deposit, you need something closer to $100k

    • jagolombago on 28/05/2016 - 10:29

      I've heard of some banks allowing for half of a standard deposit to be paid before the build begins and then the other half before completion, I don't know if this is true but I was thinking of maybe doing something like that. You may well be right though.

      • Ughhh on 29/05/2016 - 03:53

        What's half of a standard deposit? I highly doubt 20k is the standard. $20k is only just enough to get a mid sized new car.

    • thesigness on 28/05/2016 - 10:59
      +2

      Was that a typo and you meant 10k?

      • Ughhh on 29/05/2016 - 03:53

        No I meant $1.00

  • nocure on 28/05/2016 - 10:59

    you need something closer to $100k

    Don't listen to this ⬆, most will ask for no more than 10%…make sure you claim the NHOG for new builds, I think its $10,000.

    • jagolombago on 28/05/2016 - 11:06

      Thanks, will do!

    • Ughhh on 29/05/2016 - 03:56

      most will ask for no more than 10%

      What is 10% of $100k?

      If you can find a property that cost $100k well good on you

      Have you even factored in other cost as mentioned below?

      • jagolombago on 29/05/2016 - 15:28

        There are things I'll now know to consider.

  • shadowarrior on 28/05/2016 - 11:29
    +5

    Here's some of the true costs which you might not see straight away when building a new house but you should be aware of:

    • Min of 15% contribution for most banks to get considered. Even though they say 10%, during evaluation, they turn you down.
    • Fees for solicitor, soil test etc
    • Valuation drama. Sometimes if you are lucky, the bank valuation will be spot on for the loan application. Often, they will be below your loan amount. We got 3 valuations done, first one came 50k less than the purchase price. Second one came 35k less than purchase price. Third one came 20k less than purchase price. We paid the 20k difference upfront, that was on top of our contribution.
    • Tax, fees and bills for the council. In QLD first home buyers were exempt on stamp duty. Check whats the norm in your state.
    • Any deviation from the building plan will cost you money for the extras. And the builders charge a lot.
    • Be careful with land selection. Look out for big slopes, retaining wall costs, bushfire rating, highway noise rating.
    • Most builders electricals include the very basic. Adding extra lights, plug points, ceiling fans, data points will cost you out of your pocket.
    • See if the building contract includes items like landscaping, driveway, fencing etc. If not, they might cost you extra.

    I contributed $30,000 (own savings/deposit) towards the build, paid $20,000 on top for the valuation difference. Added another $20,000 for extras (fittings, fencing, landscaping, aircon, lawyer fees etc).

    • jagolombago on 28/05/2016 - 11:46

      Thanks so much for all the info. Really puts it in perspective. Some of these costs I had considered, others I had no clue of. I'll make a point of researching these further for sure.

    • jdf on 28/05/2016 - 16:57
      +1

      Excellent advice especially the part about the valuation difference, most people don't account for this which results in a lot of vacant plots of land.

    • mosquito on 29/05/2016 - 08:00

      Hit similar issues with the valuation, especially in new areas.

      The homeone forums have a lot of advice around this, expect $20K extra post build for things not included, also expect a large amount to be spent on "upgrades" to the build as the display home example will often have 100K worth of upgrades…

      • shadowarrior on 29/05/2016 - 12:32

        I love the homeone forums. :) I joined and did my research since 2010 to get some good understanding of the building process before I committed myself in building my own house in 2014. Its very important to have some basic knowledge about it. The whole experience is pretty amazing and exciting, but not knowing what you are getting in to might turn that into a nightmare pretty quick. Just because you have paid the invoice and signed the paperwork doesn't mean your job is done, it's just the beginning and you are actively involved till handover.

        • jagolombago on 29/05/2016 - 15:21

          I think I'll take a page out of your book. There is no immediate rush for me and I'd rather know the in and outs before starting. A lot of this feedback is going to help greatly. Thank you!

      • jagolombago on 29/05/2016 - 15:19

        I'll look into the homeone forums, and will take a further look in the extra costs post build. A lot of people have mentioned the extra cost for upgrades so I'll be looking into that more also! Thank you!

  • nrg2010 on 28/05/2016 - 13:10
    +2

    Jay
    Maybe in 1995 you could of!
    From your questions I don't think you have enough capital, a large enough salary and enough experience to "manage" a build. Sorry if it sounds rude, but without access to working capital and the experience of knowing the building game you are risking alot on your project.
    Looking at Joondalup house and landprices , you have just about enough to squeeze a deposit on some land, let alone pay for the development application, building approvals,rates, architect fees and constructuion costs.

    If you are serious go and talk with a mortgage broker, they will let you know where you stand and how much of a loan you can get.
    Talk to the local council they will let you know of the planning and ongoing costs.
    Talk to a conveyancer, they will let you know of costs in purchasing land.
    Talk to a builder etc,etc

    • jagolombago on 28/05/2016 - 13:19

      No need to be sorry, these are the things I need to be aware of and it's always good to receive feedback from all angles.

      • nrg2010 on 28/05/2016 - 14:01

        well good luck with it all.
        Over here in NSW we have something called community title, have a google as it can be a cheaper way of achieiving what you are after. Nerara ecovillage is one good example http://nararaecovillage.com/

        • jagolombago on 29/05/2016 - 15:22

          Thanks nrg2010. I'm going to be looking at a lot of this stuff today so will make a point of looking at that. Thanks again for your input!

  • Euphemistic on 28/05/2016 - 22:26

    Any reason you want to build? I'm assuming it's your first property purchase. You might be better to buy and renovatefirsg to get a feel for how owning a house works. Building can have some big $ surprises if you aren't fully aware of the process. Shadow warrior has highlighted some of them. At least buying an existing hous you can move in straight away and not have to pay rent while the build would be on.

    • jagolombago on 29/05/2016 - 15:26

      I guess I just thought I'd see a quicker turn around on investment if I built, but obviously I do have a lot to learn and buying a 'fixer-upper' was something I did consider. I just don't know at this point if the banks are going to lend me what it is I need to build or buy for that matter.

      • Euphemistic on 29/05/2016 - 20:13
        +1

        In that case you are probably better off finding a fixer upper to live in while you fix it up. That way you won't have to pay capital gains tax.

        If you are talking about return on investment for a long term house (10y or more), building or buying won't make much difference except for the afformentioned headaches of the building phase

    • mintysaurus on 30/05/2016 - 22:33
      +1

      My partner was going to build, they refused to make changes to the floorplan and generally stuffed him (some Title problems pushed the build back by at least a year). In the end we purchased an established house. I always felt kinda guilty about pushing him into that, but after seeing the list of extra costs we hadn't considered I'm really glad we went that way

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