What to consider before building a home

Building a home is more than simply donning a hard hat and nailing a few pieces of wood together - it is a significant investment and a life-long commitment. The process requires careful planning and consideration to ensure your vision can, over time, become your reality. Before starting the construction process, there are several important factors to consider including location, budget, style, and design, to name a few.

Location

One of the first, yet most significant factors to consider when building a new home is location. Your chosen location for your build can not only impact your quality of life, it can have a significant impact on the value of your home over time. Location consists of a number of smaller factors such as:

Proximity to amenities

Generally, the location of your home should be convenient and close to amenities depending on your stage of life. If you have a young family, a nearby school and access to doctors may be more beneficial than distance to the CBD and nightlife.

Quality of surrounding neighborhood

The safety, cleanliness and ‘feel’ of a particular suburb, town or region can influence your desired location when looking to build a new home.

Climate

As mentioned above, the ‘feel’ of a particular suburb, town or region can influence the location you may consider. This is particular relevant when factoring in the weather, given climate can change in an instant. Consider the average temperature, rainfall and potential for flooding before building.

Future value

The location of your home can also impact its ability to generate equity over time and ultimately grow in value. Homes built in areas flagged for growth with access to essential amenities will more often than not increase in value.

Budget

The factor that bears the most significance in the home building process is budget. The cost of building a home can quickly add up, therefore it's important to have a clear understanding of what you can afford before contracts are signed and work commences. It's essential to have a realistic budget, with a small buffer in place incase of any unexpected expenses or add-ons that you may require throughout the building process.

Budgeting for your build can help you prioritize your expenses and allocate funds towards the most important aspects of the construction process. This can help you remain in control of your finances, avoid financial stress and ensure that your dream home becomes a reality.

Design and materials

Design and materials are also important considerations when building a home. You want to choose a style and design that reflects your personal taste and fits in with the overall look and feel of the neighborhood. It's important to work with a designer or architect to create a design that meets your needs and provides a comfortable and functional living space.

Another important factor to consider is the type of materials you want to use in your home. From the flooring to the windows and doors, every detail matters. New homes built today are required to meet energy-effiency standards as outlined by the Australian Government. The 2022 National Construction Code (NCC) requires all new Australian houses and apartments to meet a minimum energy efficiency rating of 7 stars under the Nationwide House Energy Rating Scheme (NatHERS).

To achieve this rating, consider:

Home orientation

Building for the local climate, allowing shade and solar access as appropriate for tropical/temperate/cool climates.

Window glazing

Double and triple glazing windows as opposed to opting for default options for your build. These typically have a lower rating which can hamper your ability to achieve the required 7-stars.

Zoning

Including more internal doors in the design, mechanical heating and cooling can benefit energy requirements. Places to include doors may be at the end of corridors, the bottom of stairs or to close off occasionally used rooms, like media and rumpus rooms.

Insulation

Increasing the amount of wall, floor and ceiling insulation or extending insulation to new areas.

Lighting

Remove downlights that are not the correct rating, alongside roof windows and skylights, replacing these with other lighting options that allow for continuous ceiling insulation.

Incentives

If you are building your first home, consider taking advantage of State and Federal government incentives to help you achieve your great Australian dream. At the state level, governments will offer First Home Owner Grants (FHOG) providing grants to first home buyers. These grants vary in amount and eligibility requirements depending on the relevant state or territory you are looking to build your home within.

At the federal level, the government offers the Home Guarantee Scheme (HGS) which provides incentives to first home buyers under the First Home Guarantee, the Family Home Guarantee and Regional First Home Buyer Guarantee.

More information on these schemes and eligibility requirements can be found on the Australian Government’s website here.

Finance

As a rule of thumb, to build a new home you will require a construction loan - that is unless you have enough cash saved up to pay for an entire build in full. A construction home loan is structured differently to a regular home loan, whereby the lender won’t give you all the money at once. Instead, based on your house location, plans and design, the lender will determine how much you need for the project, and will release the funds accordingly in periodic payments to your builder. This is known as a drawdown, paid out at the completion of each individual stage of your construction.

Construction loans also differ from a standard home loan in the size of deposit lenders require. As construction loans can be seen as inherently riskier, lenders might require at least a 20% deposit. Before you seek out finance, make sure you have a detailed plan in place as construction home loans rely on an estimate of the assumed value of the completed house.

Whether you are looking to build your first home or your dream home, check out our range of competitive construction loans or chat to one of our lending specialists to help get you started.

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