Building a new home – what you pay along the way….
Building is an exciting process! It’s easy to get lost in worrying about the process but don’t worry – let’s see what we can do to make this a little easier…
Here are some of the things to allow for:
When you find the block:
Holding deposit: To secure the block, usually a flat fee – say $1000, or 0.25% of the purchase price
Once you’ve paid this get the contract over to us and we’ll get full approval in place before you pay anything else.
Balance of the 5% or 10% deposit – and what we call “exchange”:
Due generally 5-10 days after you sign the contract – you have to have full approval in place before you do this as at this stage you’re committed to that land for sure!
Choosing the builder & the house of your dreams:
Secures the pricing and gets the tender going, may also cover a site inspection – here’s a tip, fixed price site costs and a fixed price tender are very important! This is usually a $500 deposit
Once you’re happy with the rough tender & the plans you proceed to contact stage . This could be the balance of up to $5,000 and gets the contract drawn up and professional plans done.
Can crop up, could be a DA (development approval) fee, inspection fees and lodgement fees. These shouldn’t be more than $1,000 in total but can vary from council to council & your builder will have a really good idea of what you’re in for here if they’re building a lot in the area.
KNOCK DOWN REBUILD
Can incur extra fees – lets talk about this separately, stuff like disconnecting gas mains etc. Just allow maybe an extra $1,000 – $3,000, if you don’t need to spend it – well and good.
Balance of the 5% build deposit
This is usually covered by the lender if you’re borrowing most of your build
And then we move over onto the regular progress payment schedule as per the contract.
Once you settle on the land:
You’ll start paying any loan you have for the land – most cases you’re paying the ‘interest only’ on the current loan balance.
You’ll also be responsible for any land rates as they come due.
Once you start the build:
You may have to pay for temporary power and water to be connected, in most cases this isn’t a lot and in new estates the builder will probably have it in their tender
Interest on progress payments on the building loan:
Like the land loan you start making ‘interest only’ payments on the outstanding balance as you make each progress payment on the loan – progress payments are invoice the builder sends at each stage of the build so they get paid for the work they’ve done and you don’t have to pay for the whole lot before they start!
Here’s a typical progress payment schedule and an idea of what the repayments may look like during the build.
Remember: these are very rough numbers based on a 5% interest rate which is average today (AUG 2014) and you wont know how long each stage takes, the idea is just to let you know what you can expect – roughly! Plenty of other things CAN crop up, but generally this is what happens.
|Land||Amount this payment||cumulative loan amount||interest only repayment per month, approx|
|Progress payments||Amount this payment||cumulative loan amount||interest only repayment per month, approx|
|5% – dep||$11,250||$296,250||$1,234|
|10% – base||$22,500||$318,750||$1,328|
|15% – frame||$33,750||$352,500||$1,469|
|35% – lock up / enclosed||$78,750||$431,250||$1,797|
|25% – fixing||$56,250||$487,500||$2,031|
|10% – completion||$22,500||$510,000||$2,125|