The home loan application process
Building a house is not only a daunting experience, but a very expensive one as well. While there are plenty of costs that you may have already thought about if you’re looking to undertake this venture, there are many costs that can be hidden.
Be sure you’re ready for all the costs that are tied to building a house from scratch.
This is probably one you’ve already thought of. You’re going to have to build your dream home out of something, so that’s going to cost you a fair bit of cash.
Another one you’ve probably thought about. Your builders aren’t going to work for free, so you’re going to have to fork over good money for your labour.
This is possibly one you haven’t thought about, but before laying down any quotes, a builder is going to want to conduct two separate tests; one on the soil and one on the contour of the land. Naturally, any difficulties that can be seen by building on your soil will incur an extra cost. Similarly, builders will assess the slope of the land. Generally, the more of a slant you have, the more it’s going to cost you. As a rough guide, expect to pay around $5-10k for every 1 metre of fall across your property, depending on how drastic it is, and even more if the fall is sideways across the block.
Site costs are probably the most variable cost you’re likely to encounter when building a new house. This is based on things like the soil and slope difficulty, whether the site is difficult to get to, whether you have to remove trees and roots, retaining walls are required and other unexpected elements.
Believe it or not, many quotes you receive from your builder may not include the cost of putting down flooring. The theory behind this is that you pay to have a house erected on the slab, and that things like carpet, floorboards or tiles are going to cost you extra.
Because it is not strictly part of the building itself, many builders’ quotes will not include the cost of a driveway. The cost of a driveway can vary depending on what your preference is for getting your vehicle from the street to the garage.
Make sure you factor landscaping into your final budget, because your builder is unlikely to do so. It’s not uncommon to see builders including 15 square metres of turfing as part of the finishing touches, but don’t expect an oasis-like set-up if you’re not willing to pay a little bit extra.
This one might seem a little unfair, but if you’re looking to build in an area that may be more prone to feeling the effects of a natural disaster, it might hit you in the hip pocket. For instance, if you’re planning to build in an area that is prone to flooding, your new place may need to be designed just in case of that 1 in 100 year flood occurring. Similarly, for properties that are surrounded by bushland, or are built in areas that are known bushfire spots, it is possible you’ll need to obtain a Bushfire Attack Level rating. Of course, any assessments and modifications needed come at an additional cost.
This one is likely to impact you if you are building on a newly distributed piece of land, and are putting a property on that land, as well as connecting things like plumbing and electricity.
That’s right! Not even the humble wheelie bin is free. You’ll need to contact your local council to get a set of bins delivered to your property once you’re ready to move in.
Are you going to need to close down a section of the road for operational purposes (cranes etc.)? That’ll cost you. Councils and sometimes the state government will bill you for disrupting the status quo on their roads.
It’s also a certainty that things are going to go wrong throughout the building process, and modifications need to be made to the initial design of the house. Unfortunately, making such modifications can cost you cash for all number of reasons; the extra labour and materials, needing to enlist the help of an architect and/or surveyor or in some cases resubmitting plans for council approval etc. Be prepared for these “emergency” instances.
During the construction period, your loan will usually be interest-only to reduce the amount of your repayments until the building is finished. However, you may attract some additional building costs on your mortgage such as extra valuations or progress payment (drawn-down) fees. Your lending specialist will be able to explain these fees during your home loan appointment.
Obviously, how much it’s going to cost you to build a house in the end comes down to your circumstances; where are you building, what’s your budget, how many rooms/floors etc. As a guide however, building a house in Queensland can cost you anywhere between $1,700-$3,400/square metre.
If you’re looking to build a new place, or just looking to buy, make sure you check out our home loans and home loan repayments calculator. If you’re looking to renovate your current place, there’s plenty of help and advice available to you as well. And finally, if you’re looking to protect your newest and most valuable asset, be sure to purchase home insurance from Heritage.