The first step to building a house is to find out how much you can afford to borrow (if you need to) - and to arrange for the necessary finance. If you’ve been through this before, you’ll know exactly how this works – if not, there’s a little more to it than just asking the bank for the precise cost of the house you’re looking for.
If it’s your first home you’re building, for example, the amount you need to borrow may be more than just the balance of the house, minus your deposit. You’ll also need to factor in the cost of stamp duty, the likelihood that you’ll need to pay lender’s mortgage insurance, and take into account how much you’re eligible for in terms of first homeowners grants (which are constantly changing, and which differ from state to state).
The amount that the bank’s willing to lend you is another matter... This will depend on how much you’re able to pay back, over what time period, and from the bank’s perspective, how much of a ‘risk’ you present in terms of your ability to keep paying. Risk’s not just the bank’s problem, of course - even if the bank’s willing to trust you with a gigantic loan, it’s important that you’re realistic about your repayments and that you don’t underestimate the effect they’ll have on your lifestyle. Buying or building a house is likely to be the biggest financial commitment you’ll ever make.
The articles below will help you to understand how home loans and construction loans work, what you need to consider when you’re applying for finance, and why it’s so important to get the right, expert advice for these kinds of decisions.