Securing New Home Finance in 2019
When choosing to build your new home the first step is to visit your local financier. Once you have had this initial appointment you will know your capacity to borrow, and what your repayments will be based on your chosen budget.
Whether your financier is one of the big four banks or a broker, Stroud Homes Bundaberg can assist you in choosing the right person for you, before finding you the perfect block and home for your family!
We find out more about securing finance for your new home build.
There is a $2500 preliminary deposit which is due and payable when signing your preliminary agreement.
This deposit allows for the builder to complete site classifications, contours, council pre-check and preliminary plans, which your bank will require to start the process.
It also allows the builder to complete a Fixed Price Contract for your lender – which they love!
With Stroud Homes Bundaberg you will have no Provisional Costs anywhere, unlike most other builders in the local region.
“Don’t be fooled into a no deposit contract – they will be full of hidden costs and the builder won’t care – they will just make you pay these extras during the build.” warns Aletha Walters, Co-owner/Sales Manager of Stroud Homes Bundaberg.
Queensland Stamp duty (also known as Transfer Duty) is basically a tax on the transfer of property, payable to the Queensland Government by the buyer of the property.
The property value used in the calculation will either be the purchase price or valuation, whichever is higher.
“The great thing about building is that you don’t pay ANY Stamp Duty,” explains Aletha. “So you are already ahead of where you would be if you had purchased an existing property.”
You will only be required to pay a small fee on the block of land that you purchase from the land developer. All land transfers and existing property sales will incur stamp duty, however there are some concessions and exemptions that could apply to you.
The following may be eligible for concessions or exemptions:
A construction loan is a type of home loan designed for people who are building a home as opposed to buying an established property. It has a different loan structure to home loans designed for people buying an existing home.
A construction loan is most commonly differentiated from standard home loans as it has a progressive draw-down. That is, you draw down the loan as needed to pay for the construction progress payments for example slab stage, frame stage, lock-up state etc.
A construction loan will generally be interest only over the first 12 months and then revert to a standard principal and interest loan thereafter.
Stroud Homes follow a standard Housing Industry Association contract template so you know that the builder is only asking for the industry standard at each payment – unlike other builders who use ‘modified individual contracts’ to suit them.
Even though a fixed price contract has been agreed upon, if you decide you want to make changes during the building of your new home, you can request a ‘Variation to the Contract’.
This will allow you to make the changes that you wish without having your builder charge you extra for items that should already have been included in order to receive your Form 21 (Final Inspection Certificate) at the end of the build.
“I heard from someone recently about having ‘air conditioners’ included in their contract but then realised that the installation was not included and they had to pay extra for this during the build,” says Aletha. “This is very sneaky and not a builder that I would want to deal with.”
Aletha’s tip is to “do your research and make sure you read your contracts – not quickly!”