Your first home is always a very exciting step, whether you buy it or build it. If you’re looking for your dream home though, building it might be the best option for you because you’ll get exactly what you want, in the location of your choice, within your budget range. Sounds great, right?
There are many things to consider before you decide to build your own home, in addition to understanding the timeline. After all, Rome wasn’t built in a day.
Building Your First Home: The Basics
Knowing all there is to know about how to build your first home before you decide to take the leap is extremely important. You want to make sure that you’re prepared for the big project ahead. So, let’s take a look at some of the key things to consider.
Preparation Is Key
It’s great to have a dream. Unfortunately, dreams don’t turn into anything without sufficient planning. Starting with the finances, planning the build properly is the only way forward.
It’s always helpful to begin the planning process with a team of experts who can advise you on the best ways to achieve your dream home realistically.
It’s All In The Budget
It’s great to know what you want and how you want your home to turn out, but you have to know what your budget is. You can’t want a mansion fit for a celebrity with a budget fitting of your average joe. It’s important to be realistic.
Taking stock of your finance before you go ahead with planning will ensure you know what you can afford, what you can’t and when you can start.
3 Tips For Budgeting
- Do proper research. Conduct careful research on every cost that can pop up. It’s worthwhile consulting your builder at this point, in case you miss any additional costs.
- Compare building costs and materials. Don’t just settle for the first builder you find! Explore your options and see where you can get quality materials at a more affordable cost.
- Expect the unexpected. Plan ahead for extra costs during the build. Always expect it to cost more than initially quoted.
Choose Your Home Design
What’s your style? Are you old-soul with a love for old-world charm or do you like modern, clean lines and open-plan living? Know what you’re looking for. A home is a long-term investment, whether you buy it or build, so make sure you’re happy with the style of your home-to-be.
There are so many resources available to give you some ideas of styles of homes. Apps and sites like Pinterest are great for browsing different styles.
Pick Your Lot
Next, you’ll need to chat with a real estate agent to find your piece of land. This is also a cost that needs to be factored into the total cost of building your first home.
Get to know the development of that area as well – whether the surrounding land has been developed already, and whether there’s drainage, sewerage and electricity already setup (especially if you’re looking to build in a more rural location).
Things To Consider when choosing your lot:
An BAL rating (Bush fire attack level) is a potential overlay requirement, designed to protect your home from the risks of bushfires that must be met for council to grant Building Approval (BA). If your property is in a bushfire zone your new home must comply to the BAL level requirements relevant to your particular block – which can cost thousands more in construction costs. Any BAL rating is going to be costly, but as a general rule the closer you are to dense bushland the more expensive it’s going to be! here are the BAL ratings…
- BAL-12.5 – low risk
- BAL-19 – moderate risk
- BAL-29 – high risk
- BAL-40 – very high risk
- BAL-FZ – extreme risk (Flame Zone)
On some land estates and lots there may be acoustic overlays. These are in place to ensure all habitable rooms in a your new home are designed and constructed to adequately protect the owners (you) from external noise due to noisy Roads and train lines.
If your lot does have an acoustic overlay you will need to use relevant materials and construct the external envelope of your home to achieve a minimal transport noise reduction level for the applicable noise! The acoustic categories are and additional building requirements are specified here…
- Category 0 – No additional acoustic treatment required
- Category 1 – Reduction of 25 – 35 Decibels, applies to Entry doors, External walls, Roof and minimum 4mm thick glass windows and acoustically rated seals.
- Category 2 – Reduction of 30 – 45 Decibels, applies to Floors, Entry doors, External walls, Roof and minimum 10.38mm thick laminated glass windows and full perimeter acoustically rated seals.
- Category 3 – Reduction of 35 – 47 Decibels, applies to Floors, Entry doors, External walls, Roof and minimum 14.38mm thick laminated glass windows and full perimeter acoustically rated seals.
- Category 4 – Reduction of 40 – 52 Decibels, applies to Floors, Entry doors, External walls, Roof and double glazing consisting of two panes of minimum 5mm thick glass with at least 100mm air gap and full perimeter acoustically rated seals
Not all soil is good soil to build on, and why lots and look the same from the surface – it’s what’s happening under ground that matters. And for this reason all builders will need to conduct a soil test or analysis. These tests are conducted by geotechnical engineers (also called ‘geo techs’) using a piece of equipment to drill down into the ground and extract soil. By determining what kind of soil is at various depths, they will be able to classify the site and determine the bearing capacity of the soil.
- Class A – stable, non-reactive: the possibility of very little or no ground movement as a result of moisture change (often sand and rock sites)
- Class S – the possibility of slight ground movement (often clay sites)
- Class M – the possibility of moderate ground movement (often clay or silt sites)
- Class H – the possibility of high ground movement (often clay sites)
- Class E – the possibility of extreme ground movement
- Class P – problem sites: ground movement as a result of moisture change may be very severe, you will need to consult a structural engineer before building a new house.
Generally, Class ‘A’ and ‘S’ only require a basic slab with footings, however, all other classes are likely to require the slab to be further reinforced.
Another thing to consider is the fall over your lot (and especially your build pad). Any fall is not a good sign and invariably will add thousands to your civil costs in order to get your build pad flat and ready for building on. But fall over 500mm from front to back or side to side – will cost significantly more. As a general rule of thumb it will cost you up to 10k for every 1m fall. This is due to the amount of cut and fill (in fill sand) and and possible retaining walls required to stabalise the lot.
Something often overlooked – especially with in fill lots (or knock down rebuild projects) is the site access and roadside clearances. If your site has limited room to store materials or if it’s on a busy road – you may need traffic control in order to get materials safely on to site. Again adding extra cost to you building process above the costs of materials and labour.
Choosing The Right Builder
It’s all well and good to go for the cheapest builder. But, do they have the necessary skills and experience to build your first home to quality standard? You want to make sure that your new home build is in the right hands.
Also, remember that it takes a team to build a home. Consider the team you’ll need to hire, from an architect or designer to the excavator, surveyor and builder.
Get a variety of quotes or bids from multiple builders – don’t just choose the builder solely on price. Find a reliable, experienced builder who you can trust to deliver.
Cheap is cheap
While understanding you have a budget to work within, a quality build that will stand the test of time is more important than going for the cheapest build possible. After all – there is no such thing as “free” and just like everything else in life – you get what you pay for.
Fact is, there is no such thing as “buying advantage” amongst builders and regardless of the size on the builder – all builders are paying the same for materials and cost of labour. Therefor if the price is lower from one builder to the next, it’s important to look at why?
Often the cost reduction is hidden in the detail. So look closely at your inclusions and ensure your comparing the same quality across all builders.
Try to Get A Home Or Construction Loan
Consider getting a construction loan or mortgage – unless you’ve saved up enough to pay for the build yourself, you’re going to need some cash.
There is a difference between a home loan and a construction loan, so make sure you understand the difference and what you’ll need to go ahead with your project. A construction loan will give you access to the money more readily than a home loan. This is especially important when you need to pay for your construction costs at varying intervals during the build.
Something to consider is that you’ll probably qualify for a large loan. Don’t fall into the trap of taking the full loan amount. Try to work with a lesser loan, as you’ll have additional costs once your dream home is built (things like insurances and water bills). So, make sure you can afford the repayments once your dream home becomes your real home.
Finance costs to consider
Source: AMP financial
- Purchase price – this is the actual cost of the property. Unless you’re able to pay for it outright, you’ll generally need to take out a loan. Take note: lenders will generally ask for a minimum deposit of 10% to 20%.
- Loan application fee – this is a one-off payment to your lender when your loan begins. Fees can vary depending on your provider, and will cover things like credit checks, property appraisals and basic admin.
- Lender’s mortgage insurance – if you have a deposit that’s less than 20%, you may be required to pay lender’s mortgage insurance, which exists to protect your lender in the instance you’re unable to repay your loan.
- Government fees – stamp duty is a land/property transfer tax applied by all Australian state and territory governments, which can vary depending on where your future home is located. Mortgage registration and transfer fees also apply and differ from state to state.
- Legal and conveyancing fees – these cover the services of a real estate conveyancer or solicitor, who’ll prepare the necessary paperwork and conduct the settlement process.
- Building, pest and strata inspections – paying for these services will help ensure that any structural concerns or maintenance and financial issues are sorted—saving you from potentially detrimental problems down the track.
- Moving costs – this will come down to how much you do yourself, whether you rent a truck, hire professionals, or simply prod your family and friends into giving you a hand.
- Loan repayments – what you pay back and how often you make repayments—can have a big impact on the time it takes to pay off your home loan.
- Interest charges – you can generally choose a fixed or variable rate or a combination of the two. This is worth some research, particularly as interest rates can go up and down.
- Other ongoing expenses – the ongoing costs of owning a home might include strata fees for communal properties, council rates, utility costs, building and contents insurance, and things like home improvements.
First Home Buyer Grants…
There are a number of ways you may be able to help fund your home purchase. We’ve outlined some options to look into below.
First Home Owner Grant
State governments offer a one-off grant to first home owners who satisfy all the eligibility criteria. If you’re unsure about eligibility, contact your state revenue office and be sure you apply with plenty of time.
Stamp duty concessions
Certain state and territory governments offer additional incentives to first home buyers, some of which involve stamp duty concessions. It’s often worth researching what’s on offer in the area where you’re buying.
First Home Super Saver Scheme
Eligible first home buyers can withdraw voluntary super contributions (which they’ve made since 1 July 2017), to put toward a home deposit. Under the First Home Super Saver Scheme (FHSSS), first home buyers who make voluntary contributions into their super can withdraw these amounts, up to certain limits, in addition to associated earnings, from their super fund to help with a deposit on their first home.
If eligible, the maximum amount of contributions that can be withdrawn under the scheme is $30,000 for individuals or $60,000 for couples.
So if you’re still some way off buying a first home, making voluntary super contributions (as opposed to saving them in a bank account), to access later under this scheme, could produce tax benefits that help you reach your first deposit goal faster.
Next Step… Sign The Contract
You’ve decided on the builder. You’ve gotten the loan approved. Now to cross all the T’s and dot all the I’s and you’re ready to go! Just make sure you understand all the finer details before signing any contracts.
Construction of Your First Home
Obviously, it’s not as simple as just laying the foundation, building walls and fitting a roof. There are more involved steps in the construction process for how to build your first home. Here they are so that you can monitor the progress of your home more closely.
1. Preparing The Construction Site
This includes finalising the designs with the architect and acquiring the necessary permits to start building. This is also the stage where the construction team will level the site and lay the foundations.
2. Installing The Rough Framing
This means completing the skeleton of the house. It includes laying down the rough floor (i.e. screed) and the layout of the home, such as the frames for walls and ceilings.
3. Installing The Rough Plumbing & Electrical Work
All the sewerage lines, plumbing lines, water supplies, bathroom fittings, electrical and venting systems will be installed at this stage.
4. Fitting The Insulation
Insulating a home is important to regulate the temperature, especially in the warm Aussie climate. If you opt for drywall, insulation will be installed in the walls and ceilings. If you opt for brick and mortar walls, the insulation will be installed in the ceiling.
Side note – cement is also a form of insulation. So, if you choose brick and mortar walls, you’ll already have a form of insulation in your home. Some of the most common types of insulation include foam, cellulose and fibreglass.
5. Installing Interior Walls & Fixtures
If you’ve opted to have drywalls inside the home, these will be installed, along with interior finishes, including the first coat of paint.
6. Completing Exterior Fixtures & Finishes
Once the walls have been completed, it’s time to install finishes like windows, wardrobes and cabinets. You’ll also add that final coat of paint. Now your home is starting to take shape!
7. Installing Flooring, Countertops & Bathroom Fixtures
All your flooring surfaces will now be installed. So, whether you went for tiles, wooden floors or laminate flooring, these will be fitted and finished.
Now’s the time to install your countertops too. Once your exterior finishes have been complete, you can also start preparing the outside for landscaping. This could include laying bricks for your patio (perfect for the Saturday afternoon barbie!)
Fitting the sinks, oven, toilets and taps in your bathroom (or bathrooms) also happens in this stage, along with installing light switches, plug outlets and switches.
8. Completing The Aesthetic Finishes
Your fittings have all been done. Your sinks, taps, toilets and everything in between have all been installed. All that’s left to do is to add the final details.
It’s time to add the finishing touches to the interior like bathroom mirrors and door handles, those carefully selected kitchen cabinet handles and all the covers for the light switches.
9. The Final Walk-Through
Although there will be ongoing inspections during the build, things can (and most likely will) pop up at the last minute. Anything that didn’t quite go to plan can be fixed at this point. You’ll go through everything with your contractor and make a snag-list (a list of everything that needs to be fixed).
Remember those extra costs we mentioned before? Now that extra budget money will come in handy in case anything needs to be fixed or replaced.
Get The Keys!
After a long wait (about 20 weeks), your dream home will be ready! You’ll get to enjoy the spoils of your labours (well mostly the contractors’ labours).
The Bottom Line
And there you have it! You now know all the ins and outs of how to build your first home. If you decide to build your home from scratch, it’s going to take much longer than if you were to contact a real estate agent and pick from a list of already-built homes. But, and this is a big difference, you’ll have the satisfaction of knowing you designed and created a home that’s exactly as you want it.
Sometimes buying a house means you have to renovate anyway. At least by building your home, you’ll get it as you want. You’ll get the perfect size, the particular style and all the extra finishes in your home that you really want.