We know, it’s not the sexiest thing to talk about but when it comes to building a new home there are a few costs involved that are not covered by finance. These range from costs for the land to what you have to pay at settlement. And it’s not like these costs are hidden, they are just ones that many people forget about or just don’t know about.
Move Homes has put together all the costs you need to know and consider when it comes to building your new home. But if you have other questions about the costs involved in building, send us an email at hello@movehomes.com.au and we’ll get back to you with an answer.
Deposits
We’ve all heard this word thrown because it’s something no one can avoid (and is one of the first costs involved in building). Deposits are required for both the Land and the Build as a form of security. It ensure that people are serious in making the purchase of the land, and so the land isn’t sold to another person. For the build side, the money is used to commence work on your build, such as drafting plans and paying for surveys.
Costs involved: $1,500-$8,500. The reason for the price variation is that the deposit can change depending on your block of land, the builder you choose, or any deposit assistance.
Prestart and Electrical Variations
Depending on whether or not you upgrade or add things at Prestart, this is another cost to keep in mind. Unless you have incorporated a “Prestart allowance” within your contract, this is a cost you pay out-of-pocket before receiving the keys to your new home. The cost is entirely up to you as some of our clients don’t upgrade anything.
Costs involved: Varies
Settlement
This is a stage a lot of people forget, especially when formal finance approval comes through. Put simply, settlement is when ownership of the land passes from the seller to the buyer. The fees include:
- Settlement or conveyancing agent services fee
- Transfer of land registration
- Local authority enquiry fees
- PEXA fee (online platform that allows property settlement transactions to be completed electronically)
- Printing and photocopying fees
- Council fees
- Stamp duty (only applicable if your block of land is over $300,000)
Costs involved: Varies, but can start from $2,000
Settlement is also when you will pay your home loan deposit (2% for Keystart and 5%-20% for Bank).
Home Loan/Banking Fees
Depending on your chosen lender, home loan/banking fees will vary because not all banks and lenders charge these fees. Therefore, we recommending checking your home loan documents to get a full understanding of all the costs involved. The fees include:
- Home loan application fee. This varies around the $200 mark.
- Progressive drawing fees. Every time your home achieves a major construction milestone (e.g. slab or brickwork), a progress payment is paid by the bank to the builder and some banks charge a fee for these payments. This can vary around the $50 mark.
- Interest repayments. During construction you only pay interest on the home loan, and these payments are paid once a month until construction completion. Then once your home is complete, your payment structure will change, depending on how you would like to pay.
You can roughly work out your repayments with a home loan calculator, like this one!
Utilities
Unfortunately, no one can avoid utility bills during construction, which is why many people forget about it.
In order for construction to commence on any block, water and electrical services need to be installed and connected to power the block. Then once construction begins and these services are in use, monthly/quarterly payments will need to be made.
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You probably have plenty of questions if you’re looking at building. Online research is a great tool, but if you’re struggling to find an answer to your questions you can fill out the form below and we will reach out.
