5 key things to consider when you’re building a home
Thinking about building your own home? We show you some of the key things to know about, including LMI, budgeting and more!
Sponsored by QBE – helping customers learn more about lenders' mortgage insurance (LMI). Learn more on Finder's LMI hub, brought to you by QBE Insurance. Providing LMI since 1965.
Building your own home is a great adventure! However, there are many different factors that need to be considered first.
1. LMI
Finder research suggests that it takes Australians more than a decade to save the standard 20% deposit. In turn, this means they're often not keeping pace with the market.
But if you've got less than 20% saved, you can consider using Lenders Mortgage Insurance (LMI) so that you're able to borrow sooner.
LMI adds a fee to your home loan, but it can mean you can get the building process started much sooner.
And if you do have a bigger deposit saved, LMI can also be used to boost your borrowing capabilities.
LMI providers like QBE also work with a wide range of lenders, so you don't need to worry about sacrificing choice.
Learn more about QBE's lenders
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2. Budgeting
Building your home involves a lot of costs – but there's more to it than just paying your builder.
Some common costs before you build include:
- Land registration, valuation and soil tests
- Designer/architect expenses
You may also need to apply for permits from your local council, which may involve extra expenses too.
But we're not quite done. Costs during and after the building process may involve:
- Permits and licences
- On-site inspections
- Demolition/excavation/earthworks
- Conveyancing and stamp duty
- Government fees
Keep in mind there may be other expenses that aren't listed here, too.
Legislation varies from state to state and councils often have their own specific by-laws around considerations like sustainability.
YourHome – set up by the Australian Government can help you get started.
3. Design
One of the benefits of building your own home is choosing how it looks. You can spec it out to suit your specific tastes and needs.
But design goes beyond aesthetics.
You need to think about your long-term goals. For example, are you planning to live there permanently?
Or do you see it as somewhere you'll use as an investment? Are you planning to have kids?
There's nothing worse than building your "ideal" home, only to find you need to move again right away.
So asking the right questions ahead of time can make a big difference.
4. Approvals
Approvals can be complex, time-consuming and expensive. Every State, Territory and Council has its own specific requirements.
There's also variance depending on whether you're building it yourself or hiring an external builder.
For example, if you lived in NSW and were building your own home, you'd likely need:
- To acquire Owner-Builder Accreditation via NSW Fair Trading
- To apply for Development Approval (DA), via your local council
- To liaise with an Accredited Service Provider (ASP) to connect utilities
The fees and timeframes involved can vary quite a bit.
You can find more information about approvals on the Housing Industry Association (HIA) website.
5. Ongoing maintenance costs
Every home has ongoing costs – and yours will be no exception.
Utilities, council rates and possibly strata will all need to be paid on an ongoing basis.
You'll also need to get appropriate home and contents insurance.
Being prepared in advance for these costs – and the potential rises in price over time – is a good way to get yourself set up for long-term success.
Find out more about how QBE and LMI can help you build your own home
Sponsored by QBE – helping customers learn more about lenders' mortgage insurance (LMI). Learn more on Finder's LMI hub, brought to you by QBE Insurance. Providing LMI since 1965.