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10 essential things to consider when building a house

Make a plan, draw up a budget, find the right builder and sort your construction finance.

Building a home doesn't have to be a gruelling process. Here's what you need to consider when building a house.

1. Get your plan in place

Planning is the most important part of the construction process. Make sure you meticulously plan the details of your house. What direction will it face on the lot? What will the layout and flow of the rooms be? What kind of lighting will you use, and how many power points will you install (tip: you always need more than you think)?

There are a number of useful tools for planning out the design of your home. Sites like Floorplanner and RoomSketcher let you create mock floorplans. When in doubt, good old graph paper will work as well.

You’ll also want to start keeping track of design ideas that inspire you, and that you’d like to emulate. Think about starting a Pinterest board for each room of your house to file away examples of your favourite designs. As well as helping you plan, they’ll be a great point of reference to show your builders once construction is underway.

2. Budget more than you expect

No matter how much you think the building process is likely to cost, it’s likely to cost more. There could be any number of items that aren’t included in the estimate your builder gives you.

For instance, your builder is unlikely to include costs such as electrical and gas metres, NBN hookups or window coverings. Items such as landscaping and outdoor concreting, fences and gates, decking and letterboxes might also not be included on the estimate. These are known as finishing costs, and could run anywhere from 15-25% of your budget. You’ll also need to take into account site costs, which are the costs associated with preparing your site for construction, and you may also have to pay for planning application fees.

In addition to add-ons you might not have considered, you need to budget for unforeseen circumstances. For instance, you might want the luxury of changing your mind should any of the fittings or materials not match your expectations. You can use the table below to work out a rough budget.

Land price$_
Stamp duty$_
Loan settlement costs$_
Site cost$_
Planning fees$_
Finishing costs (15-25% of budget)$_
Build cost$_

3. Pick the right builder

Tips for building a house - planThis might be one of the most important decisions you make in the home building process. Whichever builder you choose, you’re going to be working with them for many, many months. It’s important to get the choice right at the outset to head off problems down the road.

There are several factors you should consider when choosing a builder:

  • Credentials. Make sure your builder is adequately licensed and insured. You’ll also want to make sure the builder is a member of Master Builders or the Housing Industry Association (HIA).
  • References. Check into the builder’s past work. Were previous customers satisfied? Don’t be afraid to ask the builder for references before you sign a contract. Also, check with the Department of Fair Trading to ensure there are no complaints against the builder you choose. Also, check up on the warranty and service they offer.
  • Past work. Have a close look at some of the houses the builder has constructed in the past. Make sure the level of quality is high. Also, look into resale data on some of the houses the builder has previously constructed.
  • Style. In looking into the builder’s past work, see that it suits your design style. A builder might be very accomplished at constructing a particular style of home, but if what you want is outside their area of expertise you might be wise to look elsewhere.
  • Personality. As mentioned above, you’ll be working with your builder for a number of months. Make sure you’re comfortable with them. Also, make sure they communicate well. If a builder doesn’t communicate well with you, it’s likely they don’t communicate well with their contractors either.
  • Price. All of this is a moot point if a builder is outside your budget.

4. Understand your agreement

Carefully read through the contract with your builder to make sure you understand its contents. Make sure you’re not taken by surprise by what the construction costs cover and what they don’t cover.

Make sure includes a cooling off period, and that it specifies a timeframe for construction that suits your needs. Check to see that it includes detailed plans, warranty and insurance information. Also pay close attention to the payment schedule.

Finally, it’s wise to have a solicitor look over the contract before you sign. Cross out any blank spaces, and make sure any variations to the contract are well documented and mutually agreed upon.

5. Check grants and concessions you may qualify for

If you’re building your first home, you could be entitled to a First Home Owner Grant (FHOG), dependent on the state or territory in which you live. This could substantially offset the cost of your home. To find out if you might be eligible, read our First Home Owner Grant guide.

Likewise, depending on your state or territory, you might be eligible for stamp duty concessions on the purchase of your building lot. For a full rundown of each state and territory’s stamp duty concessions, head here.

6. Get your financing in order

Unless you have a lot of cash on hand, you’ll need a construction home loan to finance the process. A construction home loan is structured differently than a regular home loan. The lender won’t give you all the money at once.

Instead, the lender decides how much you need for the project, and will then release the funds in periodic payments to your builder. These periodic payments are known as draws. They’ll be paid out at the completion of each individual stage of your construction.

Another way construction loans can differ is in the size of deposit lenders require. Because construction loans can be seen as inherently riskier, lenders might require at least a 20% deposit.

Before you seek out finance, make sure you have a detailed plan in place. Because construction home loans rely on an estimate of the assumed value of the completed house, your lender will want to have detailed construction plans that are fully costed.

Compare construction loans

7. Communicate constantly

Throughout the process, communicate often with your builder and tradesmen. Get regular updates on the progress of construction, and check in yourself. It’s a good idea to take pictures of the progress on a regular basis so you can document any problem areas.

Don’t be afraid to stick to your guns. If your builder, contractor or tradesmen tell you something can’t be done, push back. It might cost you extra, but odds are with the right amount of effort you can accomplish your vision. It’s worth putting up a fight for details that are important to you. After all, you’re the one who has to live in the completed home.

Top tips for building a house - communicate constantly

8. Look for ways to save

Building a home is going to be an expensive process, and as we mentioned above, it’s likely you’ll end up paying more than you anticipated. That being said, there are ways you can save money. Shop around for the best prices on fittings and fixtures, and on the materials your builder will use. Get multiple quotes for any item needed during the construction process.

You can also save money at the outset of the process by choosing a site that takes less preparation. Hauling off dirt, removing rocks or clearing brush can end up being costly. Picking a lot that needs little preparation before construction commences can minimise these costs.

Owner builders

If you’re really looking for savings, you could consider taking on the role of owner builder. This means you would manage the logistics of the home building process. This doesn’t necessarily require expertise in home building, but it will require a lot of your time and some serious project management skills. If you think you might be up to the challenge, check out our guide to money-saving tips and tricks as an owner builder.

9. Get an independent inspector

Each stage of your construction should be inspected by an independent consultant. This will help you rest easy knowing that all the building materials and practices used in constructing your home meet all the necessary codes and regulations. You’ll want inspections at the following stages:

  • Foundations and footings. This will include inspections of the slab and foundations, any drains and the formwork.
  • Frame. This inspection will make sure all the framing for the house’s walls are level and straight. It will also check that the building frame matches the dimensions laid out by the building plans. The inspection will check room dimensions, ceiling height and roof lines.
  • Lock up. This stage is when the house is lockable, meaning gyprock, windows and doors have been installed. The inspection at this stage will check window and door frames, window flashing, electrical and plumbing, brickwork and mortar.
  • Pre-handover. This inspection will check all the final fittings, including paint, tiling, window fittings and doors. It will also ensure the building site has been properly cleaned.

10. Know your rights if something goes wrong

If you’ve planned your building process well, budgeted well and signed on with the right builder and lender, it’s unlikely you’re going to face any insurmountable problems. If the worst should happen, though, there are a number of channels you can go through for complaints against builders.

If your builder is a member of the Housing Industry Association or Master Builders, each of these organisations have processes for handling complaints. Each state and territory also has its own process for handling building complaints.

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Images: Shutterstock, Startup Stock Photos, kaboompics, Stokpic

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