The Journey of Building off Plan – Construction Loans

By 22 May 2020 No Comments

The excitement of considering the option of buying a property off plan can be quite exhilarating. The choice of designing your own home that suits you and your family considering your currently lifestyle and oh the sense of achievement that is quite something.  But, with all this excitement comes the reality and the stresses of the big picture. Your budget and keeping in line with your budget over the period of the build. Let us start the journey with the first step. Financing your build – you only need 5% deposit to build your home once your finance is sorted and you have signed the sales and purchase agreement. All the legalities are out of the way, you must pay for the land that you will be building on.  At this time, it is recommended that you speak to Allsure Financial Solutions if you have note already done so to get advice on the structure options for this loan. The loan is drawn down once you have the land title.

For the building you will have a construction loan that you will progress payment in 3 phases with the bank holding onto 5% of the final progress payment until the Code of Compliance Certificate has been issued. Then only will the bank release the last 5%. Now the fun starts, deciding on the building plans, how many bedrooms, bathrooms, etc. the position of the house on the land, the colour scheme, kitchen appliances, the door handles, light switches, electrical plugs, and where their position. Carpeting or Tiles or having a bit of both.  The aesthetics of the build, and the colour scheme.  Once all these decisions had been finalized, the land is cleared, and the foundation is laid. Now you will draw down on your first construction loan.  The timeline from here on in may vary depending on which property development/developer you are going through.  For this build it took 18 weeks from the foundation being laid to the house being practically completed and could be moved into but not yet having received the CCC.  Generally, the CCC is issued within 2 weeks of the house being practically completed.

Some of the cost to consider with a construction loan are, your legal fees, rates these may be prorated, insurance – generally you will only be responsible for the insurance once the build is completed. This is not the same if you are building yourself, then you require the insurance while building.

Any changes you make to the design once finalized will incur additional costs. If your build does not include landscaping, then you will need to allocate funds for this.  You may wish to allocate extra funds for driving out to the build weekly to check on the progress – that is after all the fun part of the build.

To find out more about your deposit and sourcing your deposit get in touch with Allsure Financial Solutions for a personal consultation. We explain the various loan types and their differences. We assist with finalizing your loan approval from start right through to the final draw down.