Marty purchased a 500m2 block in a new estate. With the prospect of capturing the available views, Marty had a local building designer design a beautiful double story home for him on his new block of land. Once plans were finalised Marty came to Build In Oz for guidance on how to find the right builder
Upon submission, we immediately identified that his proposed budget was significantly out of sync with the home he’d had designed. Marty had made one of the biggest and most common mistakes made by people who are choosing to build. He’d invested $8000 in plans having a home designed that he couldn’t afford to build!
Normally, in this situation, Marty would conclude that building is too expensive and abandon his project feeling deflated and cheated as he walks away from his dream and looks for an alternative knowing he’s lost money in the process.
But thankfully, because Marty became a member of Build In Oz, that wasn’t him.
As it turned out Marty only ‘thought’ he knew what his budget was. Rather than submitting a budget on what he ‘knew he could spend’, he’d put forward a budget on what he ‘thought he could spend’. He based that assumption on a few loose conversations he’d had with his existing bank who wasn’t aware of what he could save in Stamp Duty and who hadn’t proposed he use a construction loan. In other words, they knew little about the framework for ‘borrowing to build’ and put him in the same basket as ‘borrowing to buy’.
So firstly, we put him in touch with our construction loan specialist who worked with him to nail down an ACTUAL FIGURE – a set budget that we were able to work with. And, by getting formal pre-approval by someone who understood the building process, he realised that he could comfortably afford an extra $20,000 through the savings he’d make on Stamp Duty and by using a specific construction loan.
Having a ‘set in stone price’ to work with put everyone on the same page and not only gave the designer and builder a set figure to work with, but it also held them accountable for any recommendations they made.
We then talked looked at the plans for his dream home and separated the negotiables from the non-negotiables. For example, did he really need all the timber decking that surrounded the externals of the home in both upstairs and downstairs? Did the expensive exterior cladding enhance the lifestyle the home could offer? As we worked through the project, we identified a range of large cost features that could be replaced with more cost-effective options that would not affect the liveability of the home at all!
Marty is now building his dream home on his dream block with one of our recommended builders who has the foresight to work within his budget to achieve the best result.
The number one biggest mistake made by people who are planning to build a new home is that they start in the wrong spot. They start with the home, the dream or the builder.
To avoid this costly mistake it’s essential that you start with your building budget. Your budget sets the scene for every decision you make along the way and if you haven’t got it right from the start it’s going to be tough having a happy, safe and successful home building experience.
You can get in touch with our Construction Loan specialist here.
"Always start your home building journey by talking to a Construction Loan expert to get an educated pre-approval amount for your building project"