Mortgages, Money and Me

More about building

You may find that building a new home may be a better option if you can’t find what you are looking for in an established property.

Let’s look further at the process and consider some advantages and disadvantages.


  • Government incentives under the First Home Owner Grant (if you are eligible)
  • Get more value for your money
  • Avoiding unknown maintenance issues with established homes
  • Design your dream home
  • Locations often near the coast and planned lifestyle communities
  • Often has a Builders Warranty providing a guarantee on quality of construction
  • Latest technological features in construction


  • You could be renting for 6 -24 months during the construction process
  • It is an involved, multi-step process
  • No guarantee that property will be worth more on completion
  • Potential short-term resale issues if part of a larger construction development
  • May cost more than an established home and be on less land
  • Location may be in outlying suburbs
  • Unexpected costs in site preparation or issues not covered in building contract
  • Possible delays due to weather and other unexpected factors
  • Risk of overcapitalisation
  • Builder delays could result in a contract being voided.  This has been in the news with particular regard to urban apartments where it is claimed that the builder has voided the contract through delays and then sold at a higher price.

More about First Home Owner Grant concessions

In Western Australia, the maximum benefit for established homes is for a purchase price up to $430 000 where stamp duty (currently $14 440)* is waived in full.  Between $430K and $530K the stamp duty is gradually applied until you are paying full duty for purchases over $530 000 (currently $19 190)*.

Alternatively, if you considered purchasing land and building a new home then potentially you could get a home up to the value of $750 000 with full concessions in most areas of Western Australia.

Land purchases up to the value of $300K are currently eligible for full waiver of stamp duty (currently $10165), and shaded to a purchase price of $400 000. If eligible, you would also potentially receive another $10 000 cash under the grant, making the maximum cash benefit $18 835.  If you were to build a house up to the value of $450 000 on your $300 000 land you would have a $750K property without paying stamp duty.

Conversely, if you were to purchase an established house worth $750 000 then the stamp duty would be $29 740, so you can see there are attractive savings to be had by building.

* NOTE:  Stamp duty calculations are as at October 2017 and are for illustrative purposes only. You would need to check current information as concessions may have changed or not be applicable to your circumstances.

Steps to building a home

  1. Check your finances with your broker or lender to establish your budget. Discuss whether a pre-approval for finance will be beneficial at this stage.
  2. Look for a home design. Builders have display villages all over Perth that will help you with ideas and allow you to see the quality of their work.
  3. Find your land. You will need to make sure that the design you love is compatible with the land you want to buy. A block of land that may appear to be a bargain price may have unexpected site preparation costs, or may quite simply be too small, or the wrong dimensions for the home you want.
  4. You may need to refer back to your broker or lender at this stage to arrange finance for the land purchase if there is a short timeframe for the purchase. You will not be eligible for the First Home Owners Grant until a building contract is in place so you may need to be prepared to pay the land transfer stamp duty upfront and then claim it back once the building contract is in place and the Grant approved.
  5. Choose your builder. You can ask for recommendations from friends, call the Master Builders Association and discuss your plans with various licenced builders that you may find at display homes.
  6. Make sure you deal with a reputable builder who has been around for many years and has a good track record. Ask if they can offer a guaranteed construction timeframe.  Make sure you understand what inclusions you get in your house to make sure that you don’t end up with an unfinished project.
  7. It is advisable to have your building contract and plans checked by a solicitor or conveyancer before you sign. Your builder will need to provide a fully signed building contract, specifications and plans to enable an unconditional finance approval. The builder may want to see finance pre-approval prior to preparing these documents.
  8. Liaise with your broker or lender for finance for the construction phase. Your broker or lender can also assist with your application for the First Home Owners Grant.  Construction finance may be added to the land loan or could be a separate loan, but both will need to be with the same lender.
  9. Once finance is approved the builder will submit your building plans to council for approval. Once approval is granted this is supplied to the bank by your broker with copies of the Builders insurances. This needs to be provided to enable release of funds for construction.
  10. Prior to the commencement of construction your builder will call you in for what is called a ‘Pre Start’ meeting.  This is where designs and choices of fixtures and fittings are finalised.
  11. Once construction commences the builder sends you an invoice for each stage of the project as it is completed. It is advisable to monitor the construction process closely and you may wish to engage a building inspector to ensure that the property is completed to required standards. You pay interest only on the loan during the construction phase, and only on the amount of the loan that has been advanced to date.
  12. Once the property is completed and the final payments made to the builder you can move in!  You will normally start paying principle plus interest on your loan shortly afterwards, depending on the terms of your loan.

Some tips from people who have built before:

Kimberly said:

Think about your lifestyle and your living space. You get to choose your design, so have your house work for you.

Know your measurements! If you have a cherished piece of furniture you want it to fit in the new house.

Plan ahead. You may not be able to afford the swim spa, loft or fancy downlights now, but if you have the upgraded wiring, or the correct foundations in place you can add these at a much cheaper cost later.

Shop around!

Karen said:

Add all your modifications at the beginning such as moving walls, adding on things like garages, extra patio space etc. Then Pre Start cost adjustments will not be as much and you won’t have a huge amount to add on.

Note from Roni – This is especially important as finance is based on the contract prior to pre-start and you may end up with a shortfall between your contract and your loan.

Consider the location of your bedroom. We have families around us and dogs all making noise. Our bedroom is behind the garage and in the middle so noise from back and front is buffeted.

Car parking – I see some families build a house with 4 cars, a trailer and a caravan only to have a double garage and not much room at the front. This causes lots of issues and some fines from certain councils if you park on the verge.

In closing

So there you have it! Do feel free to reach out and contact me if you have any questions or if there is anything I can help with.