Buying a new house already built??

[emma&vas]

Hi all

 

I've been looking at lots of different websites trying to find out whether or not I can purchase a newly constructed house already finished being built or do I just have to go for a house and land package?

Going for a house and land package seems like it could be a lengthy experience and also the price might change quite a lot of times.

 

Thanks for any answers in advance

[NicF]

Yes you can buy newly constructed houses. Or even ones that are part way through being built. Or if you prefer you can buy a house and land package or a block of land and then find a builder that suits you. The advantage of buying the land and then finding the builder is you can get the house you want. But it does take a while - it took us nearly 18 months from buying the land to moving in, although a few months of that was deciding on a builder and house plan we liked.

 

There are developers around that will buy a block or three of land and put several houses on at once and sell the houses. If you can get in before or while the houses are being built you can have a say in some of the finishes. Some developers will only seen the house once finished though. It's not always easy to find new house though as most developers prefer to have sold the house before building them, but they do exist. The trick is finding them and all I can suggest for that is keeping an eye out on the realestate.com.au website.

[emma&vas]

Hi nicf

 

Thanks for your reply, lots of info for me! I would love to do a house and land package but the thing that worrys me is that I've read that you have to pay the mortgage as soon as they start building which might be a bit of a stretch while paying rent as well! I will keep looking on realestate.

 

Thanks

[NicF]

When you build a house you pay for it in stages, so a deposit to start with, so much when one stage is completed, another payment when the next stage is completed and another payment when the next stage is completed and the final payment when you get the keys for the house. We had our mortgage for our build set up so that we were paying interest only on the loan until we finalised the build. This meant we still had an extra payment each month on top of the rent but it was not as much as if we were making capital repayments as well. And because you don't pay everything at the start the actual payments are relatively small to start with and then only get bigger near to the end of the build.

 

Just to address another point in your OP the cost for our build was fixed at the point we signed the contract with only additional costs if something not anticipated cropped up or we requested a change part way through. No costs were added without notification from the builder and the only extra cost they charged us during the build was $1500 for extra deep pillars for the slab. Which was offset by the $1500 they didn't charge us for clearing the site that was in the contract but not needed.

[Karenbfam]

We have just had a house built. It was advertised as a house and land package but it turned out it wasn't as the builder did not own the land. We agreed we wanted to go ahead at the end of last September and we get our keys tomorrow, so just over 9 months. The builder had designed a house and we were able to make changes. We then agreed the price. We then had to purchase the land and wait for planning permission. When you go and choose extras we knew exactly what they were going to cost. We then had to pay in 6 stages and the last payment was approx $3000 less than quoted as we got credits for things that had come in cheaper than originally stated. We paid rent and the mortgage but as already stated it wasn't too bad as you pay interest only whilst building. We are thrilled with our new home and the builder was great. The $15000 first home buyers loan was also very handy. If you want any info please pm and I will try and help.

 

Karen

[emmaclarke1238]

Thank you both for your replies they have really helped to put some things straight, it sounds more doable knowing that it's just the interest on the mortgage!

 

Thank you!

[notpom]

Hi all

 

I've been looking at lots of different websites trying to find out whether or not I can purchase a newly constructed house already finished being built or do I just have to go for a house and land package?

Going for a house and land package seems like it could be a lengthy experience and also the price might change quite a lot of times.

 

Thanks for any answers in advance

Strictly speaking, you shall never buy a new house.

 

The main reason, it is always more expensive as you pay builder's margin.

Second reason is basically the same, but the cause of overprice is a GST.

 

These two reasons basically negate all the Government incentives that you get from buying new. Does not make any sense financially.

 

Third reason of not buying new - the fundamental one. People in the right mind shall never buy a property they can not improve. Usually after 6 month when you buy a house bank allows you to revalue it. If you spend 6 months worth of weekend not watching footy sitting on the couch but instead of it - listening to the footy while painting, gardening and landscaping - you earn substantial amount of money. I usually get increase of value around $100K while spending $10K on materials. And you do not need to be a PhD to paint or lay laminate flooring.

 

What does it give you? Silly people blow equity of their home on holidays, boats and flash cars. Smart ones - they use their equity to buy next property, renovate it, use the equity to buy another property and so on.

If you buy 5 properties, and they grow 20% in value (over say 3 years - realistic call for Adelaide), you then sell 4 of them, and you have a house and it would be mortgage free (providing you repay your mortgage with the proceeds of sale).

 

If it is all too complicated - then you can (after you increased your equity) reply for a refund of Lender's Mortgage Insurance (the thing you pay if you have less than 20% deposit) on the basis that your LVR is now less than 20%.

 

In case your main motivation is to make a statement (impress people you do not like) - then buy neither new house nor house and land package. Simply because you will pay our beloved state Government full stamp Duty on the full purchase price. Buy land, pay stamp duty on land and find a builder who gives you fixed price (there are plenty around).

 

Rivergum and Sarah homes are very good example, and they usually take 6 months to build. The shorter the build is, the less interest on land and rent you pay at the same time.

 

One more trick - many blocks of land go on the market before the subdivision registered at LTO. Find one of these, sign the contract with extended settlement (6 months or when subdivision is registered) and an "early possession"(which means you will have a right to submit development application in the Council for the house). This way you get control over the land, you get approvals moving, but you do not make any mortgage repayments until you settle.

Edited July 8, 2015 by notpom

[emmaclarke1238]

Thank you so much for answers I feel like I've learnt lot's! Now I feel more informed by people who have actually done it I feel confident about looking into building.

[notpom]

One thing I forgot. When buying land, at all costs avoid "new housing estates".

 

After 3-5 years these estates become "old housing estates", with level of depreciation much greater than ordinary build, mainly because of cheap and nasty finishes, fixtures and fittings builders use to "save cost".

 

But this is the least of a problem. Main one - about 40% of these estates are used to provide "affordable housing". You would have at least 4 properties surrounding your house - one on each side. Statistically, you have 100% chance that your immediate neighbour will be "affordable".

 

Unless you love drug trade next door, noisy parties till the morning, people jumping into your backyard stealing things, etc,etc - you shall stay away from new estates.