The Ultimate New Home Building Guide: Step By Step Process

Speaker 1: 0:02

Welcome to Homebuilding Like a Boss, the podcast dedicated to helping first home buyers in Perth build their dream home with ease and excitement. I'm Jamie, your host and go-to building broker. Are you ready to feel empowered, in control and excited about your building journey? I'll help guide you with expert advice, insider tips and tricks and real life stories to help you navigate the confusing world of homebuilding. Tune in as I take you on the journey to building your home like a boss. Hello, thank you for tuning in to another episode of the podcast this week.

Speaker 1: 0:44

I am in the office super early this morning so I can record this episode for you. I'm heading out to Bali tonight and I cannot wait to get in some warm weather and away from this shitty cold Perth weather. It has been terrible. Now let's get into it. Today we're going to dive into the building process how it works, what you need to do, where you need to get started. Just to give you a little bit more education and support on the process, because one of the most overwhelming things is where to start, what to do first, who to speak to, and, as a first home buyer, you don't really get taught where to go. There's no central place or person or source to be like hey, this is what I want to do, and can you teach me how? It's kind of like you're flailing around working out what to do, who to speak to. There's so many options but which one is the right one and who do you speak to and how do you work it all out? I'm going to help break it down for you today and we're going to really dive into the process and the steps so you understand what you need to do, where you need to get started first. One thing to make you feel less overwhelmed with the whole process is always being educated and supported. So keep educating yourself, find information, keep learning. That will help make you feel confident on your journey, as you've got the right tools and education and support there with you Now.

Speaker 1: 2:18

The building process is a long process, obviously longer than going established. You can get it straight away and you can move straight in. Building is a longer process and when you're starting to think about I want to build or looking to get into the market and you think about now and then you think about the end result and you're like what the hell happens in the middle and you get super overwhelmed because you don't really know what is going on Now. I always tell my clients break it down step by step. If you break it down step by step, it is going to become much less overwhelming and stressful for you because you can really focus on what you're doing now the process, the stage and then move on to the next thing once you've done the thing before. The thing with building is you can't do jump from one step to another step, to another step to step seven or eight, nine, 10, without doing step one, two, three, four.

Speaker 1: 3:11

The first most important thing is understanding your budget. This could mean are you ready now? Are you ready in three months? Are you ready six months, 12 months? It doesn't necessarily mean you need to be ready now, but it is good to educate yourself and understand what you need to do in order to get through to the next step, or what is your goal. And setting those goals always helps you work towards something and get to those next stages.

Speaker 1: 3:41

When you're like, oh yeah, i kind of want to get into a house, but I'm not really sure and I'll just work it out as I go and I'll just wing it, you end up spending money. All the time You got Uber Eats, afterpay You're spending your money because you don't know what you're working towards. If you break down your finance goal and your finance steps, you will be able to work. Oh cool, i need to save $400 a month. How am I going to do that? And let's break it down. So one is understanding your budget, knowing what are you eligible for. There is no point looking at the established market or building or house and land packages until you know your budget, because you're going to walk around, search, go to display homes, look at all these things and you might be looking at an 800K house and land package. But And then you're like, oh yeah, i want this house, i love this design and I want this block. Then you go to a mortgage broker and you're like, hey, can the bank give me some money? And the banks that go, you can only have 500k. What Now? you're disappointed because you can't have the house that you were looking at in the 800k mark.

Speaker 1: 4:41

So you always want to start what is your finance budget and then work backwards from there. So once you've understood your finance budget, your eligibility, your deposits, what you need, how much you can borrow and what your package size is, you want to start looking at locations. So picking your location do you want to be near the freeway, the coast, the beach, schools, shops? Are you thinking of an investment property resale wise, down the line? Do you want to be close to friends or family? Do you want to do like certain suburbs? Where do you want to live and what amenities and locations do you want around you From there?

Speaker 1: 5:21

once you've worked out your location, then you want to start shopping for your block. Now you want to start looking for your block size, the budget, what's involved on the block. From there, you're working backwards from the budget that we worked out in step one. So let's say we're working with 500k, 500k and if you're looking at a block that's 250, you've got 250 left for the build component. So you can start to see, okay, is that going to work in the budget? Is that not going to work in the budget? And then you can work out from there, working backwards, how the numbers work. Once you have found your block, you'll do your block paperwork and you'll secure everything With your block.

Speaker 1: 6:07

You want to make sure that you check your site works. We have somebody help you with that on. Your site works before signing on the block of land. That's where your hidden costs can come out of. In building With my clients, i always help them through this process. You want to make sure that you can and you know roughly what those site works costs are going to be before you sign on that block of land. From here you want to design your home and lock in your builder based on your block of land Now, checking the size, the shape, the orientation.

Speaker 1: 6:38

What kind of design layouts do I want? There is no point looking at designs and builders and things like that. You're looking at 15-meter wide designs and all of a sudden you have a 12.5 block. You're not going to squish down a 15-meter wide design into a 12.5. You need to start looking at 12.5 wide designs. So working it out step by step can really help you through that process of breaking it down and working it with your budget and working it backwards from understanding your budget on step 1.

Speaker 1: 7:10

Then you are going to go into start designing, looking for builders, doing a bit of research. Usually when you like a block of land and you are happy to go ahead, lock it in. You've checked your site works, you've done your research, you like the location. It's usually 1,000 to 2,000, depending on the estate, to secure the block of land. From here you'll start designing your build, your custom design, finding your builder.

Speaker 1: 7:36

Once you like your design, you're happy with it, you're ready to go ahead with the builder, you'll sign your preliminary paperwork. Now do not sign or give away any money to a builder or a sales consultant who hasn't shown you a sketch, a floor plan, a quote or a design. Do not pay money to get a design because it's not how it works. You're paying money to get locked in and they're going to lock you into that contract or that prelim. You can get out of it but you will lose your deposit. But do not give away any money until you are happy with the quote, the sketch, the price breakdown. You've checked all the paperwork. Do not give away any money. So this stage here you will sign your preliminary paperwork.

Speaker 1: 8:25

Once you've signed your preliminary paperwork so we've understood our budget, we've got our block of land, we've got our sketch, happy with the quote and the builder, you're locking in your prelim paperwork with that builder. This now means you're happy to go ahead with that builder and that builder will start commencing work on your job and your build. So they're going to start doing a site survey, the engineering, doing your working drawings, which is your detailed plan, which will have all your little measurements, all your elevations, kitchen design, everything, every little detail on there. And that comes with your building contract. Now, between prelim paperwork and building contract, is roughly four to six weeks to get a building contract out there. You don't want to be waiting any longer than four to six weeks And from here getting your building contract.

Speaker 1: 9:16

That's obviously your legal contract. It'll say your addenda, your specification, it'll have your working drawings. It will have either your HIA or your MBA standard builders contract, your details, builders details, your block details And that is what the bank needs to approve your finance. So you have a land contract and then you have your build contract. Now you'll go to your mortgage broker. Cool, i have my land contract and I have my build contract. Now let's launch for formal finance From here. Your mortgage broker, they can start preparing your application once you've secured your block. In between that four to six week period of your prelim paperwork, lodging for formal finance, you need your building contract and your land contract. That will go to the bank. That's when they do your valuation which, if you unsure, evaluation is check out. A few episodes ago, when I did an episode with Belinda all about property valuation and building, they will value your house and land contract. Then, once valuation is all good, they will approve your finance for your loan.

Speaker 1: 10:27

During this process here, after you've signed your building contract, you will also have pre start. Now, what is pre start? This is going to be a whole nother episode and I will have Barma on here to chat about all things pre start. But pre start is basically where you will pick out all your taps, cabinetry colors, literally all the final details in your home, everything that is non structural. Pre start. You cannot make structural changes, so you want to make sure your doors, your windows, your roof walls, everything structurally is double, triple checked in your prelim paperwork and at your building contract stage. Pre start you're picking and customizing everything non structurally.

Speaker 1: 11:10

After your pre start you'll get a variation which, depending on how many things you upgrade and change, can take one to three weeks. I've had some people upgrade one to 20 things. I've had people upgrade an over 100 items on a variation. So depending on how much you upgrade and what you upgrade is how long your variation can take. Sometimes, once you have your variation back from your builder. They will have itemized and cost everything You can go through. Things may like Yep, i want to keep that. No upgrade that, change this. Do that. You'll sign off your final variation and then your builder will start updating your final plans and working drawings. So pre start is your last kind of opportunity in Hurrah to update and change everything that you want before your final plans.

Speaker 1: 12:01

Now this step is kind of happening side by side with formal finance and your mortgage broker doing your application and securing finance. One thing to note is pre start is not included in your loan and your finance unless you have allocated, let's say, a $10,000 allowance inside your building contract for pre start. So pre start you usually, let's say you upgrade $20,000 worth of pre start upgrades. You will usually pay that to the builder in the early stages of construction. So that's extra savings that you can start to save up and use for those pre start upgrades. So always tell my clients, even if you've hit your deposit, keep saving because there will be things that pre start or after your build that you need to keep doing and adding to your house furniture, all those kinds of things.

Speaker 1: 12:54

Now we've done pre start, got your variation. Final plans are being signed off. You've just received formal finance with your mortgage broker and now between formal finance, the next step is settlement. Now, settlement between formal finance is usually 21 days, so 21 days after you've received formal finance is when you're going to have settlement. Settlement is the transaction and settlement, i guess, of your paperwork, your contracts and your loans all happening, and your settlement agent will basically take care of all of this and this section of it. And this is mainly where your land and your certificate of title will get transferred into your name and that is when you become your official owner of your little patch of dirt. That's when you'll start paying your repayments on settlement as well for your block of land, and that also means that's when the builder can officially start on construction.

Speaker 1: 13:52

A builder cannot start on your block of land until you've settled and you're the official owner of that block of land. Once your builder has updated final plans, they will lodge their building approvals, so your building permits council, all those kinds of things and then, once that is done, your final plans and settlement has occurred, is when your builder will move into construction. Now, on average, pre-construction roughly depending on finance and your land titles can roughly take four to five months. So that process there you keep saving. You've got your contracts, your technical drawings, your selections, your approvals, your finance. This is that overwhelming part that you want to be educated and supported to get the best result out of your build. Once settlement has happened, that's when you will move into construction. Construction on average at the moment can take nine to 12 months from slab to keys. So 12 month guarantee if you pick the right builder, your build nine to 12 months.

Speaker 1: 15:02

The total process, approximately from your start paying your deposits on your block of land and with your builder, will roughly take 12 to 15 months, largely depending on your finance, land titles and then a little bit of weather permitting, depending on when your slab goes down Through construction. It'll work through progress payments and stages, so you're not just going straight into a loan off the bat. You are paying your repayments on your block of land and then during construction your builder will charge you your progress payments. So the slab will go down. The builder is going to issue an invoice. You'll sign up on your invoice. Once you've signed that off, the bank will release the funds to the builder and that might be, let's say, 30 grand for your slab down payment and your next one will be once you hit plate height, then your roof lockup, final inspection and keys. You will not pay your first full repayment until you get the keys for your home. So this builds up through construction, which is awesome because, yeah, you're not paying your full repayments through construction, obviously when you don't have a house.

Speaker 1: 16:15

This basically sums up the building process in a quick nutshell. There's obviously a lot of other steps and little things that happen along the way and throughout the process. Overall, this is a quick summary of the building process, how it works, what you need to do and what the steps are through this process. I help my clients navigate this process, hold their hand, support them, advocate for them step by step, so they have me on their side to help them through all of this. So, to recap, the first three most important steps understanding your budget, choosing your location and your block, and then working on your design.

Speaker 1: 16:59

And your builder, Your building broker, your sales rep, your builder should support you through this process, and that's what I'm here for as an independent building broker to help guide you, my clients, through this process step by step. Break it down, don't start looking at the whole process, from step one to step 12, because, yeah, you're going to get overwhelmed. You can't do pre-start without signing a building contract. Don't worry about that. Yet You can't get a building contract without doing your pre-limb first. So really break it down step by step and if you start to do it like that, the process will become a little bit less overwhelming for you.

Speaker 1: 17:42

If you have any questions, please book in a call on the show notes below and we can run through the building process from start to finish a little bit more in depth, based on your situation. I can help you understand what your budget and your finances and give you an action plan on how to get you there. Thank you so much for tuning in to the Homebuilding Like a Boss podcast. I hope you enjoyed today's episode and learnt something new. Remember you've got this and I've got your back. Until next time, stay inspired, stay informed and stay confident on your building journey. I can't wait to chat with you on the next episode. Don't forget to check out the show notes for more information and free resources If you haven't already hit that subscribe button so you never miss an episode of the Homebuilding Like a Boss podcast.