Excited to build your dream house or renovate your existing one, but overwhelmed by the thought of the costs and complexities involved? 

If your answer is yes, you’ve come to the right place. 

It’s one of the biggest decisions we can make, so to help make the process a little less stressful, we’ve put together a guide of a few things to consider before embarking on a build. 

That way, you can spend less time researching how to finance your project and more time choosing the perfect doorknobs.

 

How much does it cost to build a house?

Hipages estimates that the average cost to build a house in 2022 is between $1,300 - $3,900 per square meter, depending on several factors.

Let’s break some of these factors down for you.

  • 1. Size of the job

    It may sound obvious, but size really does matter when building a house. 

    Builders will often use cost per square metre (sqm) to determine how big the project is – this is the start in helping prepare your final quote.

    The more sqm there is to cover, the more labour and materials you’ll require. Naturally, this is where your quote will rise. 

  • 2. Quality of building materials

    Quality of building materials, as well as supply and demand, can have a big impact on the cost to build a house.

    It’s important to strike the right balance between managing your budget and building your home with the best quality fixtures, fittings, and materials.

    Make sure to work with your builder to choose the right materials for you and your budget.

  • 3. Site complexities

    Your foundations are important – so make sure to find a reputable licensed builder that will build your house with consideration of the challenges that may present with the terrain of the site and the council’s building requirements.

    These factors can have a big impact on the cost of building a house, affecting the complexity of adding in connections to services (water, sewage, electricity, and gas), fencing, site clearances (trees and bushes), site surveys, retaining walls and soil testing to name a few.

    Depending on where you’re building, you may also need to ensure your property is bushfire or flood safe in line with local council requirements.

  • 4. Fees and charges

    Here are a few of the additional costs that may come up in the building and financing process:

    • Legal or conveyancing fees
    • Stamp duty, land tax and transfer fees
    • Taxes and overheads
    • Building and planning fees
    • Insurance 
    • Home loan fees (like Valuation fees and the Progress Draw Fee on construction loans)

    If you’d like a better idea of what these fees and charges actually mean, read our guide to the hidden costs of buying a house here.

  • 5. Insurance

    Once your new home has been built, it’s important to have protection for you and your building from the unexpected.

    Building insurance is a great way to have protection for the structure of your house (the roof, walls, floors, etc), plus any permanent fixtures on site (sheds, carports, fences, decks, solar systems, and pools) from life’s curveballs.

    Our building insurance provided by CGU offers two levels of cover to help suit your needs – accidental damage or listed events. Find out what you can get coverage for here.

How to finance building a house

For some, funding a building project can be done without the help of financing. For the majority, construction (or building) loans may be the answer to getting your dream home or renovation off the ground and on the slab sooner. 

 

What is a construction loan?

A construction loan is essentially a home or investment loan that, for the duration of your construction period, is paid to you in instalments rather than in a lump sum. At the end of your construction period, your construction loan will continue as your chosen home loan. With People’s Choice, you can choose from a variable package, a one-year or two-year fixed package, a standard variable or a basic variable loan.

You can also choose additional features, such as opting to have a split loan. Or, you could select a 12-month interest only repayment option during the construction period, which means reduced repayments and more cash in your pockets for when you may need it.

 

How does a construction loan work?

A construction loan allows you to draw down on your home or investment loan in instalments over the course of your construction. The timing of these instalments generally lines up with the six stages of building a house, so that you can provide payment to your builders prior to commencement of each stage.

The standard stages of construction are: 

  1. Preparation – plans, permits, fees, insurance, etc.
  2. Foundation – levelling the land, laying the slab, excavations, plumbing, etc. 
  3. Framing – constructing walls, roof trusses, windows, door frames, etc.
  4. Lock-up – adding everything you need to turn your building into a house and locking it up.
  5. Fix-up – plastering, sealing, adding your appliances, bathroom installed, etc.
  6. Completion – site tidied, fences up, and builders receive final payment.

 

How to qualify for a construction loan

Your lender will want confidence that you can comfortably make your construction loan repayments. To show that your loan is affordable, you may want to have the following records handy:

  • Your income details and employment history – including pay slips, child support, pensions, overtime, allowances, rental income, and commissions. Your lender might also check how long you’ve been employed in your current contract or industry for.
  • Your savings history – it helps to show your lender proof that you can save, like having a good account history.
  • Expense details – including utility bills, rent, board, loan repayments, credit and store cards, maintenance, and lease payments.
  • Asset information including cash savings, value of motor vehicles, shares, bonds, property, and furnishings.
  • Residential and employment details for the last three years.
  • Australian driver’s licence number and expiry.

Read more about what to know before you apply for a home loan here.

How to apply for a construction loan?

Ready to apply? First, you may want to check how much you can borrow with our home loan calculator and borrowing power calculator. You can also calculate your additional costs with our stamp duty and land tax calculator.

To take the first step toward applying, submit our online application form here. 

Alternatively, you can speak to one of our team members by calling 13 11 82 or visiting your nearest branch. 

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