What Can I Expect My Costs to Be?

PreBuild-Before-You-Build

The Cost of Building

Everyone likes to know how much something costs.  This is not so easy because there are so many variables and third party costs that can differ, but this should give you a helpful guide.

Third Party costs

Lawyers

You can expect to be charged to settle your loan and your lawyer will charge you to settle and register the mortgage and register you on the title of land.  We do believe you should run your legally binding documents past your lawyer so you may expect to pay a little more than with a house purchase.  But the cost should still be reasonable.  We have seen a few cases where clients have sought legal advice on so many aspects of the process that the bill ended up being several  thousand dollars more than was probably necessary.  We would expect that you would pay upwards of $2,000 for a standard build settlement. With a reasonable deposit you may expect the bank to provide a cash contribution that you may apply to this cost.

Settling your property in a Trust can be more complex and may cost more.

If you complete the required Identification (AML ID - Anti Money Laundering regulatory requirement)  process through your lawyer, this too, may cost a little more.

Valuers

You will be required to secure both a valuation (at the start of the project) and a Valuer's Completion Certificate (at the end of your project).  Valuation fees differ quite a lot by region, but a very general rule of thumb is you pay $100 per $100,000 of value of your proposed project (example, a $1m build should cost you around $1,000).  You should pay less than half this price for a Completion Certificate

The Bank

The bank will offer you an interest rate.  All build loans must be on a floating rate until completion, then you can then fix part or all of your loan. 

The bank will charge a Low Equity Margin (LEM) to your interest rate if you have less than 20% deposit/equity.  The margin will be removed once you reach 20%, and can be reduced each time you improve your equity.  NewBuild recommends you consider a full valuation on completion of your build because you may have more equity by then and be able to reduce your LEM. 

Low Equity Margin Bands

LVR      LEM

80.01 –   85.00% LVR    0.30%   p.a.

85.01 –   90.00% LVR    0.75%   p.a.

90.01 –   95.00% LVR    1.30%   p.a.

>95.00%   LVR              1.50%   p.a.

NewBuild Costs

NewBuild will include within your  loan a $1,000 fee to manage the build plus a $500 application fee.  We will also include $500 for inspection reserves to help cover progress inspections.  By building these costs into your loan they are not an out-of-pocket expense.

You may be charged the $500 application fee once your loan is pre-approved, even if you choose not to proceed with your loan offer.  Managing your construction loan is expensive but in most instances we are remunerated by the lender so you do not need to pay us for our services ( except as mentioned above).  We require you to stay with NewBuild long term, at least two years, and if for any reason you don't remain for two years, you will be asked to remunerate NewBuild. 

These terms and costs are covered in the disclosure statement provided to you free in the website under the advisor link.  NewBuild will also include the management fee, so combined your early repayment cost will be 1.1% of the loan limit originally settled.