The benefits of a knock-down and rebuild

You don’t have to up stumps to realise your dream of a brand new home.

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If you’re dreaming of a new home but feel daunted by the prospect of selling during a sluggish market, it could be time to consider a knock-down rebuild strategy.

While this strategy may not suit all home owners there are some real advantages. Whether you’re upsizing, downsizing or simply looking for a change you’ll have the opportunity to influence the look, feel and personality of your place from the outset.

When it comes to older buildings, in many cases the most valuable aspect of the property is not the actual bricks and mortar but rather the land it’s built on. This is one of the reasons so many home owners are willing to level their old property and start from scratch, rather than spend tens of thousands of dollars on repairs.

By opting to build on your current site you can also avoid the upheaval of moving the family to another area while still enjoying the feeling of owning a brand new home. You can also factor in the latest environmentally friendly features and other energy saving efficiencies.

To fund your new home you may need a construction loan. After an assessment of your borrowing capabilities your lender will most likely require a fixed price contract from your licensed and insured builder as well as council approval plans.

Once the loan is in place you simply supply your lender with invoices to control the payments to your builder – usually in stages of the property’s completion e.g. floors, framework, lock-up and completion.

Payments will only be made if your lender’s independent expert agrees that the project is complete – which will also give you peace of mind knowing that the builder’s handiwork is up to scratch.

When your dream home is ready for you to move in you can also switch your loan to a fixed or variable rate loan with your lender.

When considering the mortgage most relevant to your needs speak with your broker – they’ll be able to run through your construction loan options as well as help you switch to a mainstream product once your house is built.

CONSTRUCTION LOAN ADVANTAGES • Usually require interest only repayments during construction

• Allow you to keep your budget and finances in check

• Provide an expert to help ensure construction is well managed

• Can be converted into a traditional residential mortgage loan once construction is complete.

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