Everything you’ve ever wanted to know about building a house answered by a 26 year old first home buyer

Building your first house is equal parts exciting and overwhelming! I’ve asked a recent first home builder all your burning questions about everything building a house related

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My boyfriend is currently in the process of building his first home! The slab is down and now he’s waiting on the bricks to arrive. Exciting times! Even though I helped during the planning process this house is 100% his and purchased with his own money.

In 2019 I saved a 20% deposit and purchased my own property, and in the process learned lots from the experience (read about that here). So I thought myself quite familiar with the house buying process. Turns out, this was not entirely true! I was still confused and stressed watching the process he went through! Purchasing land and then designing a house to go on the block is a whole other level of complicated! I can’t even imagine how overwhelming it must be for someone doing this for the first time on their own.

On my Instagram, Smartgirls-FinishRich, I asked my followers to send me any questions they have about building a home that they would like my boyfriend to answer. My hope is that in reading this list you’ll learn a few new things, have some questions answered and enjoy reading some of my boyfriend’s excellent opinions (I may be a little biased here ;).

All these answers are his own but I have paraphrased them and reworded for clarity. The bolded parts are my personal suggestions.

Why did you decide to build?

I had been saving for a while but I wasn’t sure on what I wanted to do with the money. I was set on buying shares but then all the grants were released. They were offering so much money for people to build and because I could afford it and had my deposit ready, it was too good an offer to turn down.

All about the money and the mortage

Top deposit saving tips?

  • Reduce your food costs. Eat at home more often (cook once eat twice) and cook from scratch. Buy groceries from cheap shops and pack your lunch for work.
  • Get a second job or increase your income. I do FIFO and on my week off I worked casually at a petrol station. I also worked for promotions to increase my salary.
  • High Interest Savings Account. I opened a high interest savings account, I changed banks to chase high interest savings accounts and the bonus money banks sometimes give you for opening bank accounts with them. A high interest savings account like ING’s Saving Maximiser, might be a good place to store your savings. If you sign up for an account here and add my referral code (GEX485) we will both receive $100. (Offer active until the 31st July 2021).
  • Buy fuel on cheap days (Monday / Tuesday). Even if your tank is almost full still buy fuel so you don’t get caught short and end up buying fuel on an expensive day. Read more about saving money on fuel here.
  • Take advantage of what your work offers for free. Make hot drinks at work using the provided tea / coffee. Do free training they offer. Take home left over food, etc.
  • Sell your old stuff that you don’t use. I sold music equipment, furniture, plants, games, board games and had a garage sale. Read about selling your unwanted items on Ebay here.

You can read my more tips for saving a deposit here: $90,000 In 2.5 Years For A Deposit At 23. My 10 Best Tips To Save Your Deposit Quickly

What building grants are you getting?

First Home Buyers Deposit Scheme (FHLDS). More info here

  • Didn’t need a 20% deposit and didn’t have to pay Lenders Mortgage Insurance (LMI).

First Home Owner Grant (FHOG). More info here

  • $10,000 grant and didn’t pay stamp duty

Australian Government Home Builders Grant. More info here

  • $25,000 cash

Western Australian Building Bonus Grant. More info here

  • $20,000 cash

Did you go with a big bank for your mortgage? Why/why not?

No, I did not go with a big bank. I could have gone with a different, larger bank and got a slightly better interest rate but they all had higher fees. My mortgage is with Police & Nurses. They offered me an offset account and a low interest rate. Most importantly, they still had First Home Loan Deposit Scheme (FHLDS) spots left. Banks are given a set number of FHLDS loans to give out by the government. Big banks have more applicants so tend to use all of theirs up first. Smaller banks tend to have them available for longer. Using FHLDS meant that I didn’t pay Lenders Mortgage Insurance even though I didn’t have a 20% deposit. This saved me thousands.

How big is your mortgage going to be?

I already have the land mortgage and have started to pay it off. The building mortgage increases as parts of the house get built.

In total, If I wasn’t already paying it off, my mortgage would be just under 400k. However, I will get the $45,000 cash from the grants in the next month or two so that will immediately lower it. I also put all the money I had left in my bank accounts into my offset so that has reduced it already by around 35k.

What extra costs came up? What do you need to put money aside for that is unexpected?

A broker will go through these costs and account for them. You don’t have to used a broker but it made the process easier for me! I was glad I used an independent broker, not the one provided by the company you’re building with. A few friends had issues with the ones they were provided.

  • You need to put money aside for everything not included in your build. Generally that’s internal painting, a letter box, clothes line and backyard landscaping. Friends have also needed to pay for fencing but that was included for me.
  • You need to have money left over in your bank after your deposit is taken. The bank won’t lend to you if have $0 in your bank account at settlement.
  • You may need to pay a bushfire levy if your land is near bushland. Ask if you’re in this zone when looking at land.
  • Upgrades like extra tiles, better window treatments, aircon, built in laundry cabinets, full render etc cost money. You need to have savings put aside for these upgrades or be eligible to borrow more money.
  • Stamp Duty. That’s a tax you pay when your purchase a property (including land).
  • Conveyancer fees.
  • Down payment. You have to pay a land deposit / building deposit in cash.

Do you plan on paying it off early?

I will put money into my offset when I have it but I’m not planning on paying it off early. I plan on negatively gearing it. I’m a high income earner who has no plans on retiring early. So I want the tax benefit of it being negatively geared.

Did you put money into shares or super while saving a deposit?

No I did not. I’m planning on starting to salary sacrifice now that my deposit is saved and the house is underway.

All about the building company

How did you choose what company to build with?

I Googled house and land packages in areas I was interested in building in. I made a list of all the companies that showed up and then went to look at some display villages and got a feel for each company.

Then I called each company that I was interested in and asked what was and wasn’t included in their packages. I had five or so on my short list. Some never got back to me, others were quite unhelpful or rude so I crossed them off the list. The most responsive and helpful company was WA Building Company. I went and met a building consultant (Dan) and told him areas I was interested in building in and spoke about my general budget. Later he took me to look at land and I created my floor plan with him. It worked out perfectly with WA Building Company. They had a special on when I signed up so I got aircon, upgraded kitchen appliances and more included for free.

Did you go with a building company?

Yes I did- it was always my intention to. I went with WA Building Company because they got back to me first and offered everything I wanted at a reasonable price. My intention was to build a regular house at a good price that would appeal to lots of renters. WA Building Company build lots of houses so that means they buy building supplies in bulk, which keeps building prices down. As a first home buyer, going with a large company suited me.

All about building a house

How many beds and bathrooms does your house have?

It’s a four bedroom single story house with two bathrooms.

How did you choose what to save and splurge on?

Spend heavily on what you think makes a house nice. For example, I love cooking so I spent lots on having a huge kitchen, with extra storage and large appliances. I don’t really care about bathrooms so I didn’t pay any extra to upgrade these.

I also went with building a smaller but nicely finished house. Quality over quantity.

Tips for people building for the first time?

  1. Pay the extra cost to have lots and lots of power points. Think carefully about where they will go.
  2. Show lots of people your floor plan and ask for opinions. Fresh sets of eyes are so useful!
  3. Measure out everything. For example the size of rooms compared to rooms in your house. The size of showers and the length of benches. This will give you a better idea of spacing.
  4. Drive around new growth suburbs and the area you’re building in. Take note about the houses you see. What do you like in terms of colours, bricks, styles etc. What do you hate?
  5. Take time to make all the choices before pre start. Give yourself lots of time because it takes ages! Ask for samples to take home and look in them in different light. Ask suppliers for their opinions.
  6. Go to lots of home opens and display homes to get an idea for what you like and really don’t like. Below are some pictures I took at display homes.


I hope you found this information helpful! If you have any more questions please leave them in the comments below and I will get them answered for you.

 

| This blog post was all about building as a first home buyer with WA Building company |

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Published by smartgirlsfinishrich

’m a money driven 20 something year old, working hard to improve my finances and create a lifestyle that I love. My hope is that by sharing my story it will help you increase your financial knowledge, motivate you to improve your financial situation and empower you to make more money $$$$ I’m not obsessed with money. I’m obsessed with the freedom and lifestyle choices money provides. (but also, I’m a little obsessed with money) My biggest money wins were all achieved on a a teacher income + side hustle earnings. All while living out of home. Saved a 20% deposit ($90,000) and purchased my dream first apartment in Perth, Australia. Saved $13,000 (so far) for a new car using side hustle income. On track to finish 2021 with NO HECs Debt. $18,000 paid off to date! Travelled Europe for six weeks while saving a house deposit. Check out my blog posts or follow my Instagram for all the details! It’s time for your financial glow up!

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