You can't pick the valuer unless its on the lender's panel. It's important that you find out who valued the current property so you potentially avoid them with the next lender. Are you able to get the report from her?

Regards

Shahin

– Contour survey by registered surveyor

A: No you need to pay for this and its around $1,200

– Preparation of working drawings

A: If its a display home then the builder will do this. Note that display homes are considerably cheaper than custom homes. Not all builders do custom homes (although this is starting to change as the building industry is slow and everyone is trying to stay busy) and custom homes will be much more expensive.

– Council application fee or Complying Development Fee

A: Generally no.

– Construction Certificate

A: No. The certificate itself will cost approx $2k if going through a private certifier. Its the conditions of the DA that you need to pay close attention to. For example, the DA may say that you need to submit dilapidation reports, overflow paths, etc which will all cost extra and certainly isn't covered in the normal building process.

– Engineers slab design

A: Depends on the builder but yes its generally covered.

– Sydney Water/Hunter Water fees (standard approval)

A: Not this is not covered.

Regards

Shahin

Sure its Wincrest homes and ask for Clark – he manages CC and Newcastle areas.

Regards

Shahin

The process of building a house:

1. Know my budget, in my case it's 60k cash (also less deducted credit cards, and blah blah blah), and know my borrow capacity.

A: You need to know 2 things. One is servicing and 2 what your Funds to Complete scenario will look like. So with $60k cash/deposit what is the max LVR and thus to be constructed price. Do you potentially compromise on the land portion, construction portion or both.

2. Buy a block of land, and my target is at 800sqm minimum, priced at 100k or a little more than this. The area that I'm interested to build is in Hunter region (near New Castle).

A: Make sure the land is suited to what you want to do with it. Check for easements, etc.

– To buy a block of land, is it a normal home loan to invest?

A: In so many words yes but different lenders have different policies. For example, if you want to purchase a vacant land and have no genuine savings then you need to go with lender x e.g NAB rather than lender y e.g. Westpac.

– You don't pay stamp duty on the land, just the closing cost. With this, so it will be a normal "out of pocket" during the process of building, to repay the loan, do I get this correct?

A: Based on the above you fall under the threshold so yes there is no stamp duty. What do you mean by out of pocket costs? Do you mean the DA and CC process?

3. A contour and detailed survey and geotechnical report needs to be done, and passed it to the builder.

– Anyone know roughly how much this cost?

A: Who said you need a geotechnical report? You don't always need this. The survey is $1,200 and the Geotechnical Report if required is $2,000.

4. Builder show design concept to me, if I'm agreed, show it to Town Planner? If town planner is ok, then submit for DA approval? This has to be done by me or any other professionals can take care of this?

A: It depends there are many ways to skin the cat. You can get your builder to do the whole lot, you can go through a private town planner or you can do it direct with the council. I would go for option 1. If you have money and are time poor go with option 2.

5. Construction Certificate, after DA approved? I believe having private certifier will speed up the process?

A: Correct for both questions. Prviate Certifier will certainly be quicker but you will need to pay approx $2-3k in fees.

6. Obtain another loan called "construction loan", so this is the 2nd loan for construction which the funds will be release in stage phrases of constructions.

A: Correct. You can initially get a pre approval but for formal approval you will require an executed Buiding Contract, DA plans and Progress PAyment schedule.

7. As I'm a time poor and live around 200km away from site, should I hire a project manager? and how? Is it necessary?

A: No do it through the builder. I can refer you to a good builder in that area.

8. Wait for the construction to finish, during this period, the construction loan and original loan are in place, means I have to pay repayments out of pocket?

A: Yes? What other option is there?

9. Once construction is complete, keys are handover to you, receive occupation cert from council or from private certifier, it's a happy ending to do whatever now?

A: Yes.

-Roughly these processes should take no more than 18 months?

A: That is sufficient time allocated.

-2 loans are involved (buy block of land and construction loan)?

A: Correct.

-All the loans, has to be out of pocket during the process of building?

A: Correct

-Providing that I have 60k, land is 100k, and house is around 250k, plus other cost 30k (council, professionals, and etc) total of 380k, will what I have be enough to cover?

A: Yes – it then becomes a question of going into LMI territory or staying under. This is dependent on the long term IP strategy. If you are going to use this as an IP at a later stage – make sure you get a depreciation schedule.

Regards

Shahin

Think about your longer term strategy and then work backwards. That will tell you how much deposit to use, how much to spend and what the cashflow numbers will look.

Have you determined what the longer term strategy is?

Regards

Shahin

Is it on a separate title? If so then yes. If no then still possibly yes.

Regards

Shahin

Righto – the answer is no the bank will not lend you the money as you are not on the title. The bank's view is that you do not gain anything from the loan if you are not on the title. The only time this works is in a spousal arrangement, i.e you are on the title then you can add your wife onto the loan for servicing.

Can your parents borrow the funds? If not, why not? Age or employment?

Regards

Shahin

They take the building contract price into consideration. At the end of the day they compare recent sales like any other property.

Regards

Shahin

They will value the property when you apply for a construction loan. They do this by looking at the Building Contract to see what is the included, finishes, etc. 

Regards

Shahin

Its a system val meaning they enter the information about the property and it splits out a report. Most likely that the valuation the bank will require is a 'Full Valuation'. If you have done renovations then it will definitely need to be a full val.

By now you should have contested the val whilst concurrently ordered a couple of upfront vals.

Regards

Shahin