August 6, 2021

Is it cheaper to build or buy a house in Australia?

Buying a house is one of the biggest investments you’ll ever make in your life. You can either build or buy your first home. If you’re looking for a property in the Australian market, it’s wise to hire an independent mortgage broker in Melbourne. But, before you start contacting companies like What If We Finance, it’s best that you learn about your options first so you can tell the broker you’ll be working with what you want. So, let’s start by answering the question, is it cheaper to build or buy a house in Australia?

Should You Build or Buy Your First Home?

To answer this question, let’s first look at the costs of building a home. The biggest part of your budget will go to the fees involved in acquiring a vacant lot located in Australia’s capitals. If you’re a first-time land buyer, you are eligible for stamp duty (tax levied by all Australian territories and states on property purchases) exemptions which could lower your initial expenses. Currently, the national average of a patch of land is around $322,000. If you’re not a first-time buyer, there are several stamp duty calculators you can use online to get an idea of the stamp duty you will likely owe.

How Much Does Building a House Cost?

It’s relatively easy to buy a piece of land. However, building a house on it is a different story altogether.  The cost will ultimately depend on how big the house will be, if the land needs levelling, what materials will be used, and of course, the labour and equipment costs. Some people spend roughly the same amount on their house as they did on their land, some even more. The amount of work will probably put you off and make you think that buying a house vs building a house is a no-brainer, but don’t decide just yet.

What Are the Advantages of Building a Home?

Despite all the costs associated with building a home, it comes with plenty of advantages. For one, you can customize according to your demands and make your dream home come to life. You can make the windows as big as possible, and you can add partitions and create as many rooms as you want (so long as that’s physically possible). There’ll be no need for modifications because the house will be designed exactly how you want it. After it’s built, all you have to worry about is the upkeep.

How Much Does Buying a House Cost?

The selling range of buying a house is quite big. But, in general, it’ll cost upwards of $500,000 to buy a fully finished home in top cities in Australia. So, given this amount, is it cheaper to buy land and build a house as opposed to buying a ready-built home? Not exactly. You have to keep in mind that finding a home that’s exactly what you want isn’t going to be easy. You will always find something you want to change especially when it comes to “templated” homes. So really, that amount will end up being higher if you account for possible renovations.

What Are the Advantages of Buying a House?

One of the most significant advantages of buying a house is convenience. Sometimes, it can be as simple as making a phone call or browsing online for properties for sale. Financing is also a lot easier when buying a house vs building a house. Sure, a minimum of 20% deposit is typically expected, but some lenders will let you borrow over 90% of the property’s value at reasonable rates.

Another advantage of buying a house is that you have a clear idea of what you will be getting. There won’t be any failed expectations because you’re buying an already built properly. There won’t be any surprises as long as you have had it inspected prior to completing the purchase.

Buying a House Vs Building a House: What Are Your Home Loan Options?

You can either get a housing loan if you want to buy an already established property or an existing home. You also have the option to get a construction loan for the purpose of building a house from the ground up or doing major renovations. Whichever you decide, you have to keep one crucial thing in mind, the shorter the term you choose, the less money you have to pay back. Also consider options where you have to pay a fixed amount monthly instead of varying amounts to help you manage your expenses better.

So is it cheaper to build or buy a house in Australia? There is no one correct answer to this question. In the end, it depends on the buyer and what they consider a good deal.

Talk to a Reputable and Independent Mortgage Broker in Melbourne

If you want quick, convenient, and professional financing for your first home, What If We Finance is here to help. We make finance simple, and we make sure you have all the support you need seven days a week. We’ll be more than happy to help you get started!

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