Are you in the market for a new home? RateCity helps you decide between building a new house or purchasing an existing home.
November 18, 2010
The big issue that most borrowers are faced with when looking for a home is whether they should start from scratch or purchase an existing one. Both options offer a range of advantages and disadvantages, but at the end of the day the decision comes down to personal preference, timing, future plans and money.
To assist you in your decision of whether to build a home or buy an existing property here are some advantages and disadvantages for both:
Advantages of building a new home
There are plenty of home loans on the market to help you build a home which have construction loans available. These allow you to access money at stages when you need it so you’re not making repayments on the whole loan before the home is built.
When building a new home, you have the ability to customise the house to suit your style and choose exactly what you want your home to look like. You can choose everything from the room size down to the colours of the tiles.
If helping the environment and saving money is important to you, you can fit your home out with all the latest energy saving equipment as well as the most up-to-date safety options.
Selling a new home may be easier than selling an older home as they have a lot more appeal to most buyers.
Disadvantages of building a new home
The downside of building a new home is that you have to wait for it to be built before you can move in. And if something major goes wrong with the building of your new home, you may have to outlay more cash and it may further delay your moving in date.
Advantages of buying an existing home
The best thing about purchasing an existing home is that you can move in as soon as settlement is complete. On average, settlement takes about six weeks after exchanging contracts. Your home loan is then locked in and you can get into your new financial routine of mortgage repayments.
If you want to move to a particular area, there is more choice available as opposed to building as you are limited to vacant blocks available or knocking down old homes.
Most existing homes will have an established garden or landscaping, whether you like it or not this is one less cost you have to consider.
Disadvantages of buying an existing home
Changing an existing home can work out to cost more than knocking it down and rebuilding, so make sure you do the sums and shop around for contractors.
If you wish to renovate you may need to get permission from your local council. This process can take time depending on what type of renovations you want.
Just like older cars, older homes come with older appliances and you may be faced with unexpected leaks and faulty wiring which can be quite costly. Remember that someone previously lived in this house and they may not have of looked after it as well as you will.
The bottom line
Everyone is different so while building may not suit some people it may be the better option for others and vice versa. It is important to work out what both options will cost you and go from there.
Once you have decided, you can apply for a home loan. Compare online to find the lowest rate home loans available, currently RateCity’s best rate for a variable home loan is 6.52 percent with IMB (as at November 18, 2010). Once you have your home loan organised, it is full steam ahead and one step closer to owning your own home.