When building, the choices are endless. They key is not to get carried away
When building your first home you have to take stock of a few things—including not getting carried away and going mad on all the upgrades offered. Just remember this isn’t the same as going into Maccas and upsizing. Every upgrade you make is costing you. Most first home buyers these days are faced with an enormous challenge. Getting the deposit together for that first home is no mean feat and takes discipline and sacrifice. After finally climbing to the top of the ladder you need to restrain yourself from over-extending on those upgrades.
An important consideration is the number of people who have been caught out by including upgrades, only to find their finance doesn’t stack up to the valuation of the home they are building.
Will that new tap fitting add value to the home, or is it something you just want? I’m not saying don’t do it, by all means if that is what you want, and can afford it, go for it. I am purely saying some upgrades will increase the valuation and others won’t.
Most house and land packages seem like they are built for the masses, which in fact they are—this is the way costs are kept down
Always remember a bank valuation is entirely different to a market valuation. If the bank is where you are getting your loan, then unfortunately it is the bank’s requirements you need to satisfy.
A four-bedroom house valuation will usually come in higher than a 3 brm and small study. If you have the extra money to play with then think about spending it on cabinetry, flooring and the countertops.
These items are expensive at any stage of the game, but ripping up flooring after you are in the house is even more expensive (as you have already paid out for the original fixtures). It is also time consuming, disruptive and if the money is available at the beginning of the build you are better taking care of it from the start.
Most house and land packages seem like they are built for the masses, which in fact they are—this is the way costs are kept down. It is through changing and putting in alternative upgrades we feel we have “marked” our territory as our own.
My advice to anyone entering the housing market today is to get that loan paid off as fast as you can—you just never know when the Reserve Bank is going to take the brakes off and we head into a new era where interest rates go up again.
The author is managing director of the Barry Michael Property Group