Costs of building or renovating your home

Calculate the costs of building your home

When it comes to choosing a home loan to help build your new home, there are a number of costs to consider. Among these are things like stamp duty, legal costs and insurance. The following is a guide to some of the costs you may encounter when building your home.

• Progress payments
• Stamp duty
• Legal costs
• Searches and inspections
• Lender's Mortgage Insurance
• Rates
• Building insurance

Progress payments

Before building commences, you will be required to pay a deposit to your builder as well as paying a deposit if you are buying land. As the building work progresses, you will be required to make progress payments to the builder - most commonly five payments at the end of the five stages of construction. Certain home loans can be structured for progress payments to be made during construction on completion of these stages.

Stamp duty

There are two types of stamp duty payable:

• On the mortgage - the amount of stamp duty payable on your mortgage depends on how much you borrow.
• On the transfer of the property - the amount of stamp duty payable on the transfer depends on the price of the property you are buying.

Use our handy Stamp Duty Calculator to determine how much stamp duty you will pay. Or your local Stamp Duties office can provide you with information on how much stamp duty you have to pay, how it is calculated and if you are entitled to any discounts or are able to defer payment.

Legal costs

The main legal costs incurred are the fees charged by your solicitor/conveyancer for the conveyance - the transfer of property ownership from one person to another. You can save money by taking care of legal requirements yourself, but it takes a lot of time and effort. You may want to consider a solicitor or a conveyancer. The Law Society and the Australian Institute of Conveyancers can tell you the names of solicitors or conveyancers in your area.

Searches and inspections

If applicable, you may need to pay for:

• Pest reports - Prices start from about $100. The report should identify any evidence of pest infestation in the property you wish to buy, like termites.
• Surveys - a survey sets out the position of the house relative to the property’s boundaries. You may require a survey to ensure the property is built to council requirements.
• Title searches - identifies the person who owns the property and any other interests in the property that affect the title.

Lender's Mortgage Insurance

There are a number of variables that influence whether or not lender's mortgage insurance is required. Generally, it is required if you are borrowing more than 80% of the value of the property, however this condition varies depending on property type, location of the property, loan type, etc. Lender's mortgage insurance protects the lender, not the borrower(s), against loss in the event that you default on the loan. This should not be confused with mortgage protection insurance for borrowers. In the case of foreclosure, if the property is subsequently sold by the lender at a price that does not cover the outstanding amount of the loan in full, lender's mortgage insurance will cover the difference in the debt still owed to the Bank after the sale of the property.

Rates

From the settlement date (the date the sale is finalised) you are responsible for all the council and water rates on a property. The proportion of the rates you must pay on the property for the year in which you buy the property is worked out and based on the date settlement is to occur.

Building insurance

You should check that your builder has their own insurance in place before construction commences. St.George requires you to have householders insurance in place before we make the final progress payment on your loan; this insurance is generally not available until the ‘practical completion’ stage of construction is finished.