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Building : Stage 1 - Arrange your finance

Before you open your first design book, find out how much you can borrow. Most banks will lend up to 90% of the combined land and construction cost, but this must be verified by a registered valuation.

Our mortgage calculator will provide you with a rough idea of how much you can borrow, but because borrowing money to build is more involved than buying an existing home, it's essential that you meet with your Mortgage Solutions mortgage broker. He or she is specially trained and is experienced in all aspects of financing building projects, so will guide you every step of the way.

It's not unusual for first time builders to find themselves with an uncompleted home and no more money, so your mortgage broker will work with you to give you the advice and information you need to make the right decisions and avoid that problem.

Once you know the total amount you can borrow, work out how much you need to spend on buying land where you want to live. Then work out how much of your total budget you want to spend on the house including fittings and furniture.

Always allow for cost blow-outs

There will almost always be cost over-runs, and as a general guide you should allow for 7 - 10% of the projected value. The kind of things that can add significantly to the costs are foundations and engineering costs, extra inspections and reports and extra work done by the architects. It's an extremely good idea to get a fixed price contract from your builder, that way you can be certain that your building costs won't change.

Remember to plan for design and building quotes, insurance, and the building contract.

After seeing an architect or designer, you should call for quotes from various builders. The architect may well recommend one or two builders, but it's worth putting your mind at rest and talking to at least three. Bear in mind that there are times when you may not be able to book your desired builder, and you may have to settle for someone more expensive, so check their availability before you factor their costs into your budget.

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