The Modular Process Explained: 5 Steps to Owning Your First Home
Dec 16, 2020 08:05
The dream of owning their own property seems unachievable for the majority of young people today. Housing prices have risen while salaries have stagnated. Enter modular housing - a relatively new concept that's considered the saving grace for aspiring young and old Australian homeowners. Modern modular homes have some appealing benefits over traditional construction.
However, there are many misconceptions and unknowns when it comes to modular housing, as it's still not as mainstream, and it's surrounded by a lot of myths. From budgeting, securing a loan to finding the right property and design, there are many important considerations you have to make before you turn your dream home into a reality.
If you've decided to buy your first home from your local modular home builders in Victoria, knowing where to start can be difficult. So I've put together this guide that will help you through the process. For the sake of keeping it simple, I've broken down the process in 5 parts - budgeting, finance, buying the land, finding the ideal design and construction.
Setting a Budget
Knowing how much money you can afford to borrow from lenders is the first step before looking for your first property. Lenders will assess your borrowing power by seeing how much you can afford to repay comfortably. Your wages, savings, debts and living expenses will be taken into account before they come up with a number they're confident you can manage. However, you should still do your own budget calculations before you accept the amount your lender is offering. You'll have to make sure you also include the costs that come with being a homeowner on top of your current expenses, such as insurance, maintenance and repairs.
You'll need to have some money saved for the initial deposit. The number of the deposit will vary based on a few factors, such as how much you want to borrow, your employment history, income, credit rating, debt and property value. Generally, the deposit for a home loan is 20%, but it's possible to get financing with significantly less - as little as 5%. Obviously, the bigger deposit - the better. Paying a bigger deposit shows you're a good saver, and that can increase the chances of your loan getting approved. On top of this, your loan, interest rates and repayments will be lower as well, giving you the opportunity of paying the loan sooner.
Australia has what's called The First Home Owner Grant. Depending on which state you live in, the criteria can differ, but it's typically available to first home buyers over 18. It's a one-time grant, and depending on the location of your potential home, you may get some extra benefits, such as discounts on stamp duty, or a bigger grant when your property is in a regional area.
Securing a Loan
First-time homeowners often get pre-approved loans (conditional loans) from lenders before they start searching for their dream home. These loans are an indication of how much you can borrow, and it's not guaranteed that you'll actually get approved. It's subjected to a set of conditions, including the valuation of the property you've chosen. These loans are granted when you've satisfied all the conditions set by the lender. Unfortunately, many lenders are hesitant when it comes to financing modular homes, as it doesn't fit their criteria for construction loans. It's important to speak with your lender and explain the modular process as soon as possible.
Choosing the Land
Choosing the right location for your modular home is one of the most difficult decisions you'll have to make. Look for towns and suburbs that meet your most important needs, such as being close to work, a range of schools and maybe other family members. The location should be a place where you feel happy and safe. Spend some time in the area where you want your potential home to be, and explore the local stores, cafes, restaurants and other attractions. More importantly, the location should fit your budget, so talk to real estate agents to find out the price range for land in the area. If it's above your budget, consider neighbouring areas that may be more affordable.
If the land you want to buy is very cheap, there's probably a good reason for that, so be cautious of buying bad blocks, as they can blow your budget very quickly. If you find some land you like, contact your builder for advice to see whether it's appropriate land for your home. Most renown modular home builders can construct modular homes on sloping blocks as well, but it can come with a set of challenges and extra costs.
There are quite a few modular home builders, especially if you're located in Victoria. Choosing the right builder can make or break your project, so do your due diligence. Look for a modular home builder Victoria wide that has a proven track record and testimonials from past clients. The ideal builder will have a list of inclusions and allow for customisations and upgrades to suit your needs.
Fortunately, just like there's no shortage of options when it comes to builders, there's no shortage of options when it comes to designs. Your first decision should be the size, and from there, let your budget guide you, your preferred layout style and your requirements. In order to get the best value, compare a few builders. The standard inclusions the home comes with can vary from one modular construction company to another. From permits and warranty to floor coverings, facades and floor coverings, make sure the builder includes everything you need.
The Modular Construction and Delivery Process
Before the builder starts constructing your first modular home, there are a few important things you'll need to take care of. You'll meet up with the builder, and together you'll have to choose a design and discuss customisations. Then, they'll provide you with a cost estimate, and if it suits your budget, you'll move to the pre-contract stage. You'll need to pay a deposit that covers the preliminaries, such as site survey, energy rating, working drawings, soil report and BAL rating. Once you obtain the results of the preliminaries, you'll have an idea of the final cost.
Next, you'll have to submit a planning application so that you get your planning permit, after which you'll finalise your finishes and colours. Once the building permit is obtained, the construction of your home will begin.
Modular homes are built in a controlled, off-site environment. About 95% of all construction will be performed there. Before your home is finished, the site team will go on-site to prepare the connections and footings on the property. When the home is completed and delivered to the site, the same team will install it and perform some finishing touches. Generally, the entire process lasts about 12 weeks. The time it takes can vary depending on the project, with smaller homes requiring less time, whereas large, custom designs take longer.
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