Purchasing a house involves weighing the many pros and cons. This article considers whether you should buy a new build or an existing home. The answer is: it depends on you! What is pro or con often depends on your and your family’s preferences. Rather than answering the question for you, this blog will take you through what you need to know to make an informed decision.
The pros of buying a new build
Low maintenance
With everything new and in working order, there is very little need for time or money spent on maintenance over the first decade or two. Many new builds come with a 10-year guarantee, giving you peace of mind that you’ll be covered if any build issues arise in the first years.
Less deposit needed
New builds are exempt from the loan-to-value ratio (LVR) restrictions, so you may be able to buy a new property with less than a 20% deposit. At Platinum Mortgages, we keep current with lender offers and can find opportunities for you to buy with a lower deposit.
Quality of living
Choosing your own floor plans and colour scheme means you can have a house just how you like it. You also benefit from modern heating and insulation technology and have the option of all the other living comforts available today.
Ease of resale
New builds are also often easily resold within the ensuing decade or so. Little work is required to get the property ready for sale, and new builds are an attractive option for buyers looking for something that doesn’t require much maintenance.
Cheaper insurance
Insurance for new builds is straightforward and often cheaper than insuring an older home, especially if the older home was built before 1935.
The cons of buying a new build
More stress and uncertainty
If you’re building from scratch, you’ll have to make many decisions—floor layout, building materials, power outlets, bathroom fixture styles, paint colours, and carpet options, to name a few! This, coupled with uncertainty, almost inevitable delays, and the very real possibility of budget blowouts, can cause tremendous stress. Building may not be the way to go if you like certainty and keeping things simple.
Cost of living while building
Depending on how the building contract is structured, you may be required to make progress payments during the building process. This means making mortgage payments (at least in part) while still renting or living elsewhere. We can manage the mortgage process for you and ensure you understand what mortgage payments you’ll be required to make throughout the build. Contact us to find out more.
Additional cost
Remember, not just the house needs to be built; the section will likely need landscaping. Even if you do a lot yourself, this will cost a decent amount of money. If not budgeted for, a home can feel bare and uninviting. Even once it’s landscaped, it will take time to look established.
The pros of buying an existing house
More certainty, simpler
Buying an existing house means you have certainty about the price and settlement/move-in date. Fewer decisions must be made, and much less of your time will be spent making them. You won’t start paying a mortgage until the day you take ownership of the property.
Established property and neighbourhood
Existing homes are more likely to have an established garden with mature trees and to be part of an established neighbourhood. Buying in sought-after and central suburbs often means you only have the option of existing homes.
The character aesthetic and lifestyle
Older homes often have attractive character touches and are likelier to have a bigger, established section. This is a benefit when living in a property and when it becomes time to sell.
The cons of buying an existing house
LVR restrictions
Existing properties are subject to LVR restrictions. The standard requirement is a minimum 20% deposit (80% LVR) for an owner-occupied property and a 30% deposit (70% LVR) for an investment property. However, banks can approve a limited number of loans with smaller deposits. Platinum Mortgages can work with you to take advantage of those opportunities when they arise.
Higher maintenance costs
Older houses can require much time and money for maintenance and upgrades. When looking at buying an established home, make sure to get a detailed building inspection. This will prevent nasty surprises down the line and allow you to budget for any known issues.
Less desirable layouts.
Nowadays, almost everyone has embraced a more open-plan way of living. The cook wants to be able to chat with the person sitting in the living room or watch the news while making a salad. However, open layouts are uncommon in older houses unless significant renovations have been done.
More expensive insurance
Insurance for older homes can be higher, especially if the house was built before 1935. While we can’t tell you whether a new build or an existing home is better for you, we can find you the best mortgage solution, manage the application process and structure your mortgage so you can make the most of your money. Get in touch for a no-obligation chat today.