When you first enter the property market, one of the initial decisions you will need to make is whether you want to buy a new or an existing property. Each has its merits, but if the latest construction figures are anything to go buy, new builds are really catching people's attention.
The Australian Bureau of Statistics (ABS) revealed that in September 2015, there was a 12.9 per cent increase in the value of new residential building completed compared to the previous month. This seasonally-adjusted estimate was significantly higher than the result for non-residential building, which declined 3.7 per cent month on month.
So, with more new properties coming to the market, what is it that makes them so appealing to buyers? And why might you be inclined to take out a home mortgage to buy one?
You can buy off plan
Many developers will give you the option of buying a new property off plan. This is exactly as the name suggests - the home hasn't actually been built yet, but you can get an idea of what it will be like by looking at floor plans and show homes.
You have rights under both Australian Consumer Law (ACL) and the Domestic Building Contracts Act 1995.
This can have various benefits. It might mean that you can secure the property at a reduced price before it formally hits the market, plus there's the added incentive of having longer to secure finance for your new home. You can take a look at what mortgage rates are available at the time, but it won't be necessary to sign up for the home loan until the property is completed. In most cases, you will be required to pay a deposit to secure the home, so make sure you have this money to hand if this is the property you decide on.
The NSW Office of Fair Trading advises that you read and understand the contract fully if you're buying off plan. In some cases, it might be worthwhile getting a legal professional to do this for you. Don't be afraid to ask questions if there are areas you are unsure of - and know your rights just in case the property never reaches completion.
Customise your new home
If you do decide to buy a property while the build stage is underway, there's every chance you can make some customisation choices. From what colour your bathroom tiles will be to the cupboard doors in your kitchen, these are all areas you would have very little say in when moving into an existing property.
After all, if you could find the ideal home and hate a particular feature, but how quickly will you be able to put it right once you move in? DIY can be an expensive task when you've only just relocated, so knowing your home is exactly as you want it straight away could save you money in the long run.
Research from IBISWorld suggests kitchens, bathrooms and outdoor areas are the most commonly upgraded. People were also found to be more concerned about cosmetic factors rather than structural issues, which is certainly something you can have input in when buying a new home.
New build homes can be more energy efficient.
One of the risks you take when signing up for a mortgage on an existing property is not knowing what might be just around the corner. While this is also the case with new builds, you do at least have some form of protection in terms of warranties and guarantees.
Consumer Affairs Victoria advises that you have rights under both Australian Consumer Law (ACL) and the Domestic Building Contracts Act 1995. If the work that's been completed isn't up to standard, then you might legally take action against the builder.
Every project must use good workmanship, deliver everything stated in the contract, and make sure everything in your home is in full working order, the group explains. If you move into an existing property and something is structurally wrong with the property, it's possible you won't be eligible to make a claim.
Make the most of grants and incentives
Although many have been pared back over recent years, there are still some government incentives in place to encourage you to buy a new home. As a first-time buyer, this could be a real benefit to your finances and bring down the cost of getting onto the property ladder.
The First Home Owner Grant (FHOG) was first introduced on 1 July 2000 and is administered by each territory and government. Among the schemes that's still operational is the New South Wales New Home Grant, which gives buyers of new properties $5,000 towards the purchase of new homes.
You will need to meet several criteria in order to be eligible for the funding. For example, the value of the new home mustn't be greater than $650,000 and you must be an Australian citizen. The grant will be paid as a credit wherever you're liable for duty on the transfer or agreement - where the duty is greater than $5,000, you'll be required to pay the difference.
Potential for lower energy bills
Energy bills have been rising for some time, and in addition to the mortgage costs you're paying, can soon start to add up. New build properties are constructed to strict environmental standards, meaning that in many cases they are more affordable to run than older homes.
The ABS estimates that in 2012, the average household in Australia spent $39 per week on household energy costs - a figure that's likely to have risen ever since. Some parts of the country are paying decidedly more than others, with energy costs the highest in the Northern Territory and lowest in Queensland. Looking at how much you're likely to spend in your particular area is a wise move no matter what type of property you're taking out a home loan for.
However, new homes are generally built using the latest technologies and other features designed to bring down energy costs. From better insulation to double or sometimes triple glazing, the amount you spend on gas and electricity could be drastically reduced.
If you are really keen on the idea of making your home as environmentally friendly as possible, then there's a chance you will be able to specify this during the build stages. You might request that solar panels are installed on the roof or that a rainwater tank is put in place - it's usually easier to make these changes earlier on, rather than once the construction has been completed.
Time to find a competitive home loan
Regardless of whether you have your eye on a new or existing home, it's essential to choose a home loan that's right for you. From mortgage interest rates to loan periods, getting to grips with all the terminology isn't always easy.
Speak to the team at loans.com.au for a snapshot of what's currently available and we'll be able to find a product that matches your personal financial situation.