Building a new home is a complex project and there are many decisions to be made before the project even begins. From the style of architecture, to the floor plan and layout; bathroom and kitchen fixtures and fittings; right through to flooring, paint, countertops and cupboard handles. But the most important – and usually the first – decision that needs to be made when building a new home is who to go for financing. Should you use your builder’s broker or work with your own broker?
Builder’s Broker vs. Your Own Broker
When it comes to securing finance for a new home build, some builders will recommend their own broker, someone they’ve already developed a working relationship with. And while many people believe they’re bound to work with their builder’s broker when building a new home, that’s not actually the case.
For most builders, referring their own broker provides them with an extra level of assurance, that they’re not wasting time on a home buyer who may not qualify for finance. However, for some builders, the referral could involve some form of compensation like a referral fee or a “kick-back”, which inevitably ends up costing the home buyer.
As a new home buyer, you’re not required to work with the broker that your builder suggests. In fact, we always recommend you shop around for the best finance deal to suit your requirements, and find a mortgage broker who you feel comfortable working with.
So, before going ahead with your builder’s broker, decide if the broker really is working in your best interests, both now and for your future financial goals, by doing your own research and not relying solely on your builder’s recommendation.
By working with an independent mortgage broker – someone who acts on your behalf with your best interests at heart – you’ll be set up for success when building a new home or buying an existing home. And you won’t be covering the added cost of any kick-backs or referral fees!
Securing Finance for Your New Build
Securing finance for a new build is a little different than if you were buying an existing home. Construction loans are structured differently and involve a series of progressive drawdowns or installment payments to your builder, rather than an outright payment from your lender.
As this type of lending can be complex, it’s best to talk through your financial options with someone who understands the complexities and can guide you through the processes involved in applying for a construction loan.
When you use a buy now, pay later service, you’re able to buy a product and delay the payment over several installments instead of paying the full amount up front. And while you don’t pay any interest on the purchase, you are charged fees which can quickly add up.
Before you sign up for buy now, pay later, keep in mind:
- It’s easier to over spend and buy more than you can afford when you’re not paying for something up front.
- The fees and other costs to use the service can quickly add up.
- It can be hard to keep track of repayments – particularly if you sign up for more than one service.
- Too much debt – especially buy now, pay later credit – can impact your ability to borrow for a mortgage, car finance or even a personal loan in the future.
To get the most out of buy now, pay later, we recommend you:
- Stick to a limit and only have one buy now, pay later account at a time.
- Budget for your debt repayments so that you don’t miss any repayments.
- Consider linking your buy now, pay later account to your debit card instead of your credit card, so you only spend what you have and you avoid paying credit card interest.