Building over buying?

Question from George updated on 11th October 2013:

Hi Kris, how come building your own property doesn't come into the discussions about investing into real estate? For a first-home buyer without concerns about LVR levels going up, I'm worried that I don't see the drawbacks of building my own house? It seems to be all the way favorable? It could be cheaper, you get to have a say about planning and you don't worry as much about underlying structural problems etc. In the comparison between buying an apartment outright, getting a mortgage for something bigger or building on your own, the latter sounds almost like the best option - am I wrong? Is it just a more mundane and lengthier option so the investors don't go for it? Thanks.

Our expert Kris Pedersen responded:

Hi George, these new LVR rules have been making life interesting!! Building has a lot of benefits which you have mentioned. Many people don't go down this path as many of the lenders have required larger deposits (besides Newbuild which was funded by Sovereign) most other main bank lending was limited to 80%. There can be some stress attached to it which may put some people off and if going through a well known company it may be harder to be able to create the same type of equity at purchase that is possible with buying a second hand property. Regards, Kris Pedersen

Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies.

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