Buying an Established Home vs. Building: Which is Right for You?

If you are entering the Perth property market, one of the biggest decisions you will face is whether to buy an established home or build a new one. Both options have unique benefits, challenges, and finance considerations, especially when it comes to choosing between a standard home loan and a construction loan. Understanding these differences can help you make the best decision for your circumstances.

Buying an Established Home

Purchasing an established home is often appealing to those who want to move in quickly and live in an area with existing infrastructure.

Benefits of Buying an Established Home

Immediate Move-In: You can move in shortly after settlement without waiting for construction.
Established Suburbs: Many older homes are located in well-developed Perth suburbs with schools, shops, and public transport nearby.
Character and Larger Blocks: Established properties often offer larger land sizes and distinctive architectural styles.

Things to Consider

Maintenance and Renovations: Older homes may require upgrades or repairs, adding to future costs.
Less Customisation: You’ll be limited to the current design unless you renovate.
Buyer Competition: Popular suburbs often attract strong demand, which can drive prices higher.

Building a New Home

Building a home offers flexibility and modern inclusions, but it typically involves purchasing land and arranging a construction loan to finance the build.

Benefits of Building

Custom Design: You can choose your floor plan, finishes, and features to suit your lifestyle.
Modern Inclusions: New homes are energy-efficient and include the latest appliances and materials.
Builder Warranties: Statutory builder warranties cover defects for several years post-completion.
Government Incentives: Eligible buyers may access the First Home Owner Grant (FHOG) and other concessions when building in WA.

Things to Consider

Timeframe: Building can take several months or longer depending on your builder and supply availability.
Location of Land: Land is often in newer estates further from the CBD.
Construction Loan Stages: A construction loan is released in progress payments for each stage of your build, with interest-only repayments during construction.

Home Loan vs. Construction Loan: What’s the Difference?

If you are buying an established home, you will typically take out a standard home loan and start full repayments after settlement.

If you are building, a construction loan works differently:

Funds are drawn down in stages (slab, frame, lock-up, fit-out, completion).
During construction, you generally make interest-only repayments on the amount drawn.
Once the build is complete, your loan usually converts to a standard principal and interest loan.

Understanding how a construction loan works is crucial for budgeting and managing repayments while your new home is being built.

Which Option Suits You Best?

Your decision will depend on what’s most important to you:

If you value location and convenience, an established home may be the better choice.
If you prefer custom design and modern living, building with a construction loan could be ideal.

Need Help with Your Home Loan or Construction Loan in Perth?

Whether you are buying an established home or building from scratch, choosing the right loan is a key part of the process. As a Perth-based mortgage broker, we can help you compare lenders, explain how construction loans work, and guide you through available government grants and concessions.

Buying an Established Home vs. Building: Which is Right for You?