• Step by step guide to building your first home

    Step by step guide to building your first home

    Building your first home can be challenging. Here is a step-by-step guide to help you understand what happens during the process.

    1.  Initial meeting

    Once requested, a RAMS Home Loan Manager will contact you to organise an appointment. You’ll discuss your needs, objectives and financial situation.

    2.  Application (pre-approval)

    This is where you could be issued with a pre-approval based on your borrowing capacity¹. We’ll talk about available government grants and their eligibility requirements ² and you’ll need to provide some personal information including details of your financial position and identification. 

    It is important to note at this stage, that your borrowing capacity will need to cover both the cost of the land as well as the construction.

    3.  Selecting your builder

    Once you have found a piece of land, you will also need to find a suitable licensed builder who can carry out the construction of the house. Some builders offer packages which may have inclusions relating to the kitchen, bathroom/s and lighting as well as options in relation to features such as driveways and landscaping. It is important to check what is included and what is excluded in the contract with your builder. There may be additional costs outside of the contract which you will need to pay to complete the construction of your property. 

    Alternatively, you can design from scratch and customise the property you want your builder to build according to your specific needs and desires.

    4.  Valuation of the proposal

    Your builder will supply you with your plans and specifications once you have come to a final agreement. Using these plans, RAMS will conduct an 'on-completion' valuation to determine the total market value of the proposed project. If this valuation is consistent with the estimated construction cost, your application will progress to the next step.

    5.  Approval (unconditional)

    To receive your unconditional approval, you’ll need to provide your Home Loan Manager with a copy of the contract of sale for the purchase of the land and you may have to provide updated financial documents. You will also need to provide your building plans and specifications. If you are eligible for any government grants, your Home Loan Manager can assist you to apply for these grants through RAMS at this point.³

    6.  Loan documents

    RAMS solicitors will prepare the loan documents and will work with your solicitor or conveyancer to obtain any required documentation and arrange settlement.

    7.  Loan settlement (land)

    Your solicitor or conveyancer will contact the RAMS solicitor to book in the settlement for your land purchase. Settlement periods vary between the different States and Territories so you’ll need to confirm your time-frame with your solicitor or conveyancer. In order for settlement to occur, either prior to or at settlement you will need to pay any amount not covered by your loan for the purchase of the land.

    8.  Authority to commence

    After land settlement, we provide you with flexibility on the commencement of construction of your new home, so you can build on a timeline that works for you. Before commencing construction, you will need to provide your council approved plans, signed building specifications, builder’s risk insurance and home owner’s warranty as well as a copy of the builder’s licence. RAMS will then provide an authority to commence letter to your builder which will allow them to begin construction. Construction needs to be completed within 12 months after RAMS issues the authority to commence.

    If you have applied and been approved for a government grant, you will become eligible to receive the grant funds once you have provided RAMS with the invoice for the first stage of construction and you meet all grant requirements for payment. To confirm any requirements, refer to your relevant government department’s website.¹

    9. Under construction

    Construction is usually divided into 5 stages with a progress payment drawn down from your loan to cover the costs for the completion of each of the stages. In order to receive progress payments as each stage has been completed, you will need to provide RAMS with a signed progress payment form together with an invoice from your builder for the completed works⁵. 

    Once RAMS has received these documents, it can then pay the progress payment into the builder’s account for that stage. The progress payment amounts will be shown on your Internet banking and home loan statements as they are released and will be drawn down against your total loan limit. It is important to note that you will only pay interest on the loan amounts which have been drawn down as construction progresses. 

    Midway through construction RAMS may organise a property inspection to ensure the work is of an adequate standard. Once construction is completed, RAMS will organise a final inspection. RAMS will send a final letter to you to inform you that the construction draw down has been completed and if there are any surplus funds, these will be made available to you.

    10.  Your new home!

    The settlement is complete and your RAMS home loan is in place, congratulations! We’ll be there to help with any questions or changes to your home loan now or in the future.


    More Information: Information in this material is general and does not take into account your objectives, financial situation or needs and you should consider whether it is appropriate for you. You should also obtain independent professional advice relevant to your financial circumstances. 

    1 Credit criteria apply. 

    2 Eligibility criteria and conditions of release for each state government’s grants should be checked at the time of application according to the information provided on each state government’s website.

    3 Funds to cover transaction and establishment costs required. For information about eligibility requirements in the various states and territories, visit the relevant government department’s website. 

    4 A shorter building timeline requirement may apply if you are taking advantage of a first home owners grant. 

    5 $50 administration fee for each progress payment (except for final drawdown) and valuation fees may apply. 


    Download pdf version of this step by step guide.


    About the author

    • Raymond

      Raymond A Ram is the RAMbassador for RAMS Financial Group. Raymond works with the RAMS team to bring simple, helpful and expert information on home loans and savings accounts to life with his down to earth and cheeky personality. He enjoys seeing everyday Australians turn their dreams of saving for a goal or getting into a home a reality. 

      Growing up in Goulburn, NSW, Raymond was brought up with good old-fashioned Aussie values of hard work and a fair go. It soon became apparent that Raymond wasn't content for the conventional path of grazing, producing the very best wool, and finding a nice sheep to settle down with. So it wasn't long before his passion for performing and his talent as a likeable larrikin shone through - landing him a few roles such as 'RAMlet'. He was even tipped to play RAM-bo at one point but chose to become star of the small screen instead as RAMbassador for RAMS. He now finds this role so much more rewarding.

      Contact your local RAMS Home Loan Centre about your home loan options.

      Raymond A Ram

  • Check out our latest offers

    Find your local RAMS Home Loan Centre

  • Disclaimer:

    The information here is of a general nature only and is not intended to constitute financial or tax advice. You should consult your professional adviser, accountant or taxation expert for advice specific to your personal circumstances.

    The views and opinions expressed in this article are those of the author alone and do not necessarily represent the views or opinions of RAMS Financial Group Pty Ltd ABN 30 105 207 538 (RAMS),  Westpac Banking Corporation ABN 33 007 457 141 (Westpac) or their related bodies corporate. This article is strictly for information purposes only and neither RAMS, Westpac nor any of their related bodies corporate make any representation as to the accuracy or completeness of the information in this article or endorse the views expressed in it.