When it comes to buying a home, bigger is better, right? Maybe not. All over the world, people are changing their attitude to the size of home they live in. This is particularly true amongst millennials, and if you’re looking to build your first home to take advantage of stamp duty concessions and first home owner grants, there may be many advantages to thinking small.
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WHAT ARE THE BENEFITS OF BUILDING A SMALL HOME?
- They cost less to build because they require less labour and materials.
- Can often be pre-fabricated, so can be built more quickly
- A small home requires a smaller plot of land.
- They use less energy – it’s easier to minimise your carbon footprint.
- Less maintenance costs
- You can pay off your mortgage sooner.
WHAT QUALIFIES A SMALL HOME?
A small home can be anything from a cabin in the woods to a city high-rise apartment, or a unit in the suburbs. The concept also paves the way for a much more creative approach to home design, and many smaller homes are made from re-cycled materials like old shipping containers, or wood and bricks from demolished homes.
If you’re interested in building a small home, you could consider employing a reputable builder of granny flats and/or modular homes. In Australia there are a great many to choose from, and this option has benefits like helping you build a more luxurious small space home, as you can collaborate on the design. These builders often create small space homes in the factory, then transport it to your site partially built, which helps to save on costs.
In Australia, it can be difficult to get a mortgage for a home or apartment that is less than 50 square meters and many councils will not approve plans to build homes or apartments smaller than this. Before you build or put down your deposit on a small home, you should check with your local council about relevant building regulations in your area and talk with your mortgage broker to ensure finance can be arranged.
WHAT IS THE TINY HOUSE MOVEMENT?
The Tiny House Movement is a group of people all over the world choosing to live in houses or apartments with no more than 50 square metres of interior space. That’s about one quarter of the size of the average home. In the USA, the movement is so popular that it’s driven at least three successful TV shows dedicated to tiny house living. However, here in Australia, if your tiny home has wheels, you could find it bogged down in red tape.
THINGS TO NOTE ABOUT BUILDING A TINY OR SMALLER HOME
Almost all councils in Australia treat small homes the same way they would any other building on your property, however if it has wheels it may be considered a caravan or trailer, regardless of whether it is rurally located or in the suburbs. You need to check with local authorities first before you build anything and get the proper approvals on your plans.
Building regulations apply to all homes, not just small homes and ones with wheels. If you are converting a couple of shipping containers into a home, for example, you will still have to ensure you modify them in such a way that your new home meets local building codes.
Additionally, not all lenders have an appetite for financing tiny homes or small space apartments and units. It pays to chat with us, your mortgage brokers, about your plans before proceeding. That way, we can get pre-approval on your construction loan with a suitable lender, so you can go ahead with confidence. There are several ways to finance a new-build home, whether it’s tiny or not, so please give us a call today to get the ball rolling.
FINANCE FOCUS | FEBRUARY 2019
The information provided in this page is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs. You should seek independent advice from your financial adviser before making any decisions.
AUSTRALIAN MORTGAGE AND FINANCIAL ADVISERS (AMAFA)
Phone: 07 3378 2056
Fax: 07 3378 2069