If you are planning to build your dream home, one of the first big questions you will face is whether to sort out finance or secure land first. For many first-time builders, it feels like a confusing chicken-and-egg situation. On one hand, you need land to build on. On the other hand, you need finance to know what you can afford.
The truth is, the order really does matter. Making the wrong choice can lead to unnecessary stress, budget blowouts, and sometimes even owning a block you cannot afford to build on. Let’s explore how finance and land work together, what order to follow, and how to set yourself up for a smooth, successful build journey.
Why Finance Should Come First
Finance is the foundation of your build journey. Without knowing your borrowing capacity, you are essentially shopping blind. You might fall in love with a block or home design, only to later realise it is beyond your budget. This is one of the most common and avoidable mistakes people make.
By speaking to a broker or lender early, you get a clear picture of what the bank is willing to lend you. Even better, a pre-approval means you have a realistic price range to work within when searching for land. That clarity helps you make confident decisions instead of guesses.
The Risks of Buying Land Without Finance
It is not uncommon for people to buy land before sorting finance, especially when they see what looks like a great deal or a block in a popular estate. But this decision comes with serious risks:
- Insufficient funds for the build: You may commit most of your borrowing capacity to land, leaving too little for the construction loan.
- Unexpected site costs: Sloping blocks, poor soil, bushfire or flood overlays can dramatically increase site works, and without finance clarity these extra costs can tip you over budget.
- Delays in approvals: If you rush into a land contract without pre-approval, you may find yourself scrambling for finance later, which delays your ability to begin building.
- Worst-case scenario: You own land but cannot afford to build on it any time soon.
These situations are stressful, expensive, and can stall your plans for years.
Are There Times When Land Comes First?
There are some exceptions. If you already have finance pre-approval in place, or if you are in a position to purchase land outright, it can make sense to secure the right block when it becomes available. This is especially true if it is a rare block in a location you don’t want to miss.
But even then, it is a calculated risk. The key is not to jump in blindly, you must have finance discussions underway and a realistic understanding of what comes next.
Structuring Your Budget Wisely
One of the best ways to stay on track is to think of your budget in layers. Start with your total budget, your borrowing capacity or savings, and then break it down:
- Land: As a rule of thumb, spend no more than 40–50 percent of your total budget here. If you overcommit on land, you will feel the pressure in every other stage.
- Build: Allow for the cost of the home itself, including the base price of your chosen design.
- Site costs: This is where many people come unstuck. Site preparation, slab upgrades, retaining walls, or dealing with overlays can easily add tens of thousands.
- Finishes and inclusions: Blinds, landscaping, fencing, driveways, and service connections are all essential for making your home livable but are often overlooked.
- Buffer: Leave space for unforeseen costs. Even with the best planning, surprises can arise.
Budgeting in this way gives you flexibility and ensures you do not sacrifice important elements of your build just to make the numbers work.
Commonly Forgotten Costs
We see many clients underestimate or forget about costs outside of the land and house contract. Some of the most common include:
- Council application fees and permits
- Bushfire or flood compliance upgrades
- Driveway and crossover costs
- Temporary fencing and site security
- Landscaping and outdoor works
- Window coverings, appliances, and finishing touches
By acknowledging these early, you avoid the “budget shock” that hits halfway through construction.
Already Own Land?
If you already own your block, the next best step is to organise finance clarity as soon as possible. Knowing your borrowing range allows us to work with you and your broker to design and cost a home that fits both your block and your budget.
This is also the stage where we review your land for potential challenges. If the site requires additional works, you want to know that upfront, not halfway through the process.
The Correct Sequence: Finance → Land → Builder
The safest and most reliable order to follow is simple:
- Finance: Secure pre-approval and know your borrowing power.
- Land: Search with confidence, knowing what you can afford.
- Builder: With both in place, we can guide you through design, costs, and construction.
This sequence minimises risk, avoids wasted time, and ensures every piece of the puzzle fits together.
Real Stories: What Happens When the Order is Wrong
We have seen many cases where people jumped into land first and regretted it. One family bought a block because it seemed like a bargain, only to later find it required major retaining walls and drainage works that pushed their build costs up by more than $60,000. With their finance already stretched, they had to scale back their design, which meant settling for a home they didn’t really want.
Another couple bought land before speaking to a broker, only to discover their combined borrowing power was lower than expected. By the time they came to us, they could not afford the home they had planned, and had to delay their build until they saved more.
Both situations could have been avoided with finance clarity first.
Final Advice
If you take only one thing away from this, let it be this: get the right advice early. Speak to a broker, know your borrowing power, and then find land that suits both your budget and your lifestyle goals. From there, engage a builder who can guide you through the realities of site costs, council requirements, and design options.
Building a home is one of the biggest financial and emotional decisions you will ever make. Do not gamble by guessing. Plan smart, take the steps in the right order, and set yourself up for success.
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