Five Things to Consider When Budgeting Your New Home Build
One of the most important stages in planning your next home build is to consider a budget for your project. Here are five things to consider in preparing a budget that will help you in picking the right home plans.
1. Mortgage: If you are considering a budget for your project it probably means you are needing to borrow money for your build. While the banking institutions may have learned a lesson by their reckless lending practices that lead to the housing crash of the last decade, part of the blame was on those borrowing the money. Take time to make a budget for all the expenses in your life, factor in utilities, car expenses, schooling, clothing, entertainment, strata fees, insurance, and whatever you can think of. The bank may say you can borrow a certain amount of money, but when you factor in these other expenses you may find that making the payments means you will have to work so much you will never have time to enjoy your new home. In recent years young couples or families starting out have come to expect a level of comfort that in previous generations took decades to achieve. Take time to determine a low end and a high end to what you can reasonably borrow and make payments on and then stay within that range.
2. Property: The cost of property is a major cost in the construction of a new home. In many communities as property becomes more scarce subdivisions are popping up in areas where the conditions are less than ideal. Make sure you consider all the possible costs connected with your property and include these in your construction budget. These extra costs may include bring site services such as electricity, natural gas, water, and sewer to your home. Some properties require retaining walls, geotechnical analysis, riparian studies, landscaping, sceptic fields, blasting, or land infill that can drive up the cost of the project by tens of thousands of dollars. If you have not yet purchased your property make sure to do careful investigation into any extra costs.
3. Furnishings & Finishes: It is one thing to build a new home, it is another thing to live in it. An all too common scenario is when the home reaches the final stages of the project compromises start having to be made on finishes and furnishings. Allow a buffer in your budgeting for unexpected costs that may come along during construction. If you end up not needing to use the buffer you will either have to borrow less or you will have more money for finishing upgrades. Also, take a good long look at your furniture and determine ahead of time what needs replacement. A new home will usually have more room that needs to be filled with furniture, artwork, and at times the old sofa that fit so well before just doesn’t make the cut.
4. Upkeep: All home require upkeep, almost from the day you move in there are lawns to mow, walls to touch up, and fees to pay. Ensure that you allow money in your budget for upkeep of the home, or when choosing building materials spend a little extra for materials with a longer maintenance free life. Consider using energy efficient windows, appliances, and lighting. Add extra insulation or upgrade to better flooring or exterior cladding to add life to your home.
5. Timing: In real estate and new construction, timing is very important both in when you buy or build and how much time you allow yourself for planning a project. Avoid getting into the housing market or taking on extra mortgage payments when prices are at all-time highs. If you are selling a home during a boom make sure you plan your re-entry into the market so that you don’t lose equity. Selling when the market is low can work for you if you buy back in the same low market. In may place it is the price of property that drives the drastic ups and downs in the market, construction costs generally take longer to go up and down. Give yourself ample time to plan out your project and factor in all the costs. When people plan poorly they end up paying higher prices or having to hire a contractor because he is available and not because he is the first choice.
These are just some of the things to consider when preparing a budget for your new home. Remember, bigger is not always better, and some of the most expensive homes in the world sit empty most of the time. It is often the course of wisdom to go slightly smaller in size with your home plans then to push yourself to the limits and find you cannot afford the finished product. Take the time to consider your budget and you will certainly be happy with the end result.
