Every year people decide to build their own homes and this practise is becoming more popular. It might be the thought of being able to build your dream home to your exact specifications, the idea of enjoying a home you have built with your own hands, or the realisation that you can make a good profit when you want to sell it that attracts you. However, there are several financial considerations when it comes to building your own home and you should think these seven things through before you sign on the dotted line.
How Much Work Do You Want to Do?
There is a massive difference in cost between whether you want to get your hands dirty and build the property brick by brick yourself or whether you want to be more hands-off and leave the work to the builders and the project manager. There is no right or wrong way to answer this question, but you should probably decide what you want to do before you start asking the builders to quote you.
How Much Time Could You Lose?
If you want to do some of the work yourself, you should consider how much time it will take you. If you will need to take time off work to complete the project, then you will need to factor this into the overall cost along with the cost of materials. Depending on your salary it might be cheaper to get some of the building work done for you rather than having to do it all on your own.
Hidden Extras
There are always hidden extras that come with building your own home, whether that is the cost of materials or labour or even additions that you want to make to your home.
When you plan your budget, you should work out all your costs perfectly and make sure that you have not forgotten anything. For example, you may have a budget for solicitor’s surveys, but have you factored in surveys such as your topographical survey, which you will need in order to get planning permission? Arbtech’s topographical surveys are carried out quickly and cheaply and they take full ownership of the survey once it is completed but you will still need to factor it into your overall cost.
The best way to work out the hidden cost is to add about 25% to the quote you have chosen. That way if you get any unexpected bills or change your mind about some of the work, you will have the money to pay for it without struggling or borrowing more. You can always pay it back if you don’t use it.
Where Will You Live While the Property Is Being Built?
This can be an expensive consideration. For example, if you need to stay in a hotel for a few months and put all your belongings into storage then the costs can add up quickly. However, if you have friends or relatives that you and your belongings can move in with, it is not likely to cost you much.
Many people have a contingency plan for their accommodation needs. It could be that you have to sleep in a hotel until you have finished the first section and can live in one of the rooms. You might decide to stay with friends or family but take regular trips away so that you don’t overstay your welcome at any one time. Whatever you decide will have to be paid for.
Mortgage Repayments
If you have taken out a mortgage to build your home, then the money is usually released to you in tranches as you complete each section. That means that you will quickly need to start paying a mortgage and you will need to consider this cost and factor it into your budget.
Many people sell their existing homes to build new ones and make alternative living arrangements while they are building. Other people might remortgage their existing property to get their building project off the ground. This means that your mortgage will go up on your own home as well as on the one you are building as the work progresses.
Another issue you need to factor into your budget is how much money you might be paying in bills before the project is complete. Once the property has electricity and lighting you will be liable for another bill. This is usually the point where internal work can start so the bills might get quite expensive for a while.
Your Resilience
Building your own home can be more stressful than you think and how you cope with that stress could cost you money. Having to pay for things you have not budgeted for can be stressful. To combat this, plan the whole project and work out the costing before you start. The better you plan, the less likely you are to get any nasty shocks and it will prevent you from feeling quite so stressed as the process goes on.
Potential Profit
When starting a big project, it can help you to feel less overwhelmed if you focus on the end result. It might be that you decide to sell the property as soon as it is built, and you are building with the idea of having a lump sum once you sell it to spend on something else.
It might be that you intend to live in the property forever and not realise your investment. However, you will probably make money as your home will go up in value. You could use the increase to shop around for a better mortgage and save yourself some money.
These are all important financial considerations when you are planning to build your own home. Make sure you have enough money to complete this project and that you don’t get stuck partway through because you have failed to consider all your expenses. Keep your eyes on the final prize and, hopefully, any sacrifice will be worth the reward.
