Budgeting for Building a Home
Building your forever home is like crafting a life-sized dream, brick by brick, beam by beam. However, between Pinterest boards and paint swatches, budgeting for a custom build can feel like an overwhelming task.
Before you get lost in a labyrinth of spreadsheets, let’s untangle the cost monster and map out a budget that lets you build your dream home.
Why is a Custom Home Budget Important?
A custom home budget is essential. It presents all anticipated costs for your project in a clear format, such as permits, labour costs, taxes, cost of materials, and professional fees.
By outlining your finances, you can minimise the financial stress that comes with hidden costs and unexpected spending, which are amplified by an uncertain housing market. Overspending can put construction at a halt or mean making sacrifices with your project. On the other hand, underspending means you may end up building a home that isn’t designed to fit exactly what you want and need.
Determine Your Budget for Building a Home
Start by figuring out how much money you have available for your construction project. This includes savings, loans, or any other sources of funding. Be realistic about what you can afford. Consider factors like your income, existing debts, and any other financial obligations you may have.
When it comes to financing your new home build, it’s important to consider all your options carefully.
While a turnkey funding package may seem convenient, a construction loan can actually be more cost-effective for your overall budget. With a construction loan, you only pay interest on the funds that have been disbursed, which means you can save money on interest charges throughout the build. Plus, you have more control over the build process and can make changes along the way, which can help you save even more money in the long run.
Identify Your Priorities
Next, decide what features and elements are most important to you in your new home. Make a list of must-haves, nice-to-haves, and things you can do without.
Identify the features you want in your new home, such as the number of bedrooms and bathrooms, the type of flooring, appliances, and fixtures.
Research the cost of land in the area where you want to build your home. The cost of land can vary widely depending on the location and the size of the lot.
Prioritise your spending based on your list to ensure your budget aligns with your priorities.
Get Quotes from Building Companies
Reach out to different building companies to get cost estimates for your project. Be clear about your requirements and expectations. Compare quotes from multiple builders to get a sense of the cost range for your project.
Build in a Buffer
Contingency costs are an essential element of any custom home budget, acting as a safety net for unforeseen expenses such as material price fluctuations, weather delays and modifications to the original design. Unlike other budget allocations assigned to specific phases, this reserve fund remains untouched unless needed. Just like an insurance policy, it provides peace of mind and financial security during the building process.
Understand Your Obligations
When you decide to work with a building company, both you and the company will have specific obligations. Your obligations typically include making payments on time, providing clear communication, and making design decisions in a timely manner.
The building company’s obligations involve adhering to the agreed-upon timeline, providing quality work, and keeping you informed of progress and any issues.
Should I tell my builder my budget?
Yes, it’s generally a good idea to tell your builder your budget. Knowing your budget can help your builder recommend appropriate materials and design options that fit within your budget. It can also help your builder identify areas where you may be able to save money or where you may need to spend more to achieve your desired outcome.
However, it’s important to be honest about your budget and to stick to it. If you give your builder an unrealistic budget, it can lead to disappointment and frustration if your desired outcome cannot be achieved within that budget. Additionally, if you change your budget midway through the project, it can lead to delays and additional costs.
Monitor Your Budget
Throughout the construction process, keep a close eye on your budget. Track your expenses and payments to ensure they align with the agreed-upon budget.
Regularly communicate with your building company to address any concerns or changes that may affect the budget.
Remember, a well-planned budget is the cornerstone of a successful building project. By understanding your budget and working closely with your chosen building company, you’ll be better equipped to navigate the construction process smoothly and achieve your dream home without breaking the bank.
Seeking Professional Advice
Budgeting isn’t always a walk in the park, but it is necessary.
Working with Cambridge Homes means that instead of deciphering spreadsheets and negotiating with contractors, you can focus on the fun stuff, like picking out paint colours and dreaming about the perfect kitchen layout.
At Cambridge Homes, we’re experts in helping you through the intricacies of a custom home budget. We’ll work with you to create a comprehensive budget that accounts for every detail, from materials to labour to permits and unexpected expenses that may arise.
Get in touch today to see how we can help.