Important Financial Oversights to Avoid When Building a Home

If you've decided to build your own home, you've just opened yourself up to the freedom of choosing a home design that is built exactly to suit your lifestyle. But it's important that as you undertake the rewarding journey of building your own home, that you understand exactly the financial commitments you will be undertaking and understand how to avoid making costly financial oversights. These include:

Setting a Budget and Knowing What's Included

When it comes to choosing a builder and home package, all buyers need to have an idea of their budget and understand what their new home package includes in an itemised quote. Many final prices may not include certain fixtures, flooring and other details such as driveways so it is important to account for these if they are not included and read the fine print in the building contract. There are many other costs that may be associated with building a new home including land and site preparation costs to prepare for building, as well as soil testing and other building permits, not to mention legal conveyancing costs. To avoid a budget blowout, it's also always a smart idea leave an additional allowance in your budget for unforeseen costs or upgrades that you may later decide you must have. 

Don't Overcapitalise

It's important to build the right kind of home for the area. That means for a modest, outer city suburb, avoiding building a home of palatial proportions. Most people build a home, not only to live in themselves, but for a future investment, so it's important to build a home that's in line with the needs of buyers in the area. This might mean avoiding building too big, which could turn buyers away due to maintenance and upkeep costs. Avoiding spending too much building the home that may prove difficult to recoup in the future can also be prevented by speaking to local agents about buyer preferences in the area.

Understand Loan Repayments and Potential Mortgage Costs

When you build a new home it's likely you'll have to start making repayments before you can live in the home or rent it out if its an investment. This means that owners will likely have to account for paying rent as well as their mortgage while the property is being built. If money has been borrowed to purchase land, interest will also need to be paid on the land even if building has not yet commenced. Finally, for those borrowing more than 80 of the value of the property, lenders insurance will need to be accounted for. This can be paid in instalments or upfront, but is just another financial obligation that may need to be factored in when building or buying a new home.

For more information about building a new home, contact a company like Regent Homes.