It can be tricky trying to work out what a realistic budget should be when you’re a first time builder.  And even if you have built before, each project is different and can produce its own surprises.  Setting a budget from the outset - and more importantly, sticking to it – is the best way to start your planning.

Budget for more than you expect

There is no set price for what it will cost to build a new home in Australia.  There are a lot of variables such as land size, your desired floorplan, and the level of inclusions both inside and outside the home.  The resale price of houses in the surrounding areas should also come into consideration when you are planning a budget for you build. 
 
What is true however, is that apart from the cost of the actual building, there are a lot of ‘hidden costs’, that if unknown will skyrocket your budget out of control.  Some of these extra costs you need to budget for are:
  • soil and contour tests
  • site costs (eg. tree removal, retaining walls)
  • driveways
  • landscaping
  • the slope of your land (generally, the bigger the slope the greater the cost)
  • bushfire rating
  • flood prone areas
  • wheelie bins (sometimes these need to be purchased from council)
  • lender’s mortgage insurance
  • interest repayments whilst the property is being built
 
It’s difficult to accurately estimate the hidden extra costs of building a home by yourself - your soil and contour surveys can change costs significantly - so it’s best to take advice from the experts for a close estimate of what your ‘extras’ will be.  It’s always a good idea to keep a ‘just in case’ buffer fund.

Saving benefits when building with a volume home builder

A project or volume builder can easily save a home buyer more than 50% compared to a similar home built by a custom builder.  Why?
  1. Due to the volume builder’s scale and level of standardisation they can procure trades and materials at substantial savings. 
  2. The upfront costs are also significantly less than building with a custom builder, because there are no architectural costs (often $25k-$50k) and there are limited costs associated with managing town planning approvals.
  3. Speed to build is far more rapid with a volume builder due to limited planning requirements and working off mostly standard plans, which means you’ll be in your home sooner therefore saving on paying both rent and interest on your loan
  4. Volume builders will have display homes you can walk through that give you a real life feel for what you’ll be buying; this helps you make clearer decisions on fittings and finishes that will ultimately save you money

Why it’s important to understand your building agreement

Before pressing the GO button be sure to thoroughly read and understand your building agreement.  There are some critical things to watch out for to safeguard yourself from being ‘bitten’ later on in the project:
  • Ensure all fittings, choices and inclusions are included in the contract
  • Commencement and completion date should be noted and agreed upon
  • Days for ‘delay’ should be reasonable
  • It should be clearly stated who is responsible for securing and paying planning and building permits
  • Be sure the appropriate building insurances are in place
  • Progress payments – how much and when – need to be clearly stated
  • The process for any variations to the contract need to be included
 
Documentation is king, and protects both owner and builder.  It helps the project run smoother and assists in the event of a dispute down the track.  If you do not understand something in your documentation it is best to seek the advice of a professional advisor to help you navigate what can become a minefield.

Top Tips to Save for a new home

Building a new home is probably the single largest financial decision you will make.  It’s therefore important to ensure you are budgeting correctly for its completion and have appropriate funds to manage the loan and maintenance of the property once you’ve moved in.
 
Saving for a new home looks different for everyone depending on financial situation, but these tips can help you move in sooner:
  • Set up a ‘home savings’ fund in a high interest account that you can’t easily withdraw from
  • Set aside a percentage of your salary every fortnight/month to automatically go into the savings account
  • Sell unwanted items around your home to raise some extra cash and declutter at the same time
  • Reduce your monthly spend, even by just one meal out or one new pair of shoes – put the money you would have otherwise spent into the home savings account
  • Revisit your insurances and utilities plans and see if you can get a better deal – any savings made should be automatically transferred to your home savings account

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