The Guide to Budgeting for Your New Home Build
Budget – the most important consideration, which often has the final say over every consequential decision, is often one of the hardest things to wrap your head around.
A construction budget is the total sum of money required from the beginning of the project until tools are down, including all associated costs along the home building journey.
Money sets a construction project in motion, whether a minor renovation or a build from scratch. Therefore, an effective budget should be suitable to include what you want from your new home and be realistically achievable. Once you’ve planned an affordable budget to support your build, you can confidently present your plans to your builder or building cost estimator who can prepare a specific costing plan, putting you one huge step closer to your new home.
Understanding how to create and manage a budget is one of the most important things to prepare for your build. A concise budget is the closest thing you can get to a clear plan to forecast costs, yet it is impossible to anticipate every single thing that you will need to swipe the credit card for along the way. Therefore, some wiggle room is essential, and comprehensive planning is required to ensure that things don’t get too out of hand, leaving you with money for the things that really matter.
Understand what goes into a home building budget
One general rule applies to every homeowner, whether they’ve built, bought, renovated, or demolished – don’t purchase more house than you can afford. A good way to guarantee this is to understand what goes into the cost of your new home.
While many builders and construction companies have their own cost indicators, the ‘real world’ cost will vary based on several factors.
This begins with the size and cost of the land and whittles down to the intricacies of your property design.
Most builders will charge per square metre, including materials and labour, and the price will vary based on whether you choose a project home, an architect-designed home, a luxury home, or a house and land package.
Aside from the cost of the land and the price your builder charges for the home design you choose, some potential extra costs include:
1. Site costs
Site costs comprise of all that is needed to prepare the land to host the home. This can include if you’re planning a knockdown rebuild, if the site needs clearance, soil testing, service connections, fences, retaining walls, plus the site survey.
2. Pre-start meeting costs
The pre-start meeting is when your plans are finalised and approved, and you’re ready to begin choosing your paint colours and fittings. This will allow you to change the design to include more individualised choices and upgrade to higher quality inclusions. Some of the elements you may wish to change in your pre-start meeting include electrical improvements, roof materials, tiling, kitchen cabinetry and fittings such as taps and shower-heads. Allowing some wriggle room in your budget for the pre-start decisions can result in creating a home perfectly suited to you.
Never heard of it? If you’re building a home in NSW, you’ll become very familiar with this acronym – standing for the building sustainability index. BASIX is the NSW’s Governments initiative to make homes more sustainable by reducing the impact of your electricity and water usage. The cost of your compliance will vary based on your land and build, but you will be required to meet minimum sustainability targets. Your builder will work with you to achieve this, and many have BASIX inclusions as part of their home build pricing.
4. Variation costs
Sometimes, people change their minds at the last minute, resulting in the need to make variations after the contracts are signed. These changes can be as significant as adding a deck or as minor as changing the tile style in your bathrooms. However, you should be prepared to fork out some cash to cover the variation fee and a mark-up on the variation’s cost. While variations are best avoided, if you choose to make them, having the money set aside will make things go smoother for both you and your builder.
5. The cost of finishing your home
Yep, unless you’ve chosen a turnkey package with the home ready to kick back and relax in, there may be extra costs involved with getting your home finished. This can include essential items such as carpeting, air conditioning, landscaping and paintwork, and practical things such as a clothesline, wheelie bins, a letterbox, a driveway, and fencing.
Make room for unique costs
There are rarely two builds that are the same, and you shouldn’t create your budget based on what your friend or even your next-door neighbour paid for their build.
Issues that can impact the cost of building your home include:
- The size of the project
- The simplicity or complexity of your design
- Market forces such as availability of materials and contractors
- If you have a sloping site
- If the site has poor access
- Poor foundations or difficult ground
- If rock excavation is needed
- Whether you need to perform demolition or clear the site
- If services need to be installed or are far from the mains line, such as water, sewer lines, electricity etc.
- Government requirements such as onsite rainwater storage
- Your location, i.e., the affluence of your suburb or your regionality
Ensure your budget is compatible with your design
When a budget is unrealistic, nobody wins. The customer is left disappointed, and the builder is left wishing they could make materials and labour grow on trees. This continues to be a common building issue within the construction industry throughout 2022.
In every design brief, there are factors you can change and others that are non-negotiable, and if you have budget concerns, the more flexibility you can have with your design, the better.
Building budgets are influenced by a wide range of things, many of which have the potential to leave you either raiding the piggy bank or enjoying some surprising extra cash.
Understanding these factors will go a long way in preventing disappointment, garnering a good relationship with your builder, and ensuring you’re in the ‘extra money’ camp and not the ‘raiding the piggy bank’ camp.
In summary, when deciding to build, there are a few essential steps you can take to have a better chance at financial success:
- Work out what guides your budget
- Examine your options
- Understand what your budget needs to include
- Secure pre-approval if using a loan to finance your build
- Understand what inclusions and exclusions apply
- Discuss your budget with your builder, and keep an open mind
To help nail down your budget even further, check out our blog with tips on building on a budget.
Seek Out a Trustworthy Home Builder
Even with all the information in front of you, it is ultimately impossible to plan the cost of building your home down to the dollar. Only your builder will understand what is impacting the industry and the cost of what needs to go into your build.
If you’re looking for experienced new home builders that you can trust to create your custom home from scratch, New South Homes brings together everyone from designers to builders to create high-quality homes under one vision.
Click here to read about our process, inclusions, resources, offers and more. Or, if you’re ready to get started on your build, call us on 02 9481 7441 or enquire online today.
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