It is always a problem sticking to a budget when building, but if you are borrowing money or have a limited budget then it is extremely important to control your spending.
A Little More Here …
It is tempting to spend just a little more here, to upgrade this and that.
Of course if you plan to live in your new home for a few years then the cost is not quite as important, but it does add to your mortgage and therefore you need to repay the loan with interest – so the cost can be more than just the immediate cost of the item/s.
Slow down and think before you commit to changes.
Budget When Building
In life we often have to think about cost and budget, but when you take on a major project like building a home then you really do need to be careful with the spending in all aspects of the build and the finance too.
When you need finance from a bank or non-bank lender to help pay for your new build the lender will almost always want a fixed price contract for thr build as this reduces the risk of costs blowing out. Within some fixed price contracts there are pc-sums which leave things open for some price differentials, but these are generally only used for the parts of the build that have unknown costs, or those where you (as the client) may want to have the flexibility to add things – like electrical.
Building Contracts Give Certainty
When you buy a house and land package the build is typically provided with a fixed price contract which gives you certainty.
But there are different types of building contracts and within those contracts there can be variables.
Bankers typically never question a building contract, but you should always talk to a mortgage broker and a solicitor to help you review the contract. The mortgage broker is not going to be an expert on the legal issues, but a good mortgage broker will have a lot of experience with new build finance and therefore can point out some clauses within the build contract that needs extra care.
My name is Stuart Wills and as an experienced mortgage broker and someone that has recently built a new home I am a person that should be able to help you both with the concept of building and the new build finance.
