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Building a home – Budgeting for hidden costs

building-costsWhen it comes to home ownership, building a home is a little different to simply buying one. There are a lot of comparable aspects to take into consideration like a suitable design and builder to work with your needs.
Value for money is one of the most important things, so do your homework, and choose wisely.

But value doesn’t necessarily mean ‘price’. Time is also money, and locking in a builder that understands that you want the quality to reflect their price should be your initial area of focus.

Oftentimes you will hear about how builders didn’t include a list of ‘hidden costs’ in their quote. Being aware that there is almost always going to be hidden costs is paramount, in which you should ensure your budget will allow for. Nasty surprises are the last thing anyone wants, so a bit of prior education is the best thing for you as a prospective builder.

Two important things to know are:

  1. Your budget restrictions, and
  2. Attaining all the correct and accurate information needed to weigh up options and make decisions.

What is the absolute maximum price you can afford?

Set a budget, and stick with it! This is one of the most crucial and disciplinary elements of building a home. Almost every party you will be dealing with in the building process will be asking what your budget is, so you need to be prepared to provide an exact figure. Without a set figure in mind, looking at home designs you can’t afford is a waste of everybody’s time. Unfortunately this may lead to the realisation that you might not be able to afford that dream home that you had in mind, however it’s important to keep finances under control from the get-go.

Find out what the different price types mean

Something you’ll figure out very quickly in this game is that there will be all types of property jargon being thrown around in front of you. Understanding the terms will assist you with making well-informed decisions at critical stages of the process.

So, what’s a base price?

Most builders will quote you what is called a base price, however it’s in your best interest to use this as a mere guide, as it’s almost impossible to build any home for the base price. While it’s great to have a base figure to go off, it generally only includes a percentage of what it’s actually going to end up costing you. Two of the biggest costs that this usually excludes are:

– Site costs – to prepare the land prior to starting the build.
– BASIX – The energy efficiency rating of your home which must be complied with.

Price per SQM

It may sound good, but this is an alternate quoting method which is basically a base price as well. Quality and inclusions are often left out of the SQM price too.

Inclusions

It’s relatively easy to compare prices with all different builders, but what you should be looking at more carefully is what’s specifically included. Always compare the quality of work included in each quote in conjunction with the price. Careful attention should be paid to the areas that are going to ‘complete’ your home like fittings, fixtures and appliances. Particulars that you desire must be included in the price so they don’t become ‘extras’ later on.

Go with your gut feeling when selecting a builder, never solely basing your decision on the price on paper. Don’t go with the cheapest option to save a few bucks now, as this could end up costing you more in both the near, and distant future.