Property Development Tips – Home Building Loan Considerations

Whether you are building a brand new home or refurbishing and renovating an older one, financing the project can be a difficult challenge. So what are the main things to be thinking about when organizing your home building loan or mortgage

Before you start

Lenders will need to consider the risk of giving you money, they will need to understand what income and what outgoings you have in order to determine your ability to pay back the loan. They will want to know about your credit history as well as your present situation.

How to Estimate Home Building Cost

There are many factors that go into home building costs and it can be huge task to even come out with an estimate.

The quickest way to estimate home building costs is to find similar houses in the area that has the same overall look and size of one that you want to build. Then take the selling price, minus the cost of the land and you will have a rough and quick estimate of the construction cost. This is, of course not an exact science, but by following this basic rule you will be able to get a rough estimate.

If the house that you are comparing with was built a few years ago, then you should factor in the appreciation cost due to increase in the cost of labor and materials at between 2 to 5% per annum.

How to Minimise Your Home Building or Renovation Costs

So you’ve decided to build a new home or renovate  remodel an existing home, you’re on a budget, want to minimise your building costs and get the most value for your money.

The best time to save money is before you start building. Pre-planning and defining your home building or renovation project is a key factor in minimising your home building cost. Once you have employed and signed a contract with a home building contractor, the chances to save money on your home building cost is reduced significantly.

You will never get all the details of any building project 100% perfectly planned before you start, however you can certainly remove many unknowns and have a chance to minimise the home building cost.

Creating Your Home Building Contract – An Owner-Builder Negotiation

You are on you way to building your new home or, more accurately, having it built for you. You assembled your list of candidate builders and narrowed the field to just 3-5 builders by running your own background checks on them. You interviewed the remaining candidates, then selected the builder with whom you intend to work. Checking his references convinced you that he’s the general contractor you want to be in charge of building your new home.

Now it is time to enter into a contract with your builder.

Take an active role in creating your contract with your builder. It is a collaborative process that will set the tone for your relationship as builder and owner. It can seem somewhat adversarial and feel a bit uncomfortable at times, but if both parties pursue contract creation with the attitude that you really do want to work together, tension and unnecessary conflict can be avoided.

Home Building Terms – Custom Builder and Tract Builder

Researching building a new home Before you start the home building process, familiarize yourself with home construction terms. Residential construction can be categorized into two groups, custom builders and tract builders. Other than building homes for people to live in, these two groups couldn’t be more different. Residential construction can be categorized into two groups, custom builders and tract builders. Other than building homes for people to live in, these two groups couldn’t be more different.