The question "How they can save money building their new home?" is one of the questions that we get asked the most frequently by our customers.
It should come as no surprise that a lot of our clients are interested in learning about these pointers, given the precarious state the economy is in right now and the reluctance of banks to make loans for the construction of new homes.
Not all that long ago, financial institutions were essentially "giving" out loans to virtually anyone who asked for one. The size of the loans available led to the construction of larger, more extravagant, and more expensive homes.
We are all aware of the conclusion to that tale! The high costs associated with building a new home have made it less likely that banks will provide funding for the construction of new homes in today's market.
The good news is that our clients are now more knowledgeable, savvier, and more likely to build homes that are smaller, more environmentally friendly, and more affordably priced.
If you have your heart set on constructing a new house, there are a lot of things you can do to keep the costs under control.
This will increase the likelihood that banks will provide funding for the construction of your new home.
As a result of increased competition among manufacturers for customers, the prices of many products used in the construction of homes, including drywall, flooring, and shingles, have dropped dramatically in recent years. Check out our extensive range of home designs at Hitch Constructions.
Set a realistic budget
The thrill of constructing a brand-new house can make it simple to lose focus and get sidetracked. It is highly likely that you have put in a lot of effort to save up for the deposit and get your finances in order, which is fantastic.
Be aware, however, of the additional expenses that come along with constructing a new home, such as stamp duty, conveyancing, council/utility rates, and mortgage insurance. These costs can add up quickly (if necessary). Be sure to take into account all of these costs right from the beginning to prevent unpleasant surprises later on.
When it comes to reducing overall expenses, the construction process itself may offer the greatest potential savings.
If you do the math, the rate at which something is built can result in significant cost savings, in comparison to simply selecting a different set of materials.
Choosing to construct something in a shorter amount of time will typically incur additional costs, which ought to be weighed against the holding costs for the property in the event that you go with the longer option.
Calculating the interest payments on the parcel of land, the longer period of time without a rental income if you intend to rent out the house once it is finished, or the rental payments on the house you're staying in while your new home is being built is one way to accomplish this goal.
If you could complete the construction of a house in ten days with a faster build at a cost of $5,000 more, but your overhead expenses for the slower build were going to be $1,000 per day, that means it would have cost you $5,000 just to hold the property for that extra time, so it's a no-brainer to go with the faster option.
Keep the design simple
If you want to save time and money, choose a design that is straightforward rather than intricate. A straightforward layout is typically one that is rectangular or square in shape and that features some kind of open-plan living arrangement (fewer internal walls are required).
As a cost-cutting measure, the majority of home builders offer a selection of straightforward "off-the-plan" layouts.
Render the exterior
There's a good reason why rendered exterior walls are becoming increasingly common in today's housing stock: rendering is one of the least expensive ways to spruce up the exterior of a house.
Renders and lightweight foams are not only lightweight but also go up rapidly, which means that labour costs can be kept to a minimum while still maintaining a high level of cost efficiency in the materials themselves.
The disadvantage is that there are now so many properties being rendered that they are no longer unique. This means that although the render will almost certainly save you money, it might not necessarily add value.
Don’t skimp on kitchens and bathrooms
When it comes to selecting fixtures, fittings, and materials for your kitchens and bathrooms, it is not difficult to find options that are extremely affordable.
If you do not intend to live in the house indefinitely, you should think about the preferences of potential future buyers before making any major changes. Not all prospective buyers will be willing to invest in post-purchase renovations.
It is better to spend a little bit more and display a product that people will love than it is to display a product that people will look at and think, "I can't wait to rip that out."
Kitchens and bathrooms are the most expensive rooms in the house to renovate in terms of the cost, so it is better to spend a little bit more and display a product that people will love.
Choose a Forgiving Aesthetic
When it comes to finishing your home, choosing an aesthetic that is either "industrial" or "rustic" can be incredibly forgiving. More specifically, you can leave some projects unfinished, and the end result will still look like it has a purpose.
For instance, we decided to go with concrete flooring because it looks great with the low-key "industrial" vibe that we were going for.
In point of fact, only one-third of our concrete flooring has been coloured, and we may decide to finish the rest of the floors without colouring them in any particular way.
We also constructed a loft area with stairs so that we could sleep on the second level, but we decided against drywalling the underside of the loft.
This allowed us to sleep comfortably on the upper level. Instead of having the stairs finished, we decided to keep them in their unfinished state, which included using raw wood and plywood.
They have not been altered in any way from their original construction; the only change is a coating of paint. The unfinished wood has a "rustic" appearance, and when combined with the other elements of our house, the overall aesthetic can be described as having a "rustic industrial" flavour.
Last but not least, because the look we were going for was so simple, we had the freedom to construct our kitchen out of cinder blocks and butcher block, and then we added inexpensive open shelving to the walls.
Cinder blocks are not exactly the standard fare when it comes to the construction of kitchens; however, the materials were inexpensive, and the end result was precisely what we had in mind.
Buy a block that’s ready to build on
The preparation of the site is a step that, particularly in the case of first-time home builders, is frequently neglected. You need to make sure that the piece of land you choose is level, simple to get to, devoid of trees, and already connected to the utilities at the street level.
Additionally, stay away from sloped blocks as well as soil that is rocky or highly reactive. Before purchasing a block, it is important to get the advice of a professional because there are many complexities involved in the process of site preparation.
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Do the Work Yourself
Because of your willingness to take on certain responsibilities, we were able to save money. For example, we put together our own kitchen, installed our own sinks and toilet, and dyed a portion of the concrete flooring ourselves.
We intend to instal additional lighting in areas where the contractors ran wire but didn't add fixtures, and we also intend to eventually finish our shower, despite the fact that it is functional and waterproof, it is not yet considered a "finished" product.
The addition of thousands of dollars to our spending plan would have been necessary if we had hired professionals to assemble our kitchen and instal its fixtures.
While it’s occasionally been a frustrating and time-consuming process learning how to take on some of these tasks, it’s also been rewarding, and it’s brought us closer to our home.
That said, take on every project yourself. Hire a professional to run the wire and lay the pipe unless you have a significant amount of experience working with electrical systems or plumbing.
The last thing you want is to be responsible for damaging your home by flooding it or setting it on fire because the utilities weren't set up properly.
Compromise a little on fittings and materials
If you are working with a strict financial constraint, you do not need to rush out and purchase the highest-quality fixtures and components right away.
It is sometimes a good idea to begin a renovation project by purchasing quality mid-range floor coverings and kitchen appliances.
This is especially true if doing so will prevent you from having to borrow additional funds. Before you sign off on the project, have a conversation with your builder to determine where reasonable savings can be made regarding the fittings and materials.
Source Materials When Possible
Discuss the possibility of sourcing your own materials with your contractor. When purchasing materials in large quantities, such as lumber and paint, the general contractor and the subcontractors may be able to secure more favourable pricing. In other circumstances, on the other hand, it makes more sense to do your own research and purchase items that are less expensive but are still of high quality on your own. For instance, our contractor was going to purchase a water heater for $850, but we were able to find a comparable model for only $350.
This saved us a significant amount of money. We did not bundle it with any other purchase and had our contractor put it in.
In general, source new materials rather than pre-owned ones; however, this recommendation is conditional on the specific item that you are looking at.
For instance, go ahead and purchase a new water heater or air conditioner from a retailer such as Amazon or Home Depot, but think about doing your shopping for used flooring, cabinetry, or light fixtures on Craigslist (or even eBay).
Find out when they are receiving donations and whether there is a location in your region by inquiring about it. In addition to other essentials for the home, the majority of the products sold in these kinds of shops are brand-new and of the highest possible quality.
Examples of such goods include doors, windows, toilets, and light fixtures. In addition to this, they sometimes take contributions of objects that were previously owned by someone else.
It's a little hit or miss, but you might be able to acquire some very nice components, such as granite countertops or stainless steel appliances, at a considerable discount.
Quality of materials
When it comes to the majority of building materials, you definitely get what you pay for.
You can cut down on the overall cost of construction by opting for less expensive materials that are still capable of carrying out the same functions as their more pricey counterparts. Nevertheless, in many instances, there will be a discernible difference in quality.
Polishing a concrete floor is an option that can be very cost-effective, but it is not one that will necessarily complement the style of every house.
Carpeting and wooden flooring both come in a variety of options at varying price points; the one you choose will depend on how much of a quality sacrifice you are willing to make.
The same holds true for hardwood flooring: the more money you spend, the better quality the carpets will be, and the nicer they will look. The same is true of hardwood flooring.
Salvage Materials for Reuse
Make use of whatever you have and in whatever way you can. We were able to make use of the studs that were already in place because we salvaged an entire barn and designed our layout around the tack room that it contained.
We kept the sliding barn doors so that we could either sell them or use them in another capacity, and we used the leftover lumber to construct wooden slats for the shelving in our cinder block kitchen.
Waste materials from construction projects are frequently recyclable and reusable in a variety of other applications and contexts.
Use your imagination, and before you and your contractor both have the opportunity to sort through the scraps, don't let the former owner throw them away. You shouldn't become a hoarder and keep everything, but at the same time, you shouldn't just throw away materials that are of good quality.
Consider a house and land package
Building a new home with the help of a turnkey house and land package is typically a method that is both economical and uncomplicated.
The house will be more affordable, the stamp duty will be lower (provided that it hasn't been built yet), and there will be more certainty regarding the costs of site preparation. In most cases, a high-quality house and land package will come with a comprehensive list of included extras, each of which may result in cost reductions.
Check your eligibility for stamp duty concessions and grants
Concessions on stamp duty are made available to individuals who are purchasing their first home in a number of states and territories across Australia. These states and territories include New South Wales, Victoria, Queensland, Western Australia, and the Australian Capital Territory.
The First Home Owner Grant (FHOG), which is an initiative of the Australian federal government, is also available to eligible first-time homebuyers in every state and territory of the country. Your ideal home can become a reality when you work with HP Constructions because we offer the most comprehensive selection of high-quality home constructions.
Get Several Bids and Select a Contractor Wisely
Unfortuitously, it took us about 18 months to finally get started on the construction of our new home. The fact that the first three bids we received were completely unreasonable was one of the factors that contributed to the delay.
The first contractor we worked with wouldn't even bother to listen to what we wanted and was constantly pushing us to go over our budget. The second contractor gave off an impression of being reasonable, and we even went back to him in an attempt to negotiate a lower price; however, the end result was still too high for us to consider.
When we finally got the bid from our third contractor, we were on the verge of giving up and moving into an apartment complex. It fulfilled all of our requirements at a price that was within our budget.
Not to mention the fact that we liked the guy, and it appeared as though he respected our desire to maintain a low cost of operation.
It's not a good idea to blindly follow the advice of the first person you talk to. Always seek out multiple bids to ensure that you are getting the best possible deal, even if you adore a specific contractor, even if you get along well and seem to understand one another, and even if you are friends with the person – in fact, especially if you are friends with the person – in order to guarantee that you are getting the best possible deal.
After you have received a few bids that you are satisfied with, it is time to look for references. Ask the contractor for the names of former customers, and once you have those names, do some independent investigating by asking those customers if they know of any others who would recommend the contractor.
Because contractors are going to provide you with the most glowing references possible, it is in your best interest to ask additional people about the person you are going to be working with in order to get a complete picture of who they are.
You won't just lose money due to the purchase price of the house, either. Imagine for a moment that the contractors dither around or fail to effectively manage the subcontractors.
If this is the case, you may end up paying additional money to correct mistakes or living in your current home for a longer period of time while the construction drags on. Both of these options will cost additional money.
The objective is to locate a reliable and cost-effective contractor whose work can be relied upon and who is able to keep to the schedule that was promised.
Seek transparency in your builder
You will be required to sign a legally binding contract before the construction can begin. This contract will outline the rights and responsibilities of the consumer (that is, you) as well as those of the builder.
When constructing a new home, a reputable builder will always be transparent about the total cost of the project. We encourage open communication from the very beginning and provide our customers with contracts that have transparently priced fixed rates.
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Other Ways to Save Money When Building Your Dream House
There are still a number of straightforward methods available to you that will allow you to save thousands of dollars throughout the process. Who knows, maybe you'll even be able to put enough money aside for that luxurious spa bath!
- It is imperative that you do not take out two mortgages and that you ensure your current home has been sold before beginning construction on your new home. This course of action will save you thousands of dollars in the long run, regardless of whether or not it requires you to rent a home during the construction phase.
- Always attempt to negotiate a lower price for the purchase of your land, and make an offer that is lower than the asking price. The owner has no choice but to decline.
- Before deciding on a builder, you need to make certain that you have done some research on the available options and checked to see if any of them have the necessary certification and insurance. Ask the builder for references, but don't stop there; also ask family or friends, and look at their social media or business websites. It is essential that you never pay a contractor in full before the completion of the contract and the work they were hired to do.
- Look through our extensive collection of no-cost house plans that are available online to save a tonne of money on architect fees. Even if you can't find anything in particular that appeals to you, you can still use our Internal Design Service (IDS) to design the home of your dreams according to your exact requirements.
- Take out the unnecessary features that are driving up the cost. Cathedral ceilings, multi-level pitched roofs, ornate cornices, and fancy windows can add tens of thousands of dollars to the total; opting instead for a standard ceiling, energy-saving window frames, plain plasterwork, and a single level of the roofing will result in a price difference that will astound you. Even if you want to keep some of the more fancy features, there are other simple ways to cut the price, but ultimately, that choice is up to the individual.
- You should try to source any fittings that aren't included in your kit home on your own, but you should remember to always double-check the suitability of the fittings beforehand with your builder. You wouldn't want to order the wrong type of lights for your electrical system, would you?
- Never settle for the first price quote you receive for anything, whether you're looking for plumbing, electrical, painting, or carpet laying services. It is unquestionably in one's best interest to do some comparison shopping in order to locate the most cost-effective option.
Now that you have these pointers, let's get started on constructing your dream home while saving some money in the process. All the ways you can cut costs while still constructing your dream house are outlined above.
FAQs About Home Construction
Which option—buying or building—results in a lower overall cost? The short answer is it's often cheaper to buy a block of land and then build a home on it, compared to buying an established property.
If you plan to purchase a home with the assistance of a mortgage, it is a good idea to set aside at least 25 percent of the home's purchase price in cash in order to pay for the down payment, as well as any closing costs and moving expenses. Therefore, if you purchase a home that costs $250,000, you may end up spending more than $60,000 to cover the various costs associated with the purchase of the home.
In most cases, the price of a new construction will decrease after it has been purchased, much like the price of a car. This is due to the fact that newly constructed homes typically come with a premium price tag that is not typical for the surrounding area. As a result, these prices tend to decrease before they increase, which means that it may take some time before you start to see any equity in your property.
The moment you turn the key in the door of a newly constructed home or apartment, the value of the property will begin to decrease, just like it would with a brand-new automobile. If you buy a newly constructed home and then have to sell it within a year or two, it's possible that you won't get your money back even if the market for real estate is going up.
Even though it is common for the initial costs of constructing a home to be higher, there is a possibility that you will quickly recoup those costs and experience a larger return over the course of the project. There is no need for expensive repairs for the appliances, updates, or remodelling when you build a house yourself. The vast majority of houses are constructed in more recent neighbourhoods that are extremely desirable.