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Budgeting For A Self Build Project
Building your own home can be one of the most rewarding yet testing ventures of your life. One of the most common issues which blight many a self build is poor control of the budget which can result in frightening overruns on costs. For many embarking on such a venture will often mean risking just about everything they have. Even if it doesn’t mean risking everything it will usually involve the sort of figures which make most people at least a little sweaty under the collar. Fail to plan and plan to fail. It’s often said but often ignored. There can be nothing worse than finally getting to build your dream home only to become financially stretched in the process.
Before starting any self-build project you need to get serious about costs. Price up as much as you can and be very realistic about time-scales. You need to look at what money you have to hand and what is coming from other sources. Once you begin setting out plans make sure you stick closely to them and avoid costly changes of direction once building is underway. Your budget will need to reflect the true costs of materials and labour in the location you are building. It’s also wise to set aside up to 15% for the unforeseen issues which nearly always arise. If you’ve maxed out your available sources of funding there may be little room to get extra money at a later date. It should go without saying but make sure any loans you take out for the build come with competitive rates of interest.
Keeping track of your cash is the key to self-build. It’s not a given that lenders will release cash as and when you need it. Often you will need to fund large portions of the build until money is released by your lenders. On a standard arrears stage payment mortgage this may mean paying for everything including the foundations and fundamental construction work before you see anyone else’s money flowing into the project. An advance stage payment self-build mortgage is an alternative worth exploring which can provide money in advance of each stage of your build. This will often mean more upfront cash to help you buy the land and the provision of funds to get building underway.
Stamp duty is should not be forgotten when self-building. It’s always worth checking out the most up to date charges but currently plots under £125,000 are free of any duty which is a nice little saving worth £1,250. If your plans are to build a Passive House you could also save on stamp duty for builds on plots up to £500,000. The house can also be sold on without the new owner having to pay stamp duty either. Don’t forget there are always costs involved in selling your old house along with the inevitable fees from Solicitors, Estate Agents and Removals Companies. Particularly if selling your old house comes at the end of the project make sure you still have something in the kitty to meet the costs.