Building a new home is an exciting experience, but it can also be overwhelming at times too. So, knowing how much your dream home will cost in the long run can help you modify your plans to meet your budget to ensure your dreams become a reality.
What you see is not always what you get; the real cost of building a new home may be far greater than you think. Hidden costs are not always as obvious as you think and sometimes only come to light after the plans are drawn and the contracts are signed.
But don’t let this deter you. Here are a few things to keep in mind while you take the next steps to securing your great Australian dream.
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Check the advertised price
Prices advertised are usually base-rate house prices. From here you can choose additional upgrades and features – at a cost. The best thing to do is create a list of everything you expect to be included and go through it with your builder. This will make you aware of anything you might be out of pocket for.
To help with your budgeting, check with your builder about which of the following items are included in the price you’ve been quoted for:
- Excavation and drainage
- Earthworks, retaining walls and certain site works
- Floor Finishes (e.g. carpet, tiles or floorboards)
- Heating and Cooling
- Anything Customised (i.e. stainless steel balustrades, larger than normal windows, customised wiring)
- Kitchen cabinets, bench tops, sinks and appliances
- Fencing, driveways and landscaping
Useful tip: Once you’ve chosen a builder, make sure the quote you received is still valid. With fluctuations in the price of building materials, quotes are usually only valid for 30-45 days.
Check who owns your house plan
You can employ a building designer, architect or builder who offers a design service to draw the design for you. But before employing an expert, you should discuss the cost of the design service and who gets to keep the final design copyright. If you plan to build again using the same design, you might need to retain copyright of the plans.
Check your building permits have been approved
Building permits are the documents that signify a building surveyor has approved work prior to its commencement – this includes most alterations, demolitions and removals.
Useful tip: A soil test is a must prior to building on your block. Make sure a certified engineer conducts the test.
Watch out for site costs
It isn’t unusual for site costs to quickly add up to a significant amount. On most occasions it is often an overlooked expense too.
Site costs range from the obvious essentials like connections between the house to water, sewer and electricity utilities to comply with federal, state and local government legislation. These fees will also cover access to a difficult block.
Useful tip: Don’t forget that you also usually need to pay utility connection, reconnection, registration or transfer fees for electricity, gas, telephone and water.
Know what home loan fees to expect
When choosing a home loan it’s important to look into a variety of mortgage packages and study the extra fees that apply to each home loan product.
Look out for home loans with no application fees – home loans with none or lower upfront fees may have higher ongoing interest rates or may not have all the features you need.
Know your Government fees and stamp duty
A number of Government fees will apply, including registration and other government taxes. Also look into the stamp duty rates you can expect to pay as these will vary from state to state.
When building a new home, you’ll only pay stamp duty on the land, which means it’ll be considerably less than what you’d pay on an established house – and ultimately mean a huge saving on your final cost.
For more information on stamp duty applicable in your state (if at all) and government fees – visit your State Government website or speak to your financial adviser.
Know what legal fees to expect
Fees will vary between solicitors and conveyancers as there is no official charge for conveyancing. In addition to a legal service fee you will usually be charged for ‘disbursements’. Before the conveyancer or solicitor starts work, it’s important you have a realistic idea of how much it’s going to cost. The best way to do this is to ask for an itemised statement of the likely costs.
Decide who’s going to do the moving
Whether you decide to do this yourself or get the professionals in, moving into your new home could be another hidden expense you didn’t expect. If you decide to get a company to do the work for you, ask friends or relatives who have moved recently if they have any recommendations.
Building a new home is a very exciting and fun time. Just make sure you are aware of all of the expenses associated with your new home and be prepared. Best of luck!