Creating a realistic budget is an important task when you are building your single, double-story, or custom home. With a concise budget, you can adequately forecast costs and manage your expectations. In fact, a construction budget is the total sum of money required from the beginning of the project until project completion, including all associated costs along the home-building journey.
In this guide, we’ll provide an overview of how to budget for a new home build. We have pointed out what costs to plan for in your budget and given tips for creating a realistic budget.
Why a budget is important When it comes to building a new home, the last thing you need is to go over budget. Of all the mistakes to avoid during a new house build, building one that doesn’t fit within your budget is the biggest mistake that can occur.
We have seen dreams quickly become nightmares when people try to build houses that are wrong for their budget. Once you’ve planned an affordable budget to support your design plan, you can confidently meet with your new home builder or building cost estimator to plan further.
Choose the correct floor plan
Your house floor plan will significantly impact your budget, both during and after the building process. When building your home, you should know that you’ve got the right floor plan before any work is done. Last-minute changes to move walls or add rooms can be costly and exceed your budget. From the first design consultation, your architect, builder, and design team must know your budget. There is no point in becoming emotionally invested in a home that’s too large and then trying to cut costs to make it happen.
Look carefully at your builder’s quote
Hidden costs are every home builder’s fear. Unforeseen costs are extremely common and an unfortunate way to end up with a build that’s wrong for your budget. At LEXMO HOMES, we have two types of quotes. The first is Fixed price quotes, the entire cost of the building is agreed upon at a set price. This set price includes all building materials and profit that the contractor will make – as well as the labor hours. The fixed price that is agreed on and signed by the owner and contractor is all that will go towards the project. A cost-plus contract benefits both the contractor and the project owner. One example is flexibility, which allows work to begin before the complete scope of the project is decided.
Another significant advantage is that because project expenses are reimbursed, the contractor may focus on the quality of work and employing the best materials rather than worrying about material costs. This also prevents the contractor’s accountability for cost overruns (if they do not exceed a contract limit). And with profit being its own line item, speak with LEXMO to learn how much the contractor makes on the job is protected against unexpected expenses along the way.
Other costs apart from the contractor quote
Additionally, make sure you understand what is (and isn’t) included in your quote to ensure you have the budget for any fixtures, finishings, and landscaping to finish your project. In the event you are building a new house, it’s prudent to keep in mind the extra costs of your new house, such as furniture, heating, air conditioning, utilities and moving costs that you’ll need to cover.
Start the build only when you’re fully ready
First-home buyers can be itching to get into their new house, but if you rush into the process, mistakes can happen. By all means – organize and go forward with your plan. Give yourself time to research, talk to the right professionals, and make good, well-thought-out plans. If you feel overwhelmed, don’t ever feel pressured to start building before you are ready.
Search for the correct location
Where you build your house can have a significant impact on the building cost. Two houses that look the same on paper can cost different amounts based on their positioning on the land and access to the block. If you are picking a house design for a specific block of land, ensure the builder or designer has surveyed the land before settling on a price for your budget.
It’s prudent to have a buffer when you budget
Even the best-laid plans often have unexpected costs, no matter how thorough and detailed your builder is. We recommend you plan for a 10-20% budget buffer. This ensures you’re covered if you need more financing. Best case scenario – there’s extra money in your wallet for new home decor when you move in.
Start the build only when you’re fully ready
Choosing the wrong builder can quickly make your building dreams a nightmare. Working with a builder who doesn’t understand your budget, doesn’t care about your experience, or doesn’t come with sufficient experience are all ways to end up with a house that costs more than you ever planned.
In conclusion,
Most of the mistakes to avoid when building a new home can be thwarted by using a high-quality home builder. The builder you choose will dictate the quality of your home and your experience throughout the process. Remember that a wide range of factors influences a final building budget. Understanding these factors will go a long way in preventing disappointment and building a good working relationship with your builder.
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Why select LEXMO Homes for your next build?
LEXMO HOMES have immense experience in building various types of homes in Adelaide to suit budgets and realize the dream of owning a home to call your own. You can take the next step and realize your vision with the assistance of our expert team members, who are all highly experienced and have spent many years in the industry. At LEXMO HOMES, we are excited to be your preferred home builder.
