Set your Budget
The second step to building your dream home is setting your budget.
Designed by Alexandra Loew
Consider how much you can afford based on your finances and borrowing potential.
Research the area you are buying for the average property prices per square meter. Speak to estate agents or search property listings online.
Work out the maximum square area of your dream home by dividing your available funds by the average property price per square meter, less the cost of the land.
Include a 20% contingency to cover the cost of unexpected events. This is not the same as using it to pay for increasing the size or design specification of your home.
The actual cost of building your dream home will depend on a host of factors but this exercise will help you concentrate on your return on investment and how far your current finances can stretch.
A way of estimating the land value is to work backwards from the end value of your final dream home based on market research. Using this, the land value should not be more that 30% of the end value of your home.
The other fees that need to be factored into your budget include design, permits, legal, survey and mortgage fees.
Speak to specialist mortgage advisers and your architect for guidance.
Establish your cash flow especially if using valuation-based mortgages where funds are released in stages.
Design to your budget and avoid negative equity. Even for a passion project as your dream home, it is important not to get carried away.