There have been lots of television programs on over the years where different couples, individuals and families buy some land and then build their own home. It can look like a lot of fun and a big achievement to be able to plan a property to your own specifications and to have control over it. It could also be really great to be able to show off the house that you have had built to your friends and family. However, most of the people in these shows end up struggling with the cost of things and running out of money. This can be avoided though if you plan your finances properly and make sure that you can afford it before you start.
Add up the Cost of Everything
It is a good idea to start by adding up the costs so that you know exactly how much everything will cost you when you buy it. This is not easy as things can change as you go along but you can get a pretty good idea. However, you need to be really careful to make sure that you include everything. You will find that there are things that sometimes get forgotten and then this can lead to problems later. So, as well as all the materials for building the house and the cost of the labourer, project manager and architect you will find there will be other costs as well. There might be service costs if you need to get electricity or water to the property, the cost of decoration, furniture and then fixtures and fittings. Also, you will need to pay for planning and building regs, interest on loans if you borrow the money, your own living expenses and rental of the place you will be living in. It is also very likely that the job will be delayed. This could be due to materials being late, fitting just taking longer, bad weather and things like this. If this happens and you are paying workers per hour, then this will put the cost up.
Have a Big Contingency
It is really wise to have some extra money. It is often the case that you will need some extra money here and there, perhaps building materials go up in cost, there is a delay or a problem that costs money and things like that. Some people like to add 10% for this, but you will need to decide how much you think might be necessary. It is always better to be more on the generous side so that you can be completely sure you have enough. You never hear people complaining that their contingency money was too much!!
Have a Back Up Plan
You will now know how much money that you need and be able to decide if you can afford it. You may start saving up or use some inheritance or money form the sale of a property or you may borrow the money. However, you do it, it is wise to have a back up plan just in case the contingency is not enough. Lots of people find that it is not and find that they need extra money, particularly towards the end of the build. You will need to have some thoughts about how you will cope with this should it be the case with you. Perhaps identify some potential loans that you might be able to take out or think about whether you will be able to work through the build and put some money aside or things like this. It may even be the case that you might have to cut back the work, so consider whether there are any bits that you could miss out.