There are a lot of differences between buying a home that’s already built, whether new or otherwise and building a custom home. When you build a custom home, you first buy land, and from there, you have to work with a contractor.
It’s a big undertaking, and there are pros and cons to going this route for a new home. The following are some of the core things to know about building a custom home.
If you opt to build a custom home, you have to prepare yourself to make an enormous amount of decisions. In fact, even if you consider yourself a decisive person who makes decisions quickly and easily, you’re probably still going to get tired of it by the time all is said and done.
You have to start thinking about your budget, timeframe, and the property for your custom home.
Only once you’ve decided on those things can you start to design your home.
If you can find someone, you might work with a builder who’s also an architect. They can help you create something that will match your family’s needs for years to come.
You’ll decide things like the rooms you need, how big you want your home to be and how many stories. You’ll start integrating lifestyle features and planning a layout.
The people you will work with include an architect and general contractor unless one person can fill both roles. You’ll also possibly need to work with a landscape architect and maybe an interior designer.
Determining Your Budget
The price for new homes is incredibly high right now for various reasons. The effects of the pandemic have led to inflation, supply chains for building materials are disrupted, and there are a lot of factors converging simultaneously. Labour costs are also high right now.
You’ll have to consider all this as you’re creating a budget.
Some of the specific things to make sure are in your budget include the cost of land, local fees and taxes, and design and engineering fees. You’ll need to include the cost of home construction, landscaping costs, and the cost to decorate and furnish the home, plus you’ll need a budget for contingencies.
You’ll likely need to get a loan, so you’ll have to check your credit report, compare lenders and interest rates, and decide on the mortgage option that’s best for you.
You’ll also have to prepare to make a down payment.
The Pros of Building a Custom Home
The biggest upside of building a custom home is that you get exactly what you want. You don’t have to compromise or search for your dream home only to lose it in a bidding war.
There are a lot of things you can integrate into a custom home, like en suite bathrooms, home workspaces, or an in-law suite, for example.
You can also decide where you want to build. Maybe you find a property with a beautiful view, or you’ll live by the water.
You will have to talk to your builder before committing to a piece of land. The builder has to do a feasibility study to ensure it’s suitable for what you want to build.
A new home, whether custom or not, will mean less maintenance. You could save thousands annually on maintenance costs compared to buying an older home.
What About the Cons of Building a Custom Home?
When you build a custom home, it’s almost always going to be more expensive than buying a comparable property that already exists.
You also have to remember that whatever a builder tells you as far as cost and timeline is not likely to be what you end up with. Things will take longer and go over budget in nearly every situation with a custom build.
Getting a construction loan can be complicated compared to a traditional mortgage. You’ll usually need a 20% down payment because a construction loan is viewed as a higher risk. You’ll also have to provide project plans, land value, and costs. You’ll need to have a signed purchase contract with the details of the project.
The lender is not only evaluating you as a borrower but also the builder.
No one can say for sure if a custom home is right for you—that’s up to you to decide. You should go into it with a clear understanding of the advantages and the potential pitfalls to manage your expectations.