Author: Brian December 26, 2012

Living costs during the time your new house build can be much more expensive than after you have moved in. Its well worth planning for the additional expense.

Why is it expensive?

Well you will have either a mortgage or rent on where you live now, You will also be paying the mortgage on your new block, plus the mortgage on the stage payments on the house construction.

In the last couple of months of build you could be paying close to twice the monthly cost of the final mortgage. If the build is delayed things can really go pear shaped with regard to debt.

There is the opportunity in a standard building contract to have a liquidated damages amount which can help control the risk. In our last building contract this was set at $250/week (which would pay the rent on the place we were living in) if the build took over a year.

If you are unmarried and still living at home, or can move back with family for the time of the build, that can really help. For the rest of us its a case of making sure that we budget for the additional costs and putting some cash aside.

It’s worth remembering that if you have selected the right size of house you should be able to afford more than the basic mortgage on your new house so that you can stand possible future interest rate rises.

Just make sure that when you move the credit card isn’t maxed out. There are usually lots of costs up after the move such as blinds, curtains, additional furniture and gardens. All things needed, to finish off your house.

If you think all this as a major obstacle, then perhaps building isn’t the way to go. Buying an established house or finding a house/land deal with a standard real estate contract deal of 10% deposit and the balance at settlement may be better options.
 

For more posts about decisions like this see Starting Off