This is a multifaceted question that depends on how you define cost. In terms of the raw numbers, it’s cheaper financially to build a house rather than buy one. However, the total cost doesn’t consider other costs of building a house such as time or effort, or the cost of having to fix or renovate a house after you have bought it.
Here are some important considerations to keep in mind when deciding whether to buy or build a house.
Home Loan or Construction Loan
One of the key considerations to keep in mind is that the type of finance you use will be different whether you buy or build a house. A construction loan is a loan you would need to apply for when building a house and is very different from a normal home loan. It is paid out in stages as each stage of construction is completed. The total amount you borrow is based upon the estimated value of the property once the construction is completed.
Time is Money
Obviously moving into a ready-made home is going to be a lot faster than constructing a new one. Many builders will supply building time guarantees although these are not always accurate as there are a number of unexpected delays that can occur such as council approvals, bad weather, building accidents or mistakes. The cost of these delays can quickly ramp up past what you had initially expected. Buying a ready-made home avoids all these potential problems.
Renovation and Repair Costs
On top of the final sales price of the house you buy, you also must consider any added costs that you might also have to cover such as renovations and repairs. The good thing about building your own home is that you can decide on almost every aspect of the home. With buying, you are stuck with the house you bought unless you make renovations. Additionally, if the house you bought had earlier owners before you then there might be unexpected repairs you need to perform to return the house to a suitable state.
Ultimately, whether building a house or buying a house is truly cheaper depends on your own preferences and values. Aspects of building a house might be bigger costs to some people than they are to others and the same is true when buying a house.
If you would like to learn more about buying a home or building one, get in touch with us today.