Pros and Cons of building a house?

[snuggleball]

Assuming we are up to the challenges of building a house (*gasp*), financially, what are the pros and cons?

- for similar configuration of house, and similar cost of sections, could it work out to be cheaper to build? Or more expensive?

- will the staggered payments work out to be to our favour, or against, since we won't be able to live in the house while it's being built, and will have to pay rent? Or is it cheaper in the long run, since we are looking at making partial payments during the construction?

- is there a way to get the designer/architect/builder to work out and ensure that the actual cost of building a house is within the estimated cost? I understand that we always have to cater for blow-out costs. What I'd like to know is, what are the probabilities of a blow-out? Could we borrow more than the estimated cost initially (in anticipation)? Or could we borrow more as and when the cost blows? Or do we have to fork out from our pockets?

- any other cost issues (or any other issues!) we need to pay attention to when building a house?

[jo b]

Try these,

http://www.buildyourdream.co.nz/

http://www.gobuild.co.nz/contact_us.php

http://www.buildonline.co.nz/buildon...13/bohome.html

http://www.consumerbuild.org.nz/publish/

Hope these help

Jo

[Avalon]

No advise directly on those issues - but something that occurs to me as we now have a fairly new house (5 years old - I usually buy houses well over a hundred years old but NZ is a bit short on those!):

If you build your own you can have control over heating / ventilation issues which will probably save money in the long run. Its harder and seemingly more expensive to retrofit efficient heating and insulation to a house that is already built.

Also - with staggered payments: Its always cheaper long term to pay off as much of a mortgage in the early days as possible - simply beacuse of the way compound interest works. Now I cant at the moment see whether it applies to your situation (im a bit knackered ) but essentially - the true cost of your house is not what you pay for it - but what you pay for it PLUS all the interest. By taking out a staggered mortgage - you would only be paying interest on the proportions you have at that time and therefore paying less interest in the long run than if you took the whole lot at once.

I hope that makes some sense

[Bean]

Hi

Can only say from a UK perspective (doing it here first, if we ever get a plot!!), its called the 'thirds' rule. ie. plot cost 100k, build costs 100k and therefore house values at 300k. In addition in the UK you get your VAT back.

Not sure how it adds up in NZ, I think that you don't pay any form of capital gains tax on selling property that isn't your home (In the UK you have to stay in the property and it has to be your residence for a year and a day to avoid it).

Not much help sorry

Bean

[sizzlingbadger]

We were given some very sound advice when we came out here ...

Never build until you're established here.

We looked at quite a few renovation projects and at one stage even considering building. So glad we didn't it's surprising the amount of money you go through with just setting yourself up here. Let alone having to pay rent and build costs on top of that.

Get on the NZ housing ladder for a few years, get the money behind you and then consider it. I've got a kiwi friend who has just sold two of her properties, bought a huge piece of land and was going to build on it. Loads of cash left in the bank to do it and they thought they'd have no problems. Well 3 months on, half the budget left due to a lot of unforseen problems. They've now ended up buying a relocation house because they couldn't afford to build. Seems me that no matter what you've got in 'the pot' it can still turn pear shaped.

Good Luck, take a really good long think about it and don't jump in at the deep end until you know all your potential costs.

[David with a dream]

Hi, like Avalon we have always gone for the older property which if not tackled correctly can cost you loads $$$$. However to my point which is (a tad boring) double glazing. All the new builds we loked at around NZ did not have any which is a suprise seen as how every one moans at how cold the houses are. Just a little something for you to add to your list.
and good luck....Would love to here how you get on....David

[Biddy]

For what it's worth - we've been here 6 months now and are just starting to build our own house.
We bought 3 acres shortly after arriving and blew all our Sterling. We now have plans drawn up for what is pretty much our 'dream' house. Plans have been submitted to the council and pegs have been put out on the land.
Last weekend we went to see the 'colour' lady for external paint, roof, internal door, walls, bathrooms etc etc. Then we saw the carpet man. Yesterday we saw the kitchen and bathroom lady and next week we see the kitchen lady.
We have our mortgage approved with ASB (the manager there had her house built by the same company!) - we have a stepped mortgage which basically works like this:
An overdraft facility is set up on our current account that allows us to feed portions of money to the house builders as and when it's needed. We only pay interest as and when we go overdrawn - so we will use our meagre funds initially and then start using the overdraft in a few weeks. So we can basically juggle money around our various ASB accounts online to ensure we're getting best value.
We will pay interest at the current variable rate until the house is completed and then we can convert it to a fixed rate for whatever period of time we want.

The whole thing is just soooooo easy to set up. The builders have been fantastic - as have everybody else in the process.

We will have a house that we have (at least in part) designed, chosen everything for, watched the first bit of concrete been poured etc etc.
Something we would NEVER have been able to do in the UK.
And that is worth so much.

I would recommend it to anyone.

[katandbob]

For what it's worth - we've been here 6 months now and are just starting to build our own house.
We bought 3 acres shortly after arriving and blew all our Sterling. We now have plans drawn up for what is pretty much our 'dream' house. Plans have been submitted to the council and pegs have been put out on the land.
Last weekend we went to see the 'colour' lady for external paint, roof, internal door, walls, bathrooms etc etc. Then we saw the carpet man. Yesterday we saw the kitchen and bathroom lady and next week we see the kitchen lady.
We have our mortgage approved with ASB (the manager there had her house built by the same company!) - we have a stepped mortgage which basically works like this:
An overdraft facility is set up on our current account that allows us to feed portions of money to the house builders as and when it's needed. We only pay interest as and when we go overdrawn - so we will use our meagre funds initially and then start using the overdraft in a few weeks. So we can basically juggle money around our various ASB accounts online to ensure we're getting best value.
We will pay interest at the current variable rate until the house is completed and then we can convert it to a fixed rate for whatever period of time we want.

The whole thing is just soooooo easy to set up. The builders have been fantastic - as have everybody else in the process.

We will have a house that we have (at least in part) designed, chosen everything for, watched the first bit of concrete been poured etc etc.
Something we would NEVER have been able to do in the UK.
And that is worth so much.

I would recommend it to anyone.

Good post, we are looking at doing the same when we find where we want to settle.
We look forward to seeing updates/pics of foundations being poured etc
Kat