Building from Scratch: The Hidden Costs

Building your own home from scratch can be one of the most rewarding (and stressful) experiences of your life. Custom designing a home for you and your family will certainly raise your blood pressure, but once finished, your dream is brought to life before your eyes.

However, when building your home, there may be a few costs that might surprise you – and not in a good way. Don’t let them – and save yourself the stress. We have listed some of the costs to be wary of before you start on your construction journey.

1.    Soil and contour tests

Before you receive a fixed quote from a builder, they’ll conduct tests on your land and soils to determine any issues they may have when beginning construction. The tests themselves may cost anywhere between $1000 - $2000. If the builders find issues with any rocky soil, difficult land areas or sloping, there will be extra costs you’ll need to pay to modify the land, before they can move forward. Retaining a sloping property can be very expensive, so you need to be aware before you consider building on it.

2.    Site costs

Site costs are the expenses incurred when preparing a piece of land to be developed on. This is probably the biggest cost you’ll come across when building from scratch – and the one that will have the largest variability depending on the results of the site and contour tests. You could pay anything between $10,000 to $70,000. Costs involved can be anything from elevating a sloping block to connecting and maintaining services such as water, electricity, gas, sewerage, telephone and fire control.

3.    Flooring and Driveway

There are two things that are sometimes overlooked as not all building costs cover these features once construction has been completed. Unless you’re happy with having concrete as your main flooring feature, you’ll need to factor in costs for carpet, floorboards, tiles or linoleum, depending on your choice. You’ll also need to consider the type of driveway you’re after – prices vary depending on the surface.

4.    Modifications

The costs involved with modifying your home in the middle of construction can be extremely high, and estimates can be unreliable. In a typical home, building costs are relatively easy to forecast with a rough rate per square metre. However, when modifications are made midway, additional repairs may be factored in such as re-wiring or re-stumping and may not add to floor area. In this way, rates per square metre are unreliable. You will also be looking at legal costs, penalty clauses, extra material costs, labour costs and engineering, drafting and approval costs. The moral of the story? Be 100% happy with the design before you sign the contract.

Don’t be scared off by the extra costs, though. Take them in stride and prepare your finances. The outcome will be completely worth it.

At Select, we offer no-obligation, quality and free advice to help you reach your financial goals. For information about construction loans and the building process, give us a call on (08) 9417 3399 to talk with one of our brokers.