Choosing a place to live may be difficult since it involves high costs and defines a big part of your future. At first, it may not be easy to decide whether it is better to buy a new house or build one.
After looking at some of the real estate prices in Canada — you might think, Is it cheaper to build your own home at this point? Almost everyone dreams of owning a nice, cozy (or sometimes — luxurious) house, and the most common difficulty in fulfilling that dream is the high price of a new property. Considering the high prices of real estate, people tend to be very careful when choosing their future homes.
People usually have an ideal image in their mind of how their future home could look like. And this is where the problems start: it can be very, VERY difficult to find a perfect home that matches the ideal image in your head. Most likely, the layout of the building or the interior of the house you want to buy is different than you imagined.
And that’s when, for once, it occurs to you that constructing your residence might be the best choice. As you delve into the details and compare the possible options – buying a ready-made residence or building your own home – you begin to think about the advantages and disadvantages of both options.
No Simple Answers
So, is it cheaper to build your own home? There’s no way this answer can be answered directly. Buying a mansion is more expensive than building a small wood cabin, and vice versa.
Building a ready-made residence may be the less problematic choice, but you have to accept that the layout of the building may not be what you want. And if you decide to change the housing scheme, you will have to incur additional costs.
The thought of constructing your own home can be both daunting and appealing. On the one hand, you can design the layout of your home exactly the way you want it. On the other hand, even the idea of constructing a new home seems intimidating in terms of the costs involved.
Since the question “Is it cheaper to build your own home or to buy a ready-made house?” is sure to cross your mind, it may seem logical to do some calculations before making a final decision. Below is a little guide that will help you to understand the details better.
Being Two Steps Ahead
First, make sure you remember the down payment, which requires a large amount of savings in your bank account. So, if you don’t have enough money for an initial contribution, the idea of constructing a house might be more affordable and attractive for you.
However, you should not rely on this conclusion alone. Remember that building a new residence is a very expensive proposition. So, secondly, do not forget that your bottom line in constructing a home can be a moving target. You may not know how much the overall project will cost you until the final stages of construction.
Third, you will most likely need to apply for a loan to build a new property, and the interest rate on such a mortgage is much higher than a conventional mortgage.
Also, the cost of construction depends on the location. In rural areas, the costs of land can be much cheaper than in the city center. However, you might get caught up in extra costs in rural areas: electricity, water, etc.
And the last, but not least important factor, is the cost of owning a home. The amount you have to pay for homeowners’ insurance and real estate taxes is sometimes significantly lower for newly constructed homes.
Is it Cheaper to Build Your Own Home or Buy One — All Pros and Cons of Both
The points mentioned in the previous paragraph should not be the only factors influencing your decision. Each of these options has its advantages and disadvantages and here is the list of the most important ones.
If you are playing with the idea of building your residence, here is a list of those options:
Constructing on Your Own — Advantages
- Home styles as in your dream. When you are the house plan and interior design author, you get exactly what you dreamed about.
- Avoid hasty decisions and competition. When you tour homes for sale, you may encounter offers from competitors who want to buy the same house as you.
- Newly built home. Everything in your residence is new and you may save yourself from having to repair old plumbing.
Constructing on Your Own — Disadvantages
- Building a new house is one long process. It usually takes no less than half of the year to get to the final stages of construction.
- Hard decisions are required. During the construction process, you will have to make difficult decisions that can cost your time (and sometimes — mental health, talk to people that just finished building their own house and ask how much sanity they’ve lost in the process. Chances are — some will start nervously laughing);.
- Problems with vendors. When you decide to construct a new building, many problems unexpectedly arise trying to test your nerves. You might meet with construction delays, dishonesty of subcontractors.
- Additional costs. Even if you set up a budget before starting construction, you will always run into unexpected expenses.
However, if you think that buying a residence would be the best choice for you, here is a list of those options:
Buying a Ready-to-live Property — Benefits
- A fixed date to move in. When you buy a property, you know the exact date you would move into a house. You do not have to wait until the house construction is complete.
- Strong bargaining position. If you own a property, you are in a good position to pretend for a better price. For instance, if you picked up a property that has been on sale for more than a month, you can pretend for a discount from a seller.
Buying a Ready-to-live Property — Risks
- Possible high competition. Sellers may receive multiple offers from potential buyers other than you. Sometimes the selling process can resemble an auction.
- The condition of the house. The residence you are buying may not be new. Depending on the home’s condition, you may be faced with the need to fix something earlier than you think.
You’re the One to Decide
Whichever of the two options you choose, both are tools to help you achieve your dream. You just have to decide which of the options appeals to you more.
If you have your heart set on buying your options residence, you can start by scouring listings of homes for sale. And if you feel that you are ready to construct your own home – think about the house plan, interior design and start looking for a lender.