Many would-be homeowners have looked into the possibility of constructing their own homes. Constructing a home gives homebuyers the chance to design a house that ideally complements their family and way of life. With new construction, everything from the floor plan to the finishes can be up to you to decide. Although managing the process isn’t always easy and there are challenges to get over, it can be a great opportunity to move into your ideal house.
Construction projects can take longer than anticipated and sales can move swiftly, especially in a tight local market. Top property agents in Winchester offer some helpful advice to make the process easier for you.
Is it tough to build a new house before selling the current one?
The simplest and most cost-effective way to build a new house is typically to sell your existing one before you start construction, since you can use the profits from the sale to pay for the development. However, homeowners may not use this tactic for certain reasons.
Finding a temporary rental and moving in during the construction of your new home may be too much of a disturbance for some families. Or perhaps your ideal property became available for purchase, and you seized the opportunity to secure it so you wouldn’t lose out. It is possible to keep living in your present home while you are having a new one built, however, it is a little more difficult.
Do some research before you start construction
Determine the cost of your new construction first. Include the price of purchasing the land, if applicable, as well as all associated finance expenses, fees, permit charges, material prices, and labour costs.
The building contractor you hire must also be familiar with the specifics of your project’s target cost certainty. Many building contractors frequently underestimate the cost of a project at the beginning, particularly for design-and-build contracts, and then demand more payment afterwards. It’s a good idea to plan for the improbable regarding your building budget. Depending on how distinctive the project’s features are, timelines for new constructions may fluctuate.
Financing the construction
Fortunately, you won’t have to pay all of this out of your own wallet. New construction can be financed in a number of ways. Here are some typical examples:
Equity loan:
People in England who wish to custom construct or self-build their own home can apply for a Help to Build government equity loan. Help to Build offers equity loans based on the expected expenses to purchase a piece of land and construct a home, thus it may assist even prospective homeowners with a tiny down payment.
The equity loan sum might range from 5% to 20% (in London it’s close to 40%) of the total expected cost. You may spend as much as £600,000 on your house if you qualify. If you don’t already own the land, this must also include the price of the land as well as the cost of construction, which cannot exceed £400,000.
Bridging loan:
The term “bridging loan” refers to a short-term loan, usually between 12 – 24 months, that is used to “bridge” the gap in the financing of housing. This typically occurs in the context of property development to offer financial assistance during the sale of an old development before the start of a new one.
To qualify for this loan, applicants need to be in strong financial shape, and the interest rate is often higher than average. Be cautious, though, as a bridge loan has a short duration and might result in penalties if your project runs late.
Your ability to borrow a certain amount will rely on a number of variables, with the loan’s objective being one of the most important ones. You may borrow up to 80% of the value of a residential property, for instance, if you are using it as collateral.
In conclusion,
The bottom line is that you must be ready if you want to construct a new house before selling the old one. Examine all of your financing choices, choose the ideal time frame, and coordinate closely with your contractor and estate agents to stay on track. Even with meticulous planning, things can sometimes go wrong, so it can be helpful to have emergency cash and a temporary housing option on hand.
