Self Build House Costs
This post will try to share some of my headaches around the price to build a house in Ireland in 2016! There is always the two key elements of "Can I?" vs "Should I?" at play. Just because you can afford to build at the very outside of your budget, doesn't mean you should! Do I go for a 20% deposit to get a better interest rate and leave myself cash short during build?
I've been busy contacting various institutions to get an idea of costs to work out a monthly budget. I've used this to track back the mortgage I'm comfortable paying (while hopefully not resorting to baked beans 7 days a week!) and inform the overall building budget. This then informs the size of the house to build based on square meters (which as I've learnt is the internal floor area of a building that includes partition walls, doors etc).
At least that's how I've worked out a comfortable balance between size, cost to build, cost of mortgage that I'll be left with once the dust and concrete has settled!
All I used was Excel and just started adding workbooks that tackle different areas:
Requirements
- Must Have
- Nice to Have
- Risks / Unknowns / Area to enquire about
Annual Budget (Current)
- Cost of roof over my head (rent and bills)
- Car running costs (I track my fuel costs for work)
- Personal expenses from insurances to mobile phone top ups
- Misc (Charitable Donations etc)
- Savings
Monthly Budget (Projected)
- Mortgage
- Pension AVCs
- Utility Bills
- Home Insurance
- Bins
- Irish Water
- Car
- Mobile
- Property Tax
- Life Insurance for Mortgage
Work out if you're missing any tax credits and start saving all medical receipts for sending either to your Health Provider or Revenue (you can't do both!). Streamline your charges, change banks if that is necessary. Use websites that are geared to saving you money by comparing banks, atm charges, energy costs etc for instance:
http://www.moneyguideireland.com
Then when you have all that done go back again and see what you missed! You're taking a plunge both short term and longer term. Make sure you know what every charge is on your bank / credit card statement. Do I REALLY need that?
Now you're ready to work out the build costs. You'll get various quotes for €X per square meter. You need to add to that all the extra charges to get a total cost.
- Size of House (Sq. Meters)
- Cost per Sq Meter €
- Build Cost (=Size x Cost)
- 10% Contingency (Add 10% and add VAT of 13.5%)
- Architect Fees 11% (Add VAT of 23%)
- Quantity Surveyor 3% (Add VAT of 23%)
- Structural Engineer
- Site Cost (Get solicitors letter agreeing site layout & cost subject to planning permission before purchasing)
- Stamp Duty (1% on Site Cost plus House build cost)
- Legal Costs
- Site Survey
- Self Build Insurance (Public Liability but check if your approach needs more than this)
- County Council Contribution
- Irish Water Connection Charge
- ESB Connection Charge
- Bord Gais Connection Charge
- Virgin Media Charge
- Rainwater Harvesting
- Home Automation
- Appliances
- Furniture
- Total Build Cost:
So now you have a list of items you need to go out and get the price for. You should then be able to work out the cost. I copied the costs across the page into one of four Stages so I can see when I need to have each sum of money ready to payout (The costs outlined above are listed in one category or broken up over several):
- Stage 1 - Initial Design
- Stage 2 - Developed Design
- Stage 3 - Detail Design
- Stage 4 - Construction
- Stage 5 - Post Construction
The Mortgage Provider should be quized as to how they release funds. You need to know how much of a Deposit you can afford without leaving you cash strapped during the build phase. Different Architects may have different approaches so you need to know when you'll have an accurate picture of costs. Ideally before you go to planning. That alone will drain a lot of your deposit and the bank will only let you start drawdown once you get approval. The bank I talked to will allow me to include the Professional Fees such as Architect & Quantity Surveyor as part of the mortgage even though they are being paid a good chunk beforehand. However I still need to present an intact deposit to them to get that lovely 20% interest rate, have a think about that and see how you go?!
So, Excel is your friend! You can find online Mortgage Calculators to help you plan what the mortgage repayments are likely to be. Stress it yourself to 6-8% and see what happens. You'll need 6 months of savings records going to the bank to help you prove you can afford it.Play with different mortgage terms.
Now pick 2 from the Triangle below:
Feeling dizzy yet?!! For sure building is not cheap. You can end up with a house that costs more to build than it's worth to sell! But only you can determine the value of it once you're living there. Smaller is better but not necessarily cheaper. There are definitely economies of scale to be had which I'm going to miss out on due to the size of the site and my overall budget.
One Tip: Measure out the rooms in your house and get a feel for what space you like / when it starts to get to be a squeeze. Measure them & calculate the total square meter area. Add up the number of rooms and sizes you want and see if you put it into your Excel sheet above, can you afford it? (Allow a bit for partition walls, doors, hotpress etc) Then work upwards +Sq Meters & downwards -Sq Meters - you can copy a worksheet or just play with the size to get your ideal. Now you're ready to talk to an Architect and state what you want and what you can afford.
The exercise is gruelling a little but it gives you crystal clear understanding of your financial situation and exposure. The last thing you or the bank wants is to hand back the keys after a year.....plan well, ask the right questions, listen to the advice, some of it will be hard but be realistic and always, always sleep well at night, a mortgage and new house isn't going to make your life any easier but it can be an accomplishment in your life and something to be proud of when it's all finished.
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