Financing a custom-built home

If you’re considering a custom-built home, there are some core considerations  

Buying a turn-key home has some clear benefits in terms of offering you a ready-made home, where someone else has made all the tough decisions for you, while building offers you the opportunity to customise your home exactly as you want and need it – but it means making the tough decisions yourself.

It’s a good idea to familiarise yourself with some trends in the Canadian real estate market before you get started.

Here are some things you must consider:

Getting a loan for a custom-built home

Bear in mind that getting a construction loan for your custom-built home can be a little more difficult than applying for a traditional mortgage. Construction loans are generally considered to be a higher risk. This means that you’ll need to have really strong credit, and you’ll likely need to have a deposit of 20-25% saved. It’s usually easier to get a construction loan to build on land you already own.

Check out our overview of the Canadian real estate market here, and learn more about how to organiae your finances here.

Get ready for paperwork

As well as proving to the bank that your finances are in order, you’ll need to convince them that this house will definitely get built. How? You’ll need to demonstrate that this is a well-planned and low-risk project by providing details of the land where your house will be built, floor plans, ceiling heights, insulation and building materials.

The bank will also want to see a realistic timeline for when your home will get built.

Planning your budget

Building a custom home is generally considered to be more cost-effective than buying a standalone home, but only if you know what you’re doing.

Map out your budget projections carefully, research your costs carefully, get more than one quote for big elements of the project, and make sure to leave yourself a cushion in case any element costs more than expected.

A slight budget over-run can cause significant delays in your project if you haven’t prepared for it.

Work with professionals

It may be your dream home, but it’s not a DIY project – in order to secure financing for your home you’ll need to show the bank that you are taking a responsible and sustainable approach to getting your house built. That means brining in experts like the team at FC Developments. Working closely with a contractor like FC Developments from Edmonton, will ensure that you get your project financed, and also that the project gets completed by the deadline and is finished to a high quality.

So…

Building your own home is an ambitious endeavour. It’s an ideal project for those with a clear vision of what they want, and the tenacity to see the project through, even as occasional delays or budget over-runs happen.

Getting the right financing can pose initial challenges, but with sufficient forward-planning, you’ll be building your dream home in no time.

David Jackson

David is a personal finance expert, a professional male model, and an entertainment writer.