THE ULTIMATE GUIDE TO building a new home
Perhaps you’re about to take that next step toward your dream home. Or maybe you’re still dreaming and want to know how the entire process works.
In this guide, we will cover topics such as creating a budget, picking a location, choosing a builder, securing financing, and customizing your home. It will provide everything you need to know to make your dream home a reality!
HERE ARE THE TOPICS
THAT WE WILL COVER IN THIS GUIDE:
A Home Budget
The Right Builder
A Floor Plan
WHY BUILD a home
Chapter At A Glance: Why Building Is A Better Option
You are able to build a home that fits your lifestyle and needs
Low Cost of Ownership
No costly repairs or renovations along with energy efficiency
A reputable builder stands behind their work and buyers are protected by warranties
If you are like many buyers in today’s market, deciding between a pre-existing home and a new build may feel like a difficult decision. In this chapter, we will go over why building a new home may be one of the best decisions you make! While already built homes do have advantages, most obviously that they are move-in ready, there are many reasons why a new build might be a better option.
One of the main reasons why buyers gravitate towards building a home versus buying a pre-built property is that they are able to customize a new home to suit their needs. It is unlikely that you will find a house for sale currently on the market that fits all your wants and needs exactly. Building a home allows for choice of lot, floorplan, colours and much more!
Lower Ownership Costs
With a newly built home the cost of maintenance and ownership can be significantly lower than buying a preowned property – especially if that property requires significant updating and renovations. A newly built home meets industry standards for efficiency and won’t require costly renovations or repairs.
When purchasing a pre-owned home, the warranties are very limited. While buyers have some avenues for recouping costs of unexpected issues, they are typically left to deal with problems themselves. Newly built homes come with a list of warranties and guarantees that builders are required to provide. By choosing a reputable and well rated builder, buyers will have peace of mind that any issue will be promptly dealt with and rectified by the builder if applicable.
CREATING A home budget
Chapter At A Glance: Working With Your Numbers
How much will it cost?
A rough estimate will be the average cost of square foot multiplied by the estimated size of your home.
What can I afford?
Having a clear picture of what is affordable to you and your lifestyle will allow you to know what price point fits comfortably within your budget.
I have the deposit, now what?
Meet with a mortgage broker to determine the mortgage that best suits your needs!
There can be additional fees depending on your area – don’t let them catch you off guard!
In this chapter, we will help you narrow down your budget. What can you afford? How do you determine what you can afford? What type of mortgage do you need? We cover it all.
How much will it cost to build the home I want?
When building a new home, research the average cost per square foot in your region and then multiply that number by the square footage (or estimated square footage) to determine an approximate cost.
Note: Many homebuilders require at least a 10% deposit up front. This means if your home costs $400 000, you will have to put down $40 000.
It’s also a good plan to determine how much you can afford before determining how much your home will cost. You don’t want to stretch your finances too thin, become “mortgage poor” – or end up in a dire and panicked financial situation.
How do I determine what I can afford?
Before you even consider building a home, find out if you can afford it. Assess your finances – including your income and expenses. What is affordable for you and your life?
If you aren’t sure, we recommend booking an appointment with an accountant or another financial expert. They can help you narrow down your options and help you set a clear budget. Essentially, you don’t want to be drowning in debt by the end of it all and you should likely have a 3-6 month emergency fund for the “just in case.”
If you decide to go it alone and figure out your budget yourself, all the power to you. The following briefly outlines how to make your budget:
I have the deposit, but how do I afford the rest?
This is where a mortgage comes in! You will need a progress draw mortgage for financing a new build, which is very similar to a regular mortgage. This is where you will need to talk to a homebuilder or assess house plans.
The lender will need an accepted building contract, house plans, and site plans to determine the home’s value. When your progress draw mortgage is approved, the builder receives the money often in 3 installments – 35%, up to 65% and then the final draw for the full 100%.
During each point that these payments are released to the builder, the lender conducts inspections and submits reports. The full payment is not released until you have signed a release stating that the final product meets your approval.
Make sure to talk to your mortgage broker or lender to ensure you fully understand your responsibility and payments (if applicable) at each stage of the financing.
What other fees are involved?
Additional fees may include legal fees, mortgage insurance, appraisal fees, taxes, land transfer tax, interest, furniture, monthly utility bills, and more. Don’t forget to take these into account when planning your budget and expenses. You likely don’t want to experience the panic that comes with unwelcome financial surprises.
You may also want to determine whether or not the cost of the land or lot is included in your mortgage agreement. When planning your budget, this cost could potentially reduce the amount you are able to spend on building your home.These fees and costs differ from company to company and in different locations so do your research beforehand to ensure no surprises along the way!
CHOOSE a community
Chapter At A Glance: Where do I want to live?
Things to consider when choosing
Asking yourself a few questions about your future will drastically affect where you want to live!
Check out the neighbourhood
Going through the neighbourhood at various times will give you a glimpse of things such as traffic.
In this chapter, we dive into factors you should consider when choosing the location for your build. It matters more than you might realize. And you want to make sure you are thinking in the long-term. Where do you see yourself in 5 years? 10 years? What kind of lifestyle do you want?
There are various factors at play. Let’s take a closer look!
What should I consider when selecting a community?
The house layout matters – but it might mean next to nothing if you don’t like the neighborhood you live in. Your ideal neighborhood should offer the amenities you require. It should be convenient and easily accessible.
This is where you want to consider your long-term plan.
If you don’t have children now, will you in 5 years? Are there schools nearby? What about parks? If you are a regular gym-goer, is that accessible to you in this neighborhood? Is there a grocery store in close proximity?
Access your activities, hobbies, and needs. If you use public transit, is that readily available to you? Consider where you frequently visit or what you frequently do. Take these things into account when deciding on your neighborhood.
It’s also important to think carefully about the potential for natural disasters or crime. A house on the lake may sound ideal. Yet, if the place is known for annual flooding, it might not be worth it. There are also areas that are more at risk of wildfires. And places known for their higher crime risk. Although, there are many safe and secure locations to choose from. Just keep these things in mind when making your final decision.
Pro Tip: Drive through the neighborhood at various times. Are there traffic issues nearby that might be a problem? Is the road constantly filled with cars on a Saturday for soccer games in the nearby park? These things might not matter right now. But they have potential to cause headache once you’re all moved in.
CHOOSING THE right builder
Chapter At A Glance: Finding the Perfect Builder!
Who owns the lot
If you’ve found the perfect neighbourhood – you’ll need to find out which builder owns the lots that are for sale.
ALWAYS check various sources of reference such as speaking with family and friends and searching online!
Meet Potential Builders
Meeting face to face will give you an idea if the builder is right for you!
Make the Final Decision
Compiling all the information will allow you to make an educated and informed decision.
The majority of people don’t know how to build or have the necessary resources to build a home. And that’s absolutely okay. Homebuilders prepare the lot for the build, obtain the proper permits, and construct the home – so you don’t have to. However, like any profession – there are good builders and there are not-so-good builders. In this chapter, we review how to choose the right builder.
What is a good starting point to find builders in my area?
The first thing you will need to consider is who owns the lot? Builders own sets of lots in certain subdivisions and when purchasing a specific lot you will need to determine which builder own it. There have been times when one builder will allow another builder to purchase the lot and build for a client, however, that is something that would have to be discussed prior to any agreements being signed.
References from friends or family is always best. However, Google is also a great option. If you don’t have any great references, do your research! Check out the builder’s reviews. What have previous customers said about their work? Look through their portfolios. Do the homes match up with your style? What about their floor plans? See if you like their previous work.
While researching, you should also try to check out their credentials. Are they qualified? Certified? Insured? Find out.
Should I meet with them in person?
Absolutely! Meet with multiple builders. Scout out your options. And ask questions. Do they answer them? And do they answer them well? A good builder will provide a thorough answer. This is also an opportunity to ensure that your communication styles line up. Do they listen to your vision and goals? Or is it their way or the highway? They should take into account your priorities, opinions, and ideas. After all, you are paying for it and you are the one that has to live in the house once it is built.
How do I make the final decision?
We’ll help you out here. If you agree with the following statements, you may have found your match!
They have good reviews.
They have credentials or qualifications.
They welcome questions and answer them thoroughly.
Their previous work is quality.
Their previous work matches your style.
The locations they build in work for you.
They communicate clearly and effectively.
They have references (from previous customers).
They are willing to show you their previous work.
If it doesn’t feel right, it might be best to keep hunting. It’s not worth the hassle or headache working with a builder that you don’t mesh with or that has obvious red flags.
SELECT A floor plan
Chapter At A Glance: The Floor Plan Choice
What does the future hold?
Taking time to consider your future will help determine what house will suit your needs now and down the road.
Consider your lifestyle
Big on entertaining? Need a separate office? Make sure the plan fits your lifestyle!
What have you been envisioning?
Everyone has personal preferences! Find which reflects your wants!
Selecting the floor plan to your new build is a crucial decision. Most builders will have a number of predesigned plans to choose from that vary in size and layout. Choosing the one that best suits your wants and needs will ensure you are the most comfortable in your new home.
There are a number of things that you will want to ask yourself before making the final choice on floor plan. Much like when choosing a community to live in, choosing the floor plan hinges on some of the same questions.
Where do you see yourself in 5, 10 or even 15 years?
Do you currently have children? Are children or family expanding in your near future? The answer to this question can greatly influence the layout choice. How many bedrooms are you going to want or need? Do you want additional room for overnight guests? If this home is one you plan to retire in, do you want everything on a single level?
What is your lifestyle like?
Are you frequently hosting large gatherings or entertaining? Do you want to ensure you have plenty of space for friends and family? Do you work from home and require a separate office space? Into fitness and want a gym area? Going through these questions will paint a picture of what will work best in your new home!
What design is the most appealing?
Many people have an idea of what type of home they prefer. Single or two storey? Open concept? Single or double car garage? These will be major indicators of which floor plan to decide on.
Pro Tip: Though many builders have pre-designed floor plans and layouts, there may be things that can be reconfigured or changed to suit your needs. Make sure to speak with your builder and find out exactly what’s flexible and what’s not!
Chapter At A Glance: Get the money in order!
Much like traditional purchases, you will want to have a pre-approval in hand at the beginning of your build.
Do your Homework
Not all lenders and mortgages are created equal – put some time in to find out what works best for you and your lifestyle.
Lock it in
Once you have found the ideal mortgage – sign the paperwork and secure the financing.
We briefly outlined the mortgage you need and how it works above. In this chapter, we are going to dive into a bit more detail about the process of securing your financing. What can you expect? How does it all work? If you’ve never taken out a mortgage before, it’s all kind of a mystery. So, let’s find out.
Seek out pre-approval
Don’t wait. You’ve determined your budget. Find out if your eligible. Once you find out you are, you can get that good interest rate locked in.
Compare pricing and interest rates. Who has the best deal? Why? Are there hidden fees? Do your research. Like getting your perfect builder, shop around. Don’t just go with your own bank. Consider mortgage brokers. And don’t panic if you get rejected – just because you didn’t qualify with one lender or bank, doesn’t mean another won’t take you.
Know what impacts your lending potential
The mortgages that are offered to you are based on your debt, credit, income, assets, and other elements. It’s likely a good idea to talk to someone about how you can up your chances of getting a good deal on your mortgage. For instance, paying off your debts beforehand can substantially put you ahead of other players in the game.
Ones you sign it, it's a done deal
Thoroughly look over any documentation before you sign it. It’s legally-binding. If you have a lawyer, get them to run through it with you before you put pen to paper.
CHOOSE a lot
Chapter At A Glance: Choosing the right lot
The size of your lot, especially when compared to the size of your home will determine the amount of outdoor space that will be available.
Which way does it face?
Want to enjoy the sunrise on your back deck? Make sure to check the lot’s orientation.
More factors to consider!
There are additional factors that you will want to think about such as the shape of the lot, terrain and its location in relation to the neighbourhood – ie. on a corner?
Once you have narrowed down the subdivision, you will need to choose a specific lot to build your home on. There will be pre-set lots that are available to purchase, however there are a number of things you will want to consider!
Have you always dreamed of having a spacious outdoor area? You’ll want to make sure there is room for it on the lot you choose – plus room for the house size you desire. Compare different sizes and see how these lots fit your dream.
Where does the sun rise and set on the lot? If you want those big windows in the back of your home, you’ll want to know this. It can cause your heating or A/C bills to add up. Take a look at the lot in association with the road. Where will your house be oriented? Is it ideal?
Lots come in all different shapes and sizes. Does the shape of the lot work with your dream plan? Consider it.
Where on the street is the lot located? On a corner? The end of a cul-de-sac?
Is the lot ideal for a house build? Hills can also cause structural damage later on down the line. Make sure the terrain is right for building on (and that it won’t cause issues years later). Your builder can often help you out with this. They have experience and know what’s best for building.
Pro Tip: Find out how much it costs to connect utilities to your home. This is a cost that can surprise some people. Take it into account when choosing your location.
Here’s a quick checklist of questions you can run-through and ask yourself when choosing your location:
Does it have room for all your dream plans? (i.e. pools, trees, decks) Does the Subdivision Agreement allow for your plans?
Is it your ideal landscape? (If you plan on gardening, this will matter!)
Is it close to everything you need? (i.e. schools, stores, recreational activities)
Proximity to houses nearby? This may vary depending on whether you are building in a rural or urban area.
Is it close to a busy road? (a busy road = increased noise)
Is it a corner lot? (This is more of a personal preference. Corner lots tend to have more yard space. Yet, they also have the disadvantage of potentially being close to busy intersections.)
What are the zoning laws? (Residential? Commercial?)
Are utilities available? If so, what are they? (i.e. sewer vs a septic system)
Is the lot located on a hill? (hills may require more work.)
Is the landscape or yard something you are willing to put the work into? (This is more so for bigger lots.)
Find your ideal location! And take your time. You want to get it right.
Though this is considered the fun part of a new build, many find it overwhelming and stressful as well. With a number of different options to choose from, it may feel daunting trying to choose colours, finishings and features! Take a breath, and take your time!
What choices you will have to make
While one of the main reasons buyers are drawn to building vs. buying a pre-built home is the customization and personalization. Having choice of colour, design and finishings is part of the way a custom home is built specifically for you!
Throughout the building process you will be working with a designer that will let you know what choices you will need to make and what your options are.
Pro Tip: Some choices will come with a price tag! Make sure to find out exactly what is included in the purchase price and what is considered an upgrade that will cost more!
Common customization choices when building
The most common things that you will be responsible for deciding when building a new home will be things such as:
Paint colours – your builder will have a selection of paint colours that are available to choose from for different rooms and areas of your home. Generally speaking, these colours are rather neutral and will cover large areas of your interior.
Cabinetry – you will have a choice of certain cabinetry for your kitchen and bathrooms. Along with the style, you will be able to choose finishes or paint colours.
Countertops – Beyond the colour scheme of the countertop, you will be deciding type such as quartz, granite or standard tops.
Flooring – There will be selections for types of floor (ie. hardwood, laminate, vinyl, or carpet) and colours.
Lighting and finishings – You will need to choose from a number of selections your light fixtures, hardware and finishes.
The choices can feel overwhelming; however, your builder will have design consults to help you along the way!
THE CONSTRUCTION timeline
Chapter At A Glance: Timeline Overview
Months 1 & 2
The hole is dug
Months 3 & 4
Walls start to go up
Months 5 & 6
Inner work such as electrical and plumbing commence.
Months 7 – 9
It’s starting to look like the finished product!
Customization and finalizations
Walk through and move in!
Now that you have made it this far, you are probably very eager to move into your newly built home! But how long will that take? There are a number of factors that influence the timeline of a new build such as time of year, weather and demand of tradesmen.
Before the Build Begins
There is a lot of work that goes into the process of building a home before a single scoop of dirt is dug. From choosing a builder, a floor plan and a lot, you may feel like all your decisions have been made! For the builder though, things are just gearing up!
Once the builder has all the necessary permits and paperwork in order, they will generally advise you of when construction will begin.
Months 1 & 2:
The beginning step for your home build will be a hole dug to lay the foundation. This process will take some time as there will be excavation work, cement pouring, plumbing and utility hook ups.
At this stage you will also see the foundation walls being poured and the basement floor. Your builder will most likely be consulting with engineers and inspectors to ensure everything is up to code in order to continue!
Months 3 & 4:
Now that the foundation is in the place, the house will start to take shape! Exterior walls and the roof will be set up during this stage. Once those are completed, windows and exterior doors will be installed.
Months 5 & 6:
The house is framed in and the exterior is coming together! During the next months a lot of work will be completed inside the home. HVAC systems, plumbing and electrical will be installed.
During this time there will also be exterior work being completed. Either brickwork or siding will be installed, shingling and eavestroughs may be put up as well.
Months 7 - 9:
Though your home may look pretty complete at this stage from the outside, there are still many things happening indoors. Drywalling, kitchen and bathroom installs and interior doors will be making the interior feel like a home!
Now comes the fun part with paint, flooring, finishes and countertops being installed. This will be the homestretch!
Depending on whether and what you’ve enlisted your builder to complete on the exterior, driveways may be poured and outdoor living spaces completed.
Once your house is officially completed and all inspections finalized by engineers and city officials, you will have a chance to do a final walk through to make sure everything is as agreed upon in the building contract.
If you give the go ahead, your deal will finalize with the builder and the lawyers and your closing date will be the time your home is officially transferred into your name!
Keep in mind that this is a rough timeline that does not account for unexpected delays that your builder may experience. Depending on the time of the year, weather can play a huge role in the timeline. Your builder should keep you up to date on the progress of your home and will be sure to communicate if there are any unforeseen issues that arise.