Budget wisely for your dream home

Once we have the good bones of the home, we can always renovate a kitchen or a bathroom at a later date. (Comstock)

If you're dreaming of building a new home, one of the first steps you should take is to establish a solid budget.

If you're dreaming of building a new home, one of the first steps you should take is to establish a solid budget.

Whether you're building a custom home or buying a subdivision home, understanding your builder's allocation of funds and having a solid grip on your budget will allow you to make informed, successful building decisions and allow you to enjoy the adventure of the construction process.

Budgets are one of the most difficult items in the building process to tackle. Many people have the preconceived notion that a typical budget is $100 a square foot. This is unrealistic. In fact, budgets today can easily range from $150 a square foot to $500 a square foot.

You need to sit down and go through every element of the home with the builder, ask the important questions and establish what your priorities are.

For an example, there is a trend toward hot water again due to radiant heating, better zoning and better efficiency even though there is a greater capital cost.

You can cut costs by buying inexpensive windows and doors, but you may simply end up replacing poorer quality windows in 5 or 10 years, whereas higher quality windows can last 20 even 30 years.

I recommend that you upgrade and buy the best you can afford in the things that you're not going to be changing a few years from now, such as the wiring, the mechanical, windows, exterior finishes and roof finishes.

Once we have the good bones of the home, we can always renovate a kitchen or a bathroom at a later date.

This is a good strategy for getting the house you want even with a modest budget. If your budget will not allow you to do it all now, then simply plan for several building and or finishing stages.

Satisfaction requires knowing what you want. Have a wish list to present to your building team at the initial meeting.

Include exterior and interior photos of rooms and homes that appeal to you and brochures on products that you want to include in your finishing list. Keep an accordion-style folder full of items you want to use in your home.

Professional architects and designers can help you get everything you want in a home. These creative pros will often be able to find a more cost-effective way to include more of the items on your wish list. Design fees can often be offset since they are in touch with products and suppliers and may be able to source similar, less expensive items.

You, the new home purchaser, the architect and the builder are working as a team from beginning to end, ensuring that there are no surprises when you reach the working drawing stage.

It is imperative that you understand the importance of a realistic budget. Put an additional 8 to 10 per cent aside for contingencies.

If your builder has given you fund allocations, make sure that you can get the finishes and material you want for that budget. For example if you have a flooring allowances of $5,000 but the hardwood and stone flooring you want costs $11,000, you will be responsible for the difference. These overruns can add up -- plan for them.

Take your time, explore, research and budget for all of your options.

Poor planning is generally the main reason for cost overruns.

Plan to plan, stay on budget, and have the home of your dreams (without losing a lot of sleep).

Remember that there are many items that make up the cost of your home.

Here's a list of some of them: