Budget and financing
Deciding on a budget is very individual. It could be what money you have saved or the value of your current home, or even the maximum amount a mortgage provider will lend. This is definitely not the time to be over optimistic – if anything, underestimate what you can afford. At the very least come up with a conservative amount that you are prepared to spend. And that is all you need to get started.
Remember that the budget is a moving beast as changes occur and specification decisions are made; also be under no illusion about knowing precisely how much something will cost before it is designed, specified and sourced.
At the start of the design process, your architectural designer will ask what your budget is. After further exploring in detail your ideas and requirements they should be able to design something that falls within your general budget. As a self-builder you can apply £€/per square metre rule of thumb at the initial stages but be aware that the true cost per square metre for self-builds is a very wide spectrum. A more accurate cost will only become available once a QS is able to get a fully detailed and specified set of plans to price off and you make a lot of specification decisions.
Even with a full bill of quantities it is important to keep some money aside for contingency purposes as you may come up against a number of unknowns such as ground conditions that could radically alter the budgeted cost.
You must be prepared to be flexible when you encounter something unexpected. Flexibility is having items that are not sacred cows and which can be sacrificed should the need occur such as going for cheaper floor coverings or fixtures and fittings should the need arise.
It is not uncommon to pass self-build homes where the owners have needed to delay the final landscaping and external finishing due to cost overruns during the build. Some self-builders will install second-hand kitchens and paint their concrete floors until money become available to finish things off.
If you intend to apply for a mortgage, then it is best to speak to your bank or building society at an early stage and understand their requirements. The situation is different in NI and ROI. Be mindful that some banks will not lend if the house does not conform to their standards, e.g. they are wary about non-traditional roofs such as large flat roof areas, and so are insurance companies, or sites with a shared road access, for example. The test question comes down to how easily can the bank sell the property if the self-builder is no longer able to pay off the mortgage?