Buying a new property as an investment is also a great way to get into the market and build equity. In fact, house buying is one of the best investments you can make in your lifetime. Not only will owning your own home increase your personal value but it can also be a reliable source of passive cash flow. That being said, buying a new home can be an expensive affair. The first step is to find an affordable property that fits your budget and requirements.
However, how do you calculate how much a mortgage on that property will cost? In this article, we’ll outline the steps involved in calculating the cost of building a new home from scratch with an Estate Agent Redditch in the United Kingdom. This includes identifying common building costs such as architects’ fees, external finishes and utility connections, and internal walls and ceilings.
What to consider when calculating the cost of a new build
When calculating the cost of a new property, the first step is to determine the value of your home. This is very important as it will affect your mortgage repayment and subsequent equity build-up. The easiest way to do this is to use a mortgage repayment calculator.
Once the amount is known, you can then work out the costs of building a new home. If you already have a rough idea of your budget, it will be easier to identify areas for cost savings. Another important consideration is what you plan to use the property for.
If you only plan to use the property for short-term lets, such as holiday accommodation, it may not make financial sense to buy. A new build is usually the most cost-effective way to live in a property, especially if it is your main residence.
Estate Agents in the UK
It’s important to find an estate agent that can act as a guide throughout the house-buying process. Ideally, you want an estate agent that can act as your personal property valuation consultant. You may be surprised to learn that estate agents are often prohibited from providing financial advice. On the other hand, many estate agents offer mortgage brokerage services. This allows them to provide mortgage advice and recommend a suitable lender.
The mortgage brokerage service includes a mortgage valuation service. This means that the estate agent will provide an independent valuation of your property so that you can compare costs with other properties in the area. It’s also a good idea to find out who the competition is. This will allow you to better understand the market price for your property.
Land Registry Fees and Stamp Duty
The next item on the cost of building a new home equation is the cost of purchasing the land. If the cost of the land is the same as the cost of the property, you may be interested in building on your own land. This is advantageous if you already own the land. When purchasing the land, you’ll need to pay a fee to the land registry.
This is usually around £1,000. In some cases, you may be required to pay extra fees if the registry takes a long time to process your purchase or if you pay cash. Next, you’ll need to pay stamp duty. Stamp duty is the tax on the transfer of ownership. This amount is based on the property’s value and the purchase price of the land. If you buy a new build house, you’ll usually pay 3% of the purchase price.
Building Works and Supplies
Once you have the amount for the purchase price of the property and the amount for the land, you’ll need to look into the costs of building a new home. This will include the costs of hiring builders to construct your new home and the cost of materials.
You may also need to consider the cost of a land survey, site foreman, building insurance, and external finishing works. You’ll also need to factor in the cost of raw materials such as steel, glass, and timber. This will depend on the quality and quantity of the materials. If you buy high-quality materials, they will cost more than cheap materials. On the other hand, cheaper materials will be of poorer quality.
Selecting an architect and tradespeople
Once you’ve identified the building costs for a new build, it’s time to select an architect. It’s important to choose the right architect for your project. It’s essential that the architect you choose is experienced with building new homes. Next, you’ll need to look into the tradespeople required for the project. This will include the building contractors and tradespeople. Although the architect is responsible for the design of the home, it’s the tradespeople that carry out the construction.
Total Construction Costs
Once all cost items have been accounted for, you can work out the total construction costs of building a new home. This will include the purchase price of the land, the cost of building the home on that land, and the costs of building materials. You should also consider the cost of site preparation, such as fencing and landscaping.
Final costs – closing costs, insurance, and taxes
Once all costs have been accounted for, you can work out the final costs of buying a new building property. These include the costs associated with buying the property, such as mortgage brokerage and mortgage interest. You may also need to factor in the costs of closing costs, such as the solicitor’s fee, conveyancing fees, and stamp duty. These costs are usually around 1% of the purchase price.
Summary
Buying a new property as an investment is also a great way to get into the market and build equity. In fact, house buying is one of the best investments you can make in your lifetime. Not only will owning your own home increase your personal value but it can also be a reliable source of passive cash flow. That being said, buying a new home can be an expensive affair.
The first step is to find an affordable property that fits your budget and requirements. However, how do you calculate how much a mortgage on that property will cost? In this article, we’ll outline the steps involved in calculating the cost of building a new home from scratch. This includes identifying common building costs such as architect’s fees, external finishes and utility connections, and internal walls and ceilings.
