Planning your budget for your self-build project

Every self-building project inevitably starts with one pressing question: how much will it cost? Indeed, it seems impossible to put this question on the back burner.

The vigilance with which you will define some aspects of your project will have a great influence on the accuracy of your budget and will help in avoiding unpleasant surprises incurred by additional expenses. But how can you plan your self-building project adequately?

To begin with, we have to admit that it is impossible to provide exact numbers when it comes to the cost of building your own home, each project having its own specificities. Many factors will, in fact, cause the total amount of your bill to vary, including the quality of materials used, the number of employed people working on your project or the location chosen for the construction of the new residence.

However, some guidelines can be very useful in order to avoid leaving out the calculation of an important element or spending an excessive percentage of the budget on a single stage of the project.

Setting a maximum budget with a financial advisor

In order to know if you're able to build your own home, you first need to know the amount you have available in order to avoid any financial problems. Thus, an appointment with a financial advisor is recommended to know how to plan accordingly. In general, the repayment of your debts should never exceed 42% of your gross income.

In these calculations, your financial advisor will evidently take your current financial obligations into consideration before deciding on the matter. Following this meeting and the decided amount for your maximum budget, you should reserve about 15% of this sum for unforeseen events to avoid exceeding the costs incurred by your self-build project.

Detailing your budget

For the budget linked to buying the land: Expect approximately 25% to 30% of the total price of the project regarding purchasing of the land. It should be noted that from this percentage, a proportion of 7% to 8% will be reserved to pay the notarial deed.

For the budget allocated to the construction of the house itself, you'll have to respect the following proportions:

• For the excavation and construction of foundations (foundation, footings and foundation walls, pouring of concrete and floor joists): from 30% to 35%;

• For the closure of the structure of the house and the frame (windows, doors, roof, stairs, electricity, plumbing, insulation, exterior finish): about 30%;

• For the construction of walls and ceilings (laying of gypsum board): 10%;

• For connection to utilities (water, electricity, sewer) and finishing (countertops, exterior stairs, cabinets, floors, painting, sanitary equipment and exterior landscaping): from 25% to 30%.

Note that a municipal sewer connection alone costs at least $2500 to $4000. On its part, the cost to be paid regarding the connection to electricity will be evaluated according to the distance of the new home from the electricity network.

Note that the above-mentioned proportions must be respected regardless of the workforce mobilized as part of your project.

Additional fees not to forget in you self-building project

Source: Canva

Other fees will need to be considered, in which the prices will vary according to your project. Thus, don't forget to establish a budget for:

• The quotes and the plan (provided to obtain the construction license): The price of a plan made by an architectural technologist should cost approximately $1 to $3 per square foot, but this price can fluctuate if your project has any particular details of higher complexity. If you decide to do business with an architect, you may have to pay between 8% and 12% of the construction price (excluding taxes). Watch out for any modifications along the process, extra fees will be charged for them. The rate may also vary depending on the complexity of the work and the length of the period in which the architect's services are required.

• The construction license: To begin with, we have to mention that the percent reserved for obtaining a permit is difficult to determine. Indeed, prices highly vary according to the location chosen to build your property. For example, in Montreal, it will cost you 10 times more to obtain this authorization than in Saint-Eustache. Since in Montreal this would cost you $9,80 per $1000, being the most expensive place to build, the cost of your permit shouldn't exceed 1% of the total price of the work.

• Getting a location certificate: For this one, you will need to pay between $1500 and $2200.

• Getting an estimate for the work to be done: Generally, a construction cost estimator will charge about 25$ an hour for their services.

• The transfer cost (welcome tax): These need to be determined regarding the value of your house. Note that you can use a transfer tax calculator to give you an approximate idea.

• Soil and water quality testing: For soil testing only, this will cost you between $900 and $3000.

• Obtaining a liability insurance policy: In order to ensure your protection and that of everyone working on your construction site, it is highly recommended to get such insurance policy.

Some additional information...

Despite all these steps required in order to complete a project of such magnitude, it should be noted that a self-building project will manage to save you about 30% compared to a turnkey project (with similar characteristics).

Do you absolutely want a basement? You'll have to increase your budget by at least 5% to do so. In order to get the best possible price for necessary materials regarding your project, make sure to get at least three quotes from suppliers.

If defining a budget and sticking to it is an important part of the overall planning of your self-build project, complying with established requirements is also another major step that you will need to take into account.

Before taking the plunge, you'd like to know about the challenges of a self-build project? Head over to our article about the matter!

Author: Karine Dutemple

Translation: Christine Simard