Building houses isn’t cheap, in fact, it’s downright expensive, and one cost that most people never seem to think about is the existing living expenses coupled with new interest payments which are payable as soon as you draw down on your loan facility.
For us at the moment that means paying rent on our old house that we sold recently. as well as interest payments on the land and construction loan that we have. It’s a bit disheartening to see my entire pay packet disappear into rent and loan repayments, particularly when I know that we still have months of rent payments before we can move into our new house.
All in all the house was supposed to take about 25 weeks when we first looked at the builder. By the time we signed the contract they were quoting an average of 27 weeks and now it is looking like around 32 weeks. Each week is costing us rent of around $500 a week, so those extra 7 weeks will cost $3,500 – that’s a lot of money.
Something we have done to try and ease the pain of having to pay rent as well as the loan, is that we setup our house loan to be interest only for the construction period. That essentially means that we don’t have to pay as much money into the loan while the house is being constructed and while we are still paying rent. Doing this will actually end up costing us a little bit of money over the long run, but it means that we have a little bit more money to play with during this construction period.
The thing that is really worrying though is that the contract with the builder allows for up to 9 months to build the house. 9 months is a lot more than 32 weeks, which means that we might end up needing to pay more than the $3,500 that I previously mentioned – let’s hope it isn’t the case.