Finance.... this will make or break the project. There are various ways to approach it but I will detail what in my mind is the best way to go about it. Of course, if you have loads of cash then one can always skip to the next page. Having said that, most people do not have loads of cash sitting in the bank and may be wondering how best to finance their home.
Having some savings will always help. However, before pouring those savings into a concrete mass, be sure that you have enough left over in a "rainy day account". This will ensure that the construction process will not grind to a halt because of some unforseen but not uncommon "emergency". In the days when banks were offering loans at 13 - 16% interest, I would have recommended a short term bank loan of 3-5yrs to finance a modest 3 bedroom house with average finishings (considering that the land has already been paid for). When I compared such a loan to getting a loan from a SACCO at 1% per month, I always found them to be at par but with the added advantge of SACCO loan having a stable rate while the bank loan will fluctuate. Now that bank loans are at +20% interest, SACCO loans are back in vogue and with good reason.
I would recommend that one is well armed with the cash needed to complete the project or at least get it to a point where it is livable. I do not subscribe to the idea of building slowly over many years as the added costs of inflation and having to pay rent as you build eat into your earnings. Many people have also built houses over 5 - 10 yrs and on completion they discover that the house no longer fits into their needs - it may be too big or too small or their preferences may have cahnged. One may argue that with a loan, I will be forced to pay interest and I will counter that I will pay the money back with the rent saved and my property will be appreciating in value.
Try as much as possible to have your financing ready before you begin to avoid unnecessary delays and increased costs.
A source of financing that is usually ignored may be family members who can give a soft loan or grant and also some work places have provision to give loans to employees against the salary on favourable terms.
A controversial source of financing especially for a young family would be pension. Assume both spouses have been in well paying jobs for five years or so. One of them has been thinking of quiting his/her job either to be a homestay mum/dad, or they have just had it and would rather not work there any more and would not mind looking for another job. What better time to quit than when starting this great project. You will receive pension payments that you can put in the building project and will have time to supervise it until the end while the other spouse caters for the day to day family needs. This house will be an investment whose value will appreciate over time more than you may ever hope to gain if you left that money in the pension fund.
With adequate preparation and financing, the actual building process is a breeze and can take 3 months to completion.
Having some savings will always help. However, before pouring those savings into a concrete mass, be sure that you have enough left over in a "rainy day account". This will ensure that the construction process will not grind to a halt because of some unforseen but not uncommon "emergency". In the days when banks were offering loans at 13 - 16% interest, I would have recommended a short term bank loan of 3-5yrs to finance a modest 3 bedroom house with average finishings (considering that the land has already been paid for). When I compared such a loan to getting a loan from a SACCO at 1% per month, I always found them to be at par but with the added advantge of SACCO loan having a stable rate while the bank loan will fluctuate. Now that bank loans are at +20% interest, SACCO loans are back in vogue and with good reason.
I would recommend that one is well armed with the cash needed to complete the project or at least get it to a point where it is livable. I do not subscribe to the idea of building slowly over many years as the added costs of inflation and having to pay rent as you build eat into your earnings. Many people have also built houses over 5 - 10 yrs and on completion they discover that the house no longer fits into their needs - it may be too big or too small or their preferences may have cahnged. One may argue that with a loan, I will be forced to pay interest and I will counter that I will pay the money back with the rent saved and my property will be appreciating in value.
Try as much as possible to have your financing ready before you begin to avoid unnecessary delays and increased costs.
A source of financing that is usually ignored may be family members who can give a soft loan or grant and also some work places have provision to give loans to employees against the salary on favourable terms.
A controversial source of financing especially for a young family would be pension. Assume both spouses have been in well paying jobs for five years or so. One of them has been thinking of quiting his/her job either to be a homestay mum/dad, or they have just had it and would rather not work there any more and would not mind looking for another job. What better time to quit than when starting this great project. You will receive pension payments that you can put in the building project and will have time to supervise it until the end while the other spouse caters for the day to day family needs. This house will be an investment whose value will appreciate over time more than you may ever hope to gain if you left that money in the pension fund.
With adequate preparation and financing, the actual building process is a breeze and can take 3 months to completion.
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