How to build your own house

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Ready to have your dream house built?  Building a home does not just require a great deal of your vision, time, and effort, it also needs extensive planning, organisation, and coordination with professional consultants.  Financial-preparedness is also key, which is why you must come up with a realistic estimate of possible costs and overhead. Many first-time, would-be home-owners resolve this by getting the financing assistance they need through bank loans.

To build or buy?

Many believe a common misconception: that building a home is cheaper than buying one. Whether this rings true for you or not depends on many factors, among them are the fees you would have to pay your consultants, along with connection, and legal charges; if you do indeed resort to building a structure over buying one.

The average cost of a house in Malaysia is RM497,535. Building a new house would cost you around RM310,000 to RM320,000 on average – excluding the price of the land it stands on. Structural costs would add another RM34,000.  It costs a pretty penny. But still, Malaysians continue to have their homes built. There is, after all, no other feeling like when you finally see the house you have always pictured in your head – the sheer human labour that went into constructing something that had only been a dream.  Thankfully, there are Malaysian banks that offer financing options like housing loans so that qualified individuals like you, who want to have their own dream houses built, may do so.

Steps to building your dream home Once you get approved for a loan, careful planning is necessary so you do not waste time and resources as you carry out your construction project. Refer to the following guidelines:

1. Acquire a mortgage

Banks offer several home financing options whether you plan to buy or construct a home. There are land loans you can apply for if you are looking to own a piece of land and construction loans to fund your home construction project. If you enjoy great financial standing and have no outstanding loans, you can be in a good position to negotiate for better loan terms and conditions. You would need to prepare funds from your own resources to supplement a home loan. Typically, banks in Malaysia cover a margin of finance of between 70 and 90 per cent on home loans, which means you would be required to make a minimum deposit of 25 per cent on the total housing cost, as a downpayment. It is also good practice to set aside up to about 10 per cent of the total cost for contingencies or possible overhead costs.

2. Get a planning permit 

Before you can purchase land and build your home, you need to get approved for a planning permission from local authorities. A permit will be issued after authorities confirm that the project you have proposed will not cause environmental harm and complies with any and all planning standards and regulations.

3. Find suitable land

Among a few things you would need to consider include the availability of public facilities and infrastructure. Avoid lands involved in legal disputes or locations with high crime rates. You might also want to check the quality of the land and the surroundings.  Pay stamp duty Once a suitable location for your dream home has been found, you would need to register with the Land and District Offices. Land buyers are required to pay stamp duty on the Memorandum of Transfer. For the first RM100,000, stamp duty is one per cent, while for the next RM400,000, stamp duty is two per cent. Anything over RM500,000, stamp duty is three per cent. You could seek the help of a competent lawyer to brief you on the requirements you need to fulfill and help with the entire registration process.

4. Finish your floor plan 

You might want to enlist the expertise of an architect, who will assess, fine-tune, and improve your design according to feasibility, budget, and other considerations. You and the architect always need to be on the same page with regard to all matters concerning the design and implementation of the design – and this can be addressed through open communication.

Start doing some preliminary planning, taking into consideration the design you want and other specifics such as furnishings and facilities you need to have installed. Research on the real estate market, prices for materials, and other construction costs, and come up with an estimated total cost for your project. 5. Hire a team of consultants Building a house involves more than just putting wood, cement, and nails together. If you want your home construction project to be a success, you need a team of consultants to oversee each aspect of construction.

A consultant team, often composed of a structural engineer, a mechanical engineer, and quantity surveyor, handles design, planning, and quality assurance. You would also need to enlist the help of a project manager to coordinate building efforts, especially if you cannot afford to oversee the construction yourself. Make sure to openly communicate with your consultant team so possible concerns and issues are resolved swiftly. Involve yourself deeply in the process to ensure that everything stays on track, and that everyone gets each and every detail right the first time, that you feel at home in every room to avoid costly repairs and renovation costs later on. Here are steps for you to follow if you have your mind, and wallet, set on building the house you have always had a yen for. Make sure to compare costs for everything so you could manage your construction budget with ease. Having a house built does not need to land you in debt or drain your finances dry, but it could, if you do not set yourself to save and spend less on costs wherever you can.

CompareHero is the leading Malaysian financial comparison platform, aimed at educating Malaysians and helping them save time and money. Visit CompareHero at www.comparehero.my.