What does self-build mean?
Self-build is when you fully or partially build your own home. If you entrust certain jobs to subcontractors—for example, if you don't have experience in plumbing or roofing—their value should not exceed half of the construction costs.
You can decide to take on the role of project manager and coordinate all subcontractors or hire someone to do the job. In any case, expect to devote at least 20 hours a week managing your project, which is the equivalent of a part-time job during the day for several months. It's not a decision to be taken lightly!
You'll have to make lots of decisions every day, and each one will affect whether the project stays on budget and schedule. Even with a strong team, building your own home is more complicated than buying an already-built home. But for construction enthusiasts, it's worth the effort.
1. Do you know all the steps the project entails?
Building your own home involves two major phases: planning and construction. Each phase consists of several steps.
During planning, you'll need to:
- Set an initial budget and confirm your financing capacity (pre-approval)
- Draw up plans
- Get a cost estimate
- Request and obtain estimates that include a detailed list of materials
- Get a site plan indicating the placement and orientation of the future home on the property
- Get soil and/or water quality tests and studies (if needed)
- Get a building permit from the municipality to make sure the project complies with existing regulations
- Finalize your budget and secure the financing
- Get a public liability insurance policy for the duration of the project (strongly recommended by the Régie du bâtiment du Québec)
- Choose your suppliers
- Get a survey certificate (after construction)
The construction phase includes:
- Excavation
- Foundation
- Framing
- Roofing
- Doors and windows
- Siding
- Mechanical systems (plumbing, electricity, heating, ventilation and air conditioning) and other add-ons before closing the walls and ceilings (home audio, alarm and central vacuum systems, etc.)
- Insulation
- Drywall
- Painting
- Interior moldings and other finishing work
- Flooring
- Cabinets and countertops
Construction usually takes about six months to complete. However, it is not uncommon for it to take longer. At National Bank, a maximum of 12 months is allocated to building your own home.
2. Do you have the right team?
Building a home is a team sport. You'll need to call on these professionals:
- An architect or an architectural technologist to draw the plans
- A construction estimator to estimate the costs
- A surveyor for the site plan
- A building engineer
- A mason
- A plumber
- An electrician
- A notary
- A banker
- An insurer
Before choosing each professional, you need to assess their estimates and verify their references, reputations and permits. Some of the work must be done by specialized subcontractors licensed by the Régie du bâtiment du Québec, particularly for any electrical work and gas installations.
Are you counting on your friends and family to help you out? Great! Make sure they only stick to finishing work, like painting and installing cabinets and flooring. Otherwise, they must have a competency certificate from the Commission de la construction du Québec.
In your role as the project's conductor, you'll have to manage everyone, make sure the specialists collaborate and enforce deadlines.
3. How will you finance your self-build project?
Building your own home takes a lot of time and effort. However, it can help you save money. On average, an owner-built home costs 30% less than a similar turnkey house.
How much does it cost? It depends on a number of things, like the house itself, its location and your choice of materials. After buying the land and visiting the notary, here's a general idea of how your budget can be broken down:
- 30% to 35% to excavate and lay the foundation
- 30% to “lock-up” the house
- 10% to build the walls and ceilings
- 25% to 30% to install the plumbing, electricity, gas; connect to public services; and install the stairs, doors and windows
In addition to the direct costs of labour and materials, you need to think about the indirect costs: permits and certificates, notarial fees, insurance, transfer tax, etc. To avoid any unpleasant surprises, set a 15% safety margin for unexpected expenses.
To pay for all this, you can get a loan to build your own home. All costs need to be estimated very precisely to obtain this financing. Your project will be thoroughly analysed before being approved by a real estate advisor. They will guide you through the credit approval process and give you a list of documents to put together.
You will still need to dip into your savings to pay the down payment for your self-build. You will also need to prove that you can afford the deposits required by material suppliers and have sufficient funds to bridge the gap between the actual cost of your project and the amount financed by your financial institution. As with any real estate purchase, you need to assess your borrowing capacity.
Once the loan is granted, the money will be disbursed gradually to meet the financial needs of the site. Your financial institution will send a certified inspector to visit the site a number of times to validate the quality of work and its progress. A holdback will be required on each disbursement and will be released after the work has been completed.
Good news! You may be entitled to a partial tax refund. For GST purposes, the fair market value of the property must not exceed $450,000 and the amount of the rebate can be as high as $6,300. As for the QST, the maximum admissible value for the property is $300,000 and the maximum amount of the rebate is $9,975.
Building your own home is an exciting adventure and a one-of-a-kind experience that can result in your dream home. If you do your homework and put together a good team, it's within your reach. Schedule an appointment with an advisor