Worry-free guide to buying or building a brand-new home

13 May 2018 by National Bank

A kitchen that meets your every need. A bedroom with custom closets. A central family room that suits you. Tons of storage space. An office tailored just to you. Every detail is carefully considered. While that may be everyone’s dream home, the reality is you can’t always afford to make your dreams come true. Compromises are inevitable when your budget, resources and time are limited.

Does it cost more to build a home?

Building your own home or having it built by someone else means choosing a trusted team and can be extremely stressful. To achieve what you have in mind, you have to make a million decisions. Before you consider the financial side, be aware that construction can take weeks, if not months.

Buying a new build: It generally costs more to buy a new build than one that’s already built. You’re paying for the freedom to choose every aspect of your home and you have to consider all the costs, from landscaping to heat pump. Your ability to negotiate a better price also tends to be pretty poor.

There are different new home warranty plans that could help you avoid unexpected expenses. In Quebec, if your home has been approved by the Régie du bâtiment du Québec (RBQ), you are covered by the warranty plan if the work is not completed on time. What’s more, the Garantie de constructions résidentielles (GCR) allows buyers to ask a contractor to fix a construction defect within the first five years. You can also get an optional plan with the ACQ, APCHQ and Tarion Warranty Corporation in Ontario. Be sure to look into tax refund programs as well.

Buying an existing property: Buying a home that’s already built can come with its own set of little things that need fixing, plus you might need to do some major upgrades in the next few years, like replacing the roof or redoing the kitchen. You also need to keep in mind the cost of running the home. The electricity use of an older home could increase your monthly energy bill, for instance.

Buying a pre-construction or model home

This choice is less demanding than building your own home, but it requires a bigger time investment than buying an existing home or condo. You can choose your plot in an exciting real estate project and select the plan for your home, which you can then tailor to your personal taste. But before you take the plunge, you need to know what’s involved in this kind of purchase.

First off, selecting a builder is essential for the project to be completed. You’re buying more than a “model”—you’re buying a team and its skill set. It’s a good idea to check the builder’s reputation, how long they’ve been around and if they’re a member of an industry association or organization. You can check out their website to see if they offer a warranty and even visit previous projects they have built. You can also go on the websites of new home warranty programs and see if they are listed on National Bank’s database of recognized builders.

Despite all your research, there’s a chance the real estate project will never get off the ground. There can be a world of difference between the signing of the contract and reality, if only because a housing project can take years to develop.

Even the guarantee plan for new residential buildings doesn’t protect you from the unexpected or a home that doesn’t meet all your expectations.

If you’re not comfortable with this level of uncertainty, it might be better to buy a home that’s already built or find a plot of land in a nearby neighbourhood and install a prefab or manufactured home if they’re permitted in your municipality.

Building your own home

If you opt to buy land to build your dream home, keep in mind that building your own home is a more complex project. There are many steps to take before your ideas become reality. Architectural plans to assess, certificates to obtain, permits to request and verify, as well as setting a budget that includes estimates from multiple qualified professionals and subcontractors—all before you put the first shovel in the ground. For many who choose this route, these responsibilities are on top of their regular job. A good schedule can make all the difference, especially if you need to balance work and family demands.

Buying a home and doing major renovations

You found a home that meets your needs in a neighbourhood you like, but you have to replace the roof, redo the kitchen, upgrade the bathrooms and finish the basement?

Doing major renovations is a big project that you need to be well prepared for, starting with choosing a solid team and setting a realistic budget. Renovations often involve many surprises—that’s why you might want to consider spreading them out over several years, based on how urgent they are. You can live with a kitchen you don’t love as long as it’s functional, but not a roof that leaks when it rains. That’s why you need to plan based on both priorities and financing.

No matter which route you choose to take, keeping a close eye on each step of the process is undoubtedly the best way to get a final product that stays on budget and matches what you have in mind.

Legal disclaimer

Any reproduction, in whole or in part, is strictly prohibited without the prior written consent of National Bank of Canada.

The articles and information on this website are protected by the copyright laws in effect in Canada or other countries, as applicable. The copyrights on the articles and information belong to the National Bank of Canada or other persons. Any reproduction, redistribution, electronic communication, including indirectly via a hyperlink, in whole or in part, of these articles and information and any other use thereof that is not explicitly authorized is prohibited without the prior written consent of the copyright owner.

The contents of this website must not be interpreted, considered or used as if it were financial, legal, fiscal, or other advice. National Bank and its partners in contents will not be liable for any damages that you may incur from such use.

This article is provided by National Bank, its subsidiaries and group entities for information purposes only, and creates no legal or contractual obligation for National Bank, its subsidiaries and group entities. The details of this service offering and the conditions herein are subject to change.

The hyperlinks in this article may redirect to external websites not administered by National Bank. The Bank cannot be held liable for the content of external websites or any damages caused by their use.

Views expressed in this article are those of the person being interviewed. They do not necessarily reflect the opinions of National Bank or its subsidiaries. For financial or business advice, please consult your National Bank advisor, financial planner or an industry professional (e.g., accountant, tax specialist or lawyer).