Should you buy a Home or Build a Home? The pros and cons of building a New House in Toronto/GTA
Everyone is willing to do what it takes to get the most appropriate home for themselves and their families. This process involves various choices, but the very first decision is whether to buy an existing home or build a new one. Here we discuss the pros and cons of buying a house versus building a house.
Read till the end and find out which solution fits you best.
To compare the cost involved in building a house versus buying a newly built one, you need to keep in mind multiple factors. In general, building a house is cheaper than buying one! This is simply because, when you build a house, you will not pay for the seller’s profit. Similar to any other market, if someone is willing to invest in a property and build a house to sell, they want to make a profit on their investment. This is usually – in a stable market- around 20-30%. Whereas, when you build it for yourself, you will save that 30%.
However, building a house is a capital intensive process and you will require cash. This will be in 3 stages, explained in more detail in our Buying Land and Building a House Costs in Toronto article but in short, a mortgage down payment on the property depending on your financial situation, cash to cover hard costs of construction and soft costs. Unlike building yourself, buying a house is less capital intensive. All you need is the down payment for your mortgage, plus other soft costs such as land transfer fee, lawyer’s fee, etc. But, keep in mind you will be paying not only for the seller’s profit but will also pay interest on the remaining mortgage balance for the entire period of your mortgage, usually 25 years. Therefore, if you have the financial capability to build a house, you will end up saving a lot in the long term (or you can also do it as an investment and sell the property after building).
Moreover, when building a house, you have the option of either customizing it to fit your needs and liking or you can also save money by not doing a lot of customization that are not necessary for you. You can also build a more efficient home that not only meets new energy codes and has lower environmental impact but also reduces the operation and maintenance costs.
This is obvious that buying an old house is more affordable than building a new one. But additional costs of updates, repairs, remodeling and landscaping should be considered in the total cost of the house. It would be interesting to know even if buying a new-build home, you may face numerous hidden costs like latent defects and lack of interior essentials such as appliances. Whatever you choose, make sure when weighing the cost of building your own home vs. buying a pre existing home, you know what you’re getting and, more importantly, what you’re not. Below links can help you factor in all costs.
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A house building project takes at least 8 months, and on average one year. But when buying a property, you may be able to move in right after closing the property or in some cases within a month or two. For many people this convenience is compelling enough to prefer an existing home over a building one.
Customization is another huge advantage of building your own home over buying one. It is not that easy to find an existing house that meets all your needs and wishes. Instead, when building your own home, you get to actually choose all your finishes and other features of the house. You will also be able to upgrade the quality of your own place and have much more control over the details to match your taste and lifestyle. This is quite luxurious.
On the flip side, when you buy a property, you have to compromise everything from the floor plan to the number of windows and craftsmanship. You may wish that there was another bedroom on the main floor or the bathroom was bigger. These are things that can be planned for when you are building a house for yourself.
The process of house hunting involves numerous steps such as viewing homes, making offers, home inspections and closing. While building a home involves more fun yet challenging steps. You have to find the land (if you don’t have one), which may not be in the neighborhood where you are familiar with. You need to find a contractor in Toronto, decide on a design, choose every element that goes into it, and above all, you have to accept to find a temporary accommodation. In addition, building a house for yourself can greatly reduce your maintenance cost as you have full power over the quality of the materials and equipment used.
The Bottom Line
Building a home is cheaper than buying one but requires Time and Cash. Working with an experienced builder can make the process much easier and also reduce the risk of going over budget and time. If you have the time and money, why not build your own dream home?
Contact Odima construction group with years of experience in home building and home renovations in Toronto/GTA. Our professional team can help you decide whether to build a house or to purchase one will suit your needs and wishes best.
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