Three Key First Steps in Building a House (And Saving Your Money)

Our 3 key first steps in building a house will help you upskill quickly so you are ready for designing, building and/or buying a home for the first time is (a bit of a frightening – but exciting – operation.)

Hopefully, our 3 top pointers will kit give you insight into achieving your dream home. We love ideas from our network, so drop us a comment or  give us a vote!

Take note below here below now, these are the core first 3 key steps in building a house. they are simple and yet often forgotten or ignored. (So simple yet so painful if ignored!)

The 3 Key First Steps

  1. Organize the finance budget and mortgage first
  2. Design and select within that budget
  3. Don’t cut corners in design or construction.

Key Step 1 in Building Your House

Before you choose your design, check your budget and start to organize the money. Count the cost!

…ensure you get an OFFER LETTER from the lending institution in your hand with the real final amount you can borrow.


You can always request your own preliminary approved loan amount from a mortgage adviser, bank or credit union when contemplating owning or building a home. Remember, it is based on your salary or income and lending institutions calculate a percentage of that to estimate your loan amount for your future home. It’s normally in the region of 40-45% maximum of your income.

It is important to point out that this is PRELIMINARY. It’s a guide. SO don’t PIN ALL YOUR HOPES on whatever the lending institution staff tell you. Shop around. Get other estimates.

When you are ready to choose your best deal, then ensure you get an OFFER LETTER from the lending institution in your hand with the real final amount you can borrow. There is a process to getting this, but nothing said before that letter is approved or real.

You can use mortgage calculators online  and website market comparisons so you have an idea of market options. Click this one below to estimate your loan.

The banks normally only start the paperwork for organizing the actual cash…(which can take 2 – 5 months )… once they know you have  a land deed and town planning permission available. (Many banks will also combine land purchase and house build costs together for loans.)

When they are complete, you will receive the formal written, letter headed offer letter, stating the amount they will pay out and the terms, such as the interest rate.

Remember too that ehe bank owns YOUR home until you have paid the whole loan off even though it is in your name.

All of this to say, count your costs but also consider a property which is well-designed and built and increases in value …for the bank and for your future equity.

Another Part of Key Step 1 – Don’t Forget to Factor In Other Costs!

We often forget the additional costs of property and new mortgages. It can  often feel like strangulation when added to all the costs of building, moving, fitout and more!

 After building completion, you have less money to live on for a period because of the additional extra expenses of moving, fitting out with furniture and curtains etc, new insurances…all of which add up.   So we do strongly suggest that you add a separate ancillary expense budget for odds and ends in your calculations for building a house .

Examples of Ancillary Costs

Here is a list of some of the most common ancillary costs, some of which (numbers 5, 6, 7) can be combined into your loan. Just remember many banks may charge interest on the extra costs!

  1. property tax
  2. council or state tax for utilities (eg garbage collection)
  3. life and other insurances
  4. maintenance costs
  5. bridging finance rates
  6. mortgage application fees (can these be waived?)
  7. financier survey charges

Make sure you ask questions and budget them in!

But before we get there, ..how do we even know how much our new dream house design will cost to build? This is one of the most important steps in building a house.

 Remember the saying “count the cost before you build the house?”

You don’t want a half finished dream home!

Design or select a home within your budget.

Step 2 in Building Your House

I need to shout about that one! Do I need to repeat?

Don’t waste money on dream plans that you can’t afford to build.

So often we have seen the casualties  from “champagne taste with mauby pocket” customers who fork out on a design which they then can’t afford to build. (Mauby (pronounced maw-be) is a drink made from tree bark…the opposite to expensive champagne).

You, however are now in the know and will not be doing that!

This step in building a house is about being prudent. You may watch Grand Designs but they never mention the debt people live with! Better to live within your budget and design to expand the home in approximately 5 years once you have recovered from the new expenses.

 And still go on holiday every year!

If you are on a tight budget, designs need to provide you with BASICS at the beginning (unless you have money to burn!)

Remember you have a lifetime to add-on cool stuff – it changes in fashion over the years anyway!

(Of course this does not apply if you have enough money to build and buy a luxury home! But even there, you need to budget!).

 Step 3 in Building Your House

Don’t cut corners in design or construction.

Whether you are building a new smallhome or your home purchase is already built (eg house, apartment, duplex) and you want to renovate or upgrade it, get qualified experienced input so that the works being done repay you in the future with increased value of your property. In our third key and final step in building your new house, it’s better to spend a little bit more.

Don’t be blindsided by super low costs from builders or construction companies. You may end up spending double!

Even the removal of one wrong wall or a poor design of circulation flow makes it more difficult to resell your home at profit and can reduce the value of the property!

(We are here to help. Checkout our design tips here from our qualified architects. Don’t be one of those whose property gets stuck on the market !)

Here is a bonus tip: You think you won’t move…and the home is for forever? Well, life throws wobblers  at all of us and your house asset can provide cash if needed ! So design it for resale…even if you don’t intend to resell!

Again, make sure you have checked that builder out!

Choosing Your Builder

When hiring a builder or buying materials, you may not be able to afford the best or most expensive but there are simple good products and good builders in every community!

Choosing a builder is sometimes a bit scary and you need someone trustworthy and honest. So we’ve listed some  pointers for you.

  • Get a cost breakdown..full breakdown..not a one liner.
  • Ask for references from past clients and suppliers and call the references up to check!
  • Check one of their building sites. People should be working!
  • Have a quantity surveyor recheck the quote with the plan. (Usually banks make this part of your mortgage costs.) Tell the surveyor  your  specifications..don’t ask the builder to price granite and not tell the surveyor.
  • For multiple quotes, Write it all down and give each person quoting the same information so you get a true comparison! (We can provide that service if you need it!)

To Sum up:

The whole house buying and building thing can be a bit daunting at first but our 3 point plan of budget, appropriate design, and good referenced professionals will steer you right.

Our top 3 steps in building a home are taken from over 30 years in the home design and build developments industry where we have worked – in the USA, Caribbean, Ireland and the UK.

More information on steps in building a house can found on the web; this piece for Forbes from Houzz will add to our advice.

We are always here to give you any assistance you need with our online home design company services as shown below.

  • elegant houseplans,
  • affordable small homes,
  • information about green homes,
  • smart home accessories for your home,
  • mortgage advice and much more.

Email us at designexpert@islandhomeplans.com or leave a comment or question for us to get back to you!

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  1. This is a must read for everyone because I believe if not everyone almost everybody wants to have a house of his or her own. Thanks for sharing this informative and educative post on how to build a house. After reading this post I discovered this is something I must follow in order to achieve my goal on building a house.I will share this post to my friends to get educated on the steps to follow in building a house.

    1. Please feel free to get in touch if you have questions. While every country has unique laws, there are core systems that run in every country…officially anyway!!! Thanks so much for reading!

  2. Hi Liz – I know that buying a house can be very exciting and also very stressful.  I bought a new construction house, so I was able to redesign a few areas of the house, and pick out all of the features.  I can’t imaging actually building a house from the ground up.  That does seem like it would be a bit intimidating, however your article about the 3 key steps to build a house would be helpful to someone who is building a house.

    Thank you for this information,


    1. Hi Michele 

      I spent a lot of time with customers –  over 100 – sorting out banking legal and design. For customers the process can indeed be scary. Especially because they are not aware on the extra additional costs post construction.

      I hope it helps someone and they take the tips on boosting their income with Wealthy Affiliate …:)

  3. You offer such good advice to anyone thinking of building their own home, and anyone would be advised to go through all of your steps in the order that you show them. There is no point in trying to cut corners – that can only lead to heartbreak in the end.

    Would you advise someone to plan a bit under their original budget? In my experience builders almost always tend to be somewhat over budget by the time the property is completed.

    Thank you so much for your great advice

    Chrissie 🙂

    1. Hi Chrissie, That’s a great question! Thanks. For sure add  between 10-20% onto estimated quote and then the final price…hopefully it is  a fixed price. The extra percentage is called a contingency and is for “unforseens”.

      A good builder usually sticks to his budget but unforseens do happen, no fault of the builder. Also customers sometimes change things mid build, so the prices will go up!

  4. Thanks, there are so many great tips here. The one that resonates with me is that life does throw wobblers at us, and just because we ‘think’ something will be our forever home it may not be, and we should certainly be designing it to maximise resale value in the event we do indeed sell, even if that’s not the original intention. I think lots o f people get stuck like that with existing properties – they do a patchwork type renovation that suits them at the time and then realise when it’s time to sell they should have spent a bit more to make it a more cohesive and better thought through renovation that appeals to a broader range of people.

    Great advice, thank you.

    1. Thanks Melissa,

      I had a “wobbler” so I speak from experience. I’ve seen it happen to clients too…a sudden illness, losing a job, a death. When you suddently have to sell, a good design  and build can add 25% to construction value of the property and if it flows well and looks good, the property will sell relatively quickly.

  5. This article has taken away a lot of my fears surrounding renovating and building onto my house. I love that all the steps are covered, from financing to choosing the correct builder.I absolutely agree that getting someone reputable, with experience, is of the highest importance as well as staying within budget. We are currently busy renovating. Have only done the bathroom so far. Your article has provided me with some tips and valuable information for the process going forward, thank you.

    1. The trick with renovations is that it can spiral out of control…more than a new build and that’s because of “unforseens”.  Its good to have a contingency fund as your “backstop”…lol…. (if you have heard the drama around Brexit). No need to tell the builder… just have it…in case. Andthey do your best not to double your spend on  things like tiles and faucets etc *tempting as it is.)

      Feel free to check back in if you need any help and I wish you well on your project!

  6. Awesome and really helpful post in regard to building a house. This three-point plan is comprehensive, concise and truly addressed the direction you need to take.

    I wish I would have followed a website like this when we had our house built.

    We built our very first home with a reputed and very expensive builder. We assumed there will be no worries. But in our 1st year of winter, we surfaced heating problem. The rooms were not evenly heated. The house was under warranty so we called the builder. They could not do much. 

    In the summer of the 1st year, we lost the cooling gas Freon. They came and refilled.

    My point is it is hard to verify everything for a naive person like us where we were left after the builder delivered the house.

    The rest of things are fine.

    I am sure this site will help many people.

    1. Anusuya,

      I am so sorry to hear of your issues!  Construction problems can be fixed… things can be done. Itsnormally an issue of COST to the builder! They often don’t make a huge amount with construction …unlessthey are building a high end property.

      However, its a bit late to say this but know next time that the builder should take out insurance and mayve you should too…to cover for what you mentioned….defects.Insurance in building is an important must. But that’s a whiole other blog!

  7. Having gone through the experience of building a house (we purchased a brand new unfinished house and designed the interior), I can appreciate your advice, especially about staying in the budget you can afford. Things light kitchens and even lighting can easily get out of hand.

    Plan, plan, plan. Budget , budget, budget!

    It definitely is good advice to spend the time up front in design, finance, choosing a builder, and even finishes in the house, as it will eliminate headaches (both real and financial) in the end.

    Thanks for the great article as a reminder for some and a beginning point for others.

    Well done!

    Have a great day!

    1. Hi Tom, lol I feel your experience!

      Yes I raise my hand as one of the ones who overspends on finishes …and i would have overspent for clients too except for my business partner who was like a construction accountant!

      If ever people work with professionals…whether architects, engineers, builders, whoever, have a someone familiar with building costs monitoring and weighing in to keep that lid on the budget!. My clients are very lucky as we have an in-house cost estimator, I regularly get told off!

      Luxury items can be added with earnings from Wealthy Affiliate and extra earnings 😉

  8. Thanks for the informative post! Kudos! You’ve awesomely created a post that everyone needs to go through thoroughly prior to starting up any building/construction work. Yes, selecting a home within one’s budget will surely prevent anyone from starting what he cannot finish in a lifetime. Most people do waste a lot of money on dream plans that they can’t afford to execute and I’ve almost fallen into the same category as I’m planning to lay the foundation for a duplex building while I can only afford to execute a 3-bedroom flat for now. Thanks for the great work!Israel Olatunji

    1. Israel, Firstly thanks for your comment. I love hearing everyone’s stories! It teaches meabout what people need.

      Please don’t  be too hard on yourself. Just mark it off as new knowledge and adapt. The foundation and roof are the most expensive parts of building a house,  so  you can start saving now.

      If the foundation is already cast, consider creating a carport or patio….for less… and then adding the other part of the duplex when you have the money from all the extra dollars you will soon make  😉

  9. I wanted to thank you for the advice for buying a house. You mentioned that you should make sure that the home you are building has the basics, since things can be added on. This sounds important to keep in mind especially if you’re on a tight budget.

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