Building an extension is often a better solution than moving when you find you have outgrown your existing house. Studies have shown that the cost of home extensions is more than offset by the increased value of the property. However, as with any investment, you need to take the risks into consideration first. These are some of the things you need to know about building an extension before you begin:

Owner Building versus a Building Contractor

Many homeowners who are thinking about building an extension consider becoming an owner builder in order to save money. While this may save you money, there are many pitfalls for the unwary. Before considering this option, you should be aware of some of these owner builder responsibilities:

• In most states, renovations over $1000 require an owner builder permit. In order to get the permit, you may have to attend a series of classes at your own expense if you undertake major renovations.
  
  
• As an owner builder, you are responsible for everything that happens on your building site. You must obtain all the necessary contracts and permits as well as arrange for all building inspections and other legal building requirements.
  
  
• Regular owner builder reports are mandatory.
  
  
• You must obtain all necessary building insurances, including home warranty insurance upon completion of the project.

Before committing to becoming an owner builder, read the Home Improvement Pages articles linked to above and then speak to a local building contractor about the cost of their building an extension for you. When you weigh everything in the balance, you may find that having a professional in charge of your project can be the most cost-effective solution.

Designing Your Building Extension

Whatever you decide, you still need to take a hands-on approach to building an extension. A building designer may be able to help you design the perfect extension, but will not be able to do it without your input. Take the time to complete a thorough design before you do anything else. Include everything, including your preferred roofing materials, cladding and even interior fit-outs. All of those "little things" will add up to a more accurate cost estimate than a square metre estimate can. It's a good idea, too, to add a 10% buffer to your final estimate, just to cover unforeseen expenses.

If you need financing, one of the advantages of building an extension over buying a new home is that getting home equity financing is reasonably easy. However, it can be too easy. Don't let yourself get caught in the trap of over-borrowing. While your extension will most likely add value to your home, that value won't be realised until you sell it. In the meantime, you have to meet your monthly financial obligations.

Once your design is finalised and you have the money you need, you're good to go. If you have planned and budgeted carefully, you'll find that building an extension is easier than you probably imagined it would be and when it's finished, you and your family will enjoy living in your home more than ever before.