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I
CHANGING
ONE'S MIND
I PROGRAM I TECHNICAL
I BUDGET I PRICE OF MONEY AND LOANS I
I
CONSTRUCTION OF A NEW ECONOMICAL HOUSE
I
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THE PRICE OF MONEY AND
LOANS -
EXAMPLE
The budget calculations
will take into account loans and their liquidation, depending
on the country and the duration terms.
Reimbursing the loan can be quite a different issue according
to the country.
An example of an
individual house (standard accommodation, family of 5-6, traditional
building), in 3 countries: Switzerland, France and USA will
be found below.
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Building costs vary widely
from country to country. These differences are partly determined
by quality differences or differences in the general concept. The
main determinant is, however, the cost of money according to the
duration of the loan and the terms of reimbursement. To make comparisons
easier, let us postulate that loan rates are identical.
The life duration of each project may differ a lot; maintenance
of the house is therefore not included here.
| |
Switzerland |
France |
U.S.A. |
| Initial
cost |
Frs.
1'000'000.- |
€.
320'000.- |
$
150,000 |
| Private
funds |
Frs.
200'000.- |
€.
64'000 .- |
$
30,000 |
| Loan |
Frs.
800'000.- |
€.
256'000 .- |
$
120,000 |
| Duration
for clearing the loan |
100
ans |
33
ans |
10
ans |
| Cumulated
expenses after 10 years |
Frs.
462'000.- |
€.
187'520 .- |
$
153,000 |
| Monthly
rent |
Frs.
3'850.- |
€.
1'568 .- |
$
1,300 |
| Still
to be paid |
Frs.
720'000.- |
€.
186'880 .- |
$
0 |
| Cumulated
expenses after
20 years |
Frs.
884'000.- |
€.
336'640 .- |
|
| Monthly
rent |
Frs.
3'700.- |
€.
1'408.- |
|
| Debt
to be paid after
20 years |
Frs.
640'000.- |
€.
102'400.- |
|
| Cumulated
expenses after
33 years |
Frs.
1'372'800.- |
€.
475'648 .- |
|
| Average
monthly rent |
Frs.
3'500.- |
€.
1'200 .- |
|
| Debt
to be paid after
33 years |
Frs.
536'000.- |
€.
0.- |
|
| Cumulated
expenses after
50 years |
Frs.
1'910'000.- |
|
|
| Average
monthly rent |
Frs.
3'200.- |
|
|
| Debt
to be paid after
50 years |
Frs.
400'000.- |
|
|
| Initial
cost |
Frs.
1'000'000.- |
€.
320'000 .- |
$
150,000 |
.
Conclusions:
High quality of construction
is very expensive when a loan is necessary. Fifty years after the
construction, the cost of building a private house in Switzerland
amounts 4 or 5 times the initial price (!). Moreover, 50 years later,
there still remains a debt equivalent to half of the initial loan.
In the US, 10 years
after construction, the house may not meet the required quality
criteria anymore (aspect, technical factors, comfort). However,
the low cost (everything has been reimbursed) allows the possibility
of a new project.
Apart from the quality
of the project, it is useful to remember :
- furniture and decoration
will age
- technical elements
will need to be changed (heating system, bathroom installation,
etc.)
- paint, windows, roof,
...will need to be restored and eventually changed
All these restorations
will cost about 1 % of the initial budget every year.
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