Get a Mortgage or Home Construction Loan To Build a Home

Building can be such an exciting project and having us manage your finances can free you up to focus on more important things like colour schemes and planning your first summer bbq.

There are a few different options when it comes to building new

A ‘house and land’ package is where the building company has already designed a house for a section and you have the option to buy it as it is and they will manage the build for you and deliver you a fully completed new home

A ‘design and build’ concept is a bit more hands on as you work with the building company in order to come up with a home that suits your individual needs.

Buying 'off plan' is similar to a ‘house and land’ package and is popular when buying apartments or townhouses. Generally the plans have been consented and the developer has them for sale while the project is underway. 

Along with different options, there are also different construction contracts out there

Turnkey

A turnkey contract is a fixed price contract between you and the building company, you will pay a deposit and nothing more until the home is completed. You only need a 10% deposit for a turnkey contract (20% for investors) and having more time to save during the build is a bonus too. Something to note; While variations can be made to a fixed price contract, each one generally incurs cost so it pays to make sure all your must-haves are included in the initial contract you sign.

Land and build

A land and build contract is very similar to a turn-key in that it's a fixed price contract, you only need a 10% deposit for the bank (20% for investors) and you will receive a fully completed home at the end. The difference is you will need to pay progress payments to the building company and different stages throughout the build. You will only pay mortgage repayments for the payments that have been made, so the closer your home gets to completion the more you will pay.

Labour only

Labour only contracts are generally not recommended unless you have a lot of knowledge in the building industry/ work in the industry yourself. You pay for the builder to build but manage the rest of the project yourself, such as getting code of compliance, hiring, managing and paying all the contractors, health and safety onsite, and sourcing all the materials. As you can imagine, this type of build has the potential to go way over budget and for costly mistakes to be made which is exactly why it's a hard sell for the bank, and a minimum 40% deposit is required for a loan like this. If you do have the knowledge and skill set required, building a home can take a lot of the builder's margin out and save you some money.

Building new has a lot of advantages such as:

  • It is exempt from LVR restrictions so you may be able to have less than 20% deposit.

  • You may be eligible for extra money towards your deposit from kiwisaver. You can get up to $10,000 when building a new home.

  • A new home is well insulated, warmer, drier and more energy efficient.

  • Building new gives you control over what you want in a home so you don't settle for less.

  • Investing in things like solar panels, underfloor heating or ducted heat pumps is ched to eaper to do during the building process versus an existing home.

  • Maintenance costs for a new home is minimal versus an older existing home.

  • Master build guarantees often come with new builds which can give the owner peace of mind.

  • New homes can come with new appliances which generally have the latest technology.

While building a new home is a great option, as with anything, there are some things to consider before taking the plunge

  • Where do you want to live? Bare land is becoming harder to come by, especially in metropolitan areas such as central Auckland, Wellington, and Christchurch. If you don't mind moving out of the central city to the outer suburbs, or even rural, then building a new home might be for you.

  • Deciding on a building company can be daunting when there are so many out there. Take the time to look at show homes and get a feel for what you like in a home and what companies you trust to build your home.

  • Make sure you have a good property lawyer to look over the contract for you and help with the due diligence. Some contracts tend to favour the developers so it pays to know exactly what you are signing, before you sign.

  • Your build budget can be blown fairly easily. Nicer door handles there, a bigger bath here and all of a sudden, the budget is blown. It pays to make a list of must-haves vs wants at the start of the process and then hold firm on the extras to keep the budget in check.

Reasons to choose us:

Free Service

We don't charge for our services unless it’s something complex, and if that's the case we’ll tell you upfront.

Better mortgage rates

We deal with all major banks, and we know who's competing for new customers at any given time and who will give the best deal. We do the negotiation for you.

Better Advice

We advise on things such as loan structure, budgeting and our view on interest rates. Bank employees technically aren't allowed to give their view on these and if they do it’s in favour of their bank.

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