Firstly new builds are exempt from the Reserve Banks (RBNZ) Loan to Value (LVR) restrictions which impacts the size of the deposit you need. This exemption includes purchase types such as land and build packages, buying off the plans and turn-key purchases. Lenders however, still have their own internal lending policies to adhere to. These policies differ between banks and impact how they will access your lending and the size of the deposit you need for an investment property or your own home. For an owner occupier there are lenders who only require a 10% deposit, however others will require 20% or more, depending on the borrowers circumstances and plans.
What Loan is right for you?
If you want more design input into your home then you may consider a Progress Payment loan which allows for more input when choosing a section and home design. Alternatively, a Turnkey option offers a faster build process and provides more pricing certainty however much less input into design as a land and build package has already been put together with consented plans. A deposit will be required on signing of the Sale and Purchase agreement and you will start the regular mortgage repayments when you move in.
Valuations
All banks require a registered valuation of the “as completed value” prior to the build starting, based on the build contract and specifications. Some banks and lenders also require further valuations during the build, where others don’t - which could save you money. Some banks will also calculate your LVR using the registered valuation instead of using the cost to complete which can add up to a stronger equity position for lending purposes and save you money on low equity margins/fees.
Managing the Process
Finding the right loan is only part of the process. With some construction loans there are varying requirements along the way which are not always managed fully by your lender. Our lending partners will fully project manage the loan process for our customers, along with ensuring you meet any other outstanding conditions, so you are not caught short. While the lending process can be more complex than buying an existing home, working with our specialist partners can simplify the process; from application, to build, to completion and beyond providing absolute certainty for your new home.
