Financing Your Build

Finance Tips

We’ve made the design and build process easy for you, so here are some tips to help ease the stress of financing it. 

Financing a new build is quite different to financing the buying of an existing home because it can sometimes be difficult to know how much a new build project will cost in total, as opposed to an existing home that already has a value. 

When should I sort out finance?

As soon as you think you’re going to build its time to start seeking out finance options. But perhaps a better place to start than trying to guess what you might get from a lender, work out what you can afford to pay back; general rule of thumb is that a sensible mortgage repayment is no more than 25% of your income. This will help you set your budget as you enter the design phase. 

How much deposit do I need to finance a new build?

Most lenders make this judgment on a case-by-case basis with the amount you can borrow depending on several things including the value of your project and your ability to repay the loan.

The deposit you need could be as little as 5% for a fully managed turn key new build. If it’s a build/labour only contract and you intend to do some of the finishing work yourself you could be required to put up between 20-35% as a deposit.

If this is your first home you’re building, some lenders will approve you for the Welcome Home Loan which requires only a 10% deposit.

Using Online Design and Build would be considered a fully managed turn key build and because you control the design process you can see the cost as you move along with your choices. This will help you when you approach a lender.

Where can I get finance for a new build?

Banks are one obvious source of finance but they aren’t the only ones.

An alternative is to access finance through engaging the services of a mortgage broker to do the shopping around for you. Mortgage brokers act independently of banks or finance companies with the goal to find you the best deal. They approach lenders on your behalf and negotiate on interest rates, structure and charges for you, and because they know the ins and outs of lending they can be a big help. 

You don't usually need to pay a mortgage broker for their services either, as they usually earn a commission from lenders, but it's best to check before you get started. 

Using your KiwiSaver

This is mainly an option for those investing in their first home and you have to have been contributing to the KiwiSaver scheme for at least three years. But if you meet the basic criteria you may be able to withdraw a significant amount of the money you’ve put into your KiwiSaver fund to use towards your deposit.

Furthermore, through the Government’s KiwiSaver HomeStart grant you could be eligible for up to $10,000 per person to go towards the deposit of your new build. Again, there are certain eligibility criteria you must meet and regional house price caps to work within. And it’s important to note that the HomeStart Grant cannot be used to build a home only and will need to be put towards the purchasing of land as well. Find out more about both these options on the Housing New Zealand website

Saving tips for first home builders

  • Prepare a budget and stick to it.
  • Record and analyse what you’re spending your money on to look for opportunities for savings.
  • Be honest with yourself – what do you really need vs what do you just want? This will help you avoid spending on non-essentials and impulse buys.
  • Set up a bank account for your deposit savings and make sure these take priority. The higher-earning savings account you can get, the better.
  • Set-up an AP for your deposit savings so you won’t be tempted to skip it if things are a little tight.
  • Work at paying off your credit cards and any other debts you might have; reducing or eliminating these increases your borrowing power.
  • Shop around for deals on the essentials. For example, there are often deals for switching your credit card debt that come with a low interest rate for a set period. Take full advantage of this and work hard to get the debt down over this time. Or, sometimes you can get a better deal by bundling all your insurance policies with one provider.



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