Mortgage Minute: New Builds
In this mortgage minute we look at how lending for a new build works.
Most banks lending criteria for land and build will allow an owner occupier to get started with as little as a 10% deposit. You will usually need a 20% deposit when settling on the section but can leverage up to 90% when you start building.
Buying off the plans can be done from as little as 5% deposit if you are an owner occupier, more for an investment property. We sort the approval for the section and the build at the same time, with conditions to meet before you can proceed. These are conditions such as a building contract, plans, registered valuation, consent and the builders all risk insurance being sorted.
Getting the right lender is key when building. A registered valuation will be required prior to getting under way, however some lenders require additional valuations during the build, adding to the cost. Some lenders will calculate your LVR using the registered valuation instead of using the cost to complete. This can reduce your LVR and save you money on low equity margins/fees. The way lenders treat fixed price contracts also varies.
It’s a bit of a journey, but Loan Market has your back and can help find the right lender for your build and we will manage this process with you. So if you are looking at building your first home or your dream home give us a call on 027 259 1349 to get started.