Borrowing to build a home

After the earthquakes, building a home has become more and more popular in the Christchurch region. There has been more land become available, and more building companies are out there looking to build homes on this available land. There have been many new subdivisions open up, especially on the fringes of Christchurch.

There are two main types of building loans. These are

TURN KEY BUILD

  • Deposit of 10% (normally)
  • Balance paid on completion
  • Building company owns the house and land until the end of the build
  • Very convenient as you are not involved as much in the build
  • No mortgage required on the property until completion which can make it easier to make rent payments etc while the house is being constructed
  • Not all building companies will offer this type of build
  • They can often be more expensive as the building company has to finance the build

LAND & BUILD

  • You purchase your section (with or without a mortgage)
  • Enter into a fixed price building contract with a building company
  • Progress payments made as the house is being built (mortgage increases as this happens)
  • This type of build is generally offered by all builders
  • Often a cheaper type of build then turn key
  • Since a mortgage starts from the section purchase, you need to be able to cover section mortgage, progress payments mortgage, as well as rent and bills while the house is built

Different banks have varying policies on build loans, and they can often be quite complicated, so we are here to help. We deal with a variety of lenders and all of the main banks, so we can find the best deal and loan structure for you, as well as guiding you through the whole process.