Purchasing a section and building a home is a popular way to get onto the property ladder in Wanaka and Central Otago, with many new developments being opened up around the area.

Financing a land and build option can be quite different from a regular house purchase, and there are different requirements that banks need buyers to meet. There have also been a number of changes in the lending policies by banks due to COVID-19 and this might mean they review your financial position a little differently.

Generally, most people will often apply for finance for the section and the build at the same time, and this will require 2 finance offers, one for each stage of the project. They will often have different conditions that need to be met, and can include things like a Registered Valuation, build contract and plans, consent, and making sure you have the right insurance.

Ideally the banks would like you to have a 20% deposit based on the total project costs, however land and build is currently exempt from the Reserve Bank’s rules around loan to value (LVR) restrictions, so you may be able to start with a minimum of 10% deposit. You will need a 20% deposit for the section price, and can then leverage up to 90% for the actual build.

Our inspiration home is an expression of possibility and will be opening October 31st at 18 Arion Court, Pisa Moorings, Cromwell 

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Whether you are made aware or not, depending on the bank, they will add between 0-15% of your fixed price contract in servicing to allow for potential overruns. This could affect the level of borrowings you are able to get. For example, if your fixed price contract was $450,000 then it could actually be assessed at $517,500 (15% more) making a big difference to what you can borrow. For some, this "behind the scenes" calculation can be the difference in gaining approval or not so getting the right bank for you is important. How each bank reviews your income position could also be different due to COVID-19, especially for those who are self employed. 

Each bank treats new builds quite differently, so it can be confusing and time consuming to work out which bank would suit you best. This is where I come in, and deal with New Zealand’s largest panel of lenders, so I can find the right bank and lending product for you. We work with you all the way through this process to make it simple and stress-free, sounds good, right? The services we offer are generally always free to you too!

You can read the extended blog here.

If you need any advice at all around lending for new builds, then feel free to give me a call on 021 812 300 or email [email protected]

Whether it’s a burning question, a comment or a simple chat, at Build7 our focus is you.

Contact us today:

Matt Williams - [email protected]. Tel: 021 946 110.

Jolanda Williams - [email protected]. Tel: 027 448 5164

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