Numerous benefits to building your own home include being able to choose the land, size of the house and materials.
10 Nov 2015
There is also something about being involved in the design and build process that gives owners a sense of achievement they wouldn’t get from buying an existing property. The downside is it takes time, money and having to make so many decisions can be stressful. Overall, it can be quite daunting.
Each bank has different policy requirements regarding obtaining finance for building a new home, so you’ll need to do some research. As an example, one bank may require you to contribute 50% deposit to purchase the land, while the next bank will only require 20% for the same scenario. Most banks will value the house by adding the land price to the build cost, and require anywhere from 10%-35% of the total value as the deposit. A few lenders will also look at the end value, so if the house is worth more upon completion the lender counts that as equity, or part of your deposit, meaning your 10% deposit. Confused? Most people are.
However, with the right information and advice the process can be simplified. This is where the expertise of an experienced mortgage adviser comes in handy. We walk you through each phase of the finance process, then review all your options to help control the risks and find ways to help you achieve your goals.
Even if you don’t think you can pull together a deposit, there may be options such as tapping into KiwiSaver. A couple contributing for five years into KiwiSaver will often have $30,000 between them. Then there’s the HomeStart grant. If eligible, that same couple could get an additional $20,000 from the government creating a significant deposit amount of $50,000. That’s enough for a 10% deposit on a $450,000 house. If you don’t have KiwiSaver available, there are also other options you may wish to consider – such as gifted funds or loan guarantors.
If you aren’t quite there yet, then we’ll work with you to get you there sooner. Don’t despair, contact your local Mike Pero Adviser for an obligation free discussion.