HOME CONSTRUCTION LOANS

Renovating or building a house?

TYPE OF MORTGAGE -

There is a specific type of mortgage used when building. This is because the lender does not want to give you all the money at the start of the project - in case the building (which is their security) doesn't get completed.

It is commonly known as a Home Construction Loan.
(Find out more about types of mortgages)

First Time Building A House?

You have to learn and understand many new things, even if you have contracted a building company that will handle most of it, you still need to keep some track of what is going on.

You may also be a first home buyer which means you will have even more to learn about home construction loans and mortgages in general.

Plus, very few of us are comfortable with letting someone else have complete say over the final visual details of the decor.

Whether you are going to live in the property or not, the colour of the walls, the fabric of the curtains, lighting, door and bathroom hardware etc etc all need to be chosen along the way.

Building a house is a very time consuming, and often stressful, event in your life.

Make sure your Home Construction Loan allows for all of these finishing touches too. As with ongoing property maintenance (more on this further down), you need to make sure there is enough money available for the unexpected and for the finishing details.

Sometimes we need to make choices about what we will get finished before moving into the property, but once you are paying the full mortgage, rates, insurance and all the other costs of owing a house - it can take a very long time to find the extra money to fully complete the house.

Are you happy to live without carpet? Or curtains? And for how long?
Or is this not how you want to live?

Can you manage to complete the landscaping / lawns / gardens yourselves over a period of time?
Or are you really busy with work and this needs to be done by a contractor?

Are you physically able to do the extra jobs?

This all needs to be kept in mind when planning your build, and when arranging your home construction loan.

We recommend a number of Local Building Services through personal experience, and satisfaction with the products and service.

You might consider visiting Building A Home Info which has a lot of first hand information and experience to help you avoid pitfalls of home construction, benefit financially from the experience and enjoy yourself along the way.

Use A Mortgage Broker

When you are building or renovating the whole process is more detailed and time consuming than if you are buying an existing house. Wherever possible it is good to use professional partners to ensure the process goes well.

A Mortgage Broker should work as your professional partner to ensure you get the best property finance available for your situation. They will help smooth the money process, and free up your time to focus on the other requirements of the process.

They should be extremely familiar with all types of home construction loans, and be able to help you find the one that best fits your needs.

If you live in New Zealand:

We recommend you use a Mortgage Broker to help you get your Home Construction Loans. The Services is generally free to you, and a good Mortgage Broker will also bring their experience and helpful advice.

We work with professional Mortgage Brokers, with their years of experience both as brokers, in the real estate industry and as investors in the property market.

Using a mortgage broker is the best way to explore all the options and save you a lot of time when you are looking for Home Construction Loans.

They are used to dealing with the banks and will understand what is the best option for you.

There are many home loan lenders in New Zealand.

The big players are what are known as the "major banks":
- ANZ New Zealand
- The National Bank
- Westpac New Zealand
- ASB Bank
- Bank of New Zealand (BNZ)
- Kiwibank

However, there are also a large number of other Mortgage Lenders around, including Banks, Credit Unions, Building Societies, Finance Companies and other Institutions.

Many of these are what are often termed "Second Tier Lenders" but don't make the mistake of dismissing them as they are often highly competitive.

They provide an excellent answer for many mortgage seekers who do not meet the lending criteria of the major banks, and they still play a large role in the Mortgage Market of New Zealand.

Click here for a full list of Mortgage Providers.

"Abacus Finance recommends Strongline Buildings for the strength of steel, the durability of Tri-Steel engineering and the fast, efficient Strongline Construction Process."

Interest Rates

It is usually only possible to fix your interest rate once building of the house is complete.

Keep up to date with the lowest mortgage rates using this fantastic service which you can subscribe to, and get a daily interest rate email. Current mortgage rates.

Property Maintenance

This is something you should think about during the house building process.

- What maintenance needs to be done now?
- What ongoing maintenance will there be?
- Can I do this myself or will I need help?
- Do I have the right tools / equipment to do the job?
- Do I have the right skills to do the job?
- Will I have to pay someone to do the maintenance?
- What will the cost of the maintenance be?

The type of maintenance required may include:
- mowing lawns
- weeding and planting gardens
- painting fences and buildings
- cleaning gutters
- repairing structures
- cleaning of the buildings, fences, pathways

(Have a look at the range of equipment from Powerwashers designed to make your workload easier.)

The list can go on.... so it is something you have to factor into your building process.

Make sure you have enough spare money to allow for the extras associated with maintaining a property once it is built.

After the first year you will have a better idea of what your on-going costs will be. From then you may be able to put some of your contingency money back into your mortgage - just don't leave yourselves short as it can become stressful trying to find maintenance money and paying the mortgage.

Managing the Cost of the Build

The reality is that there are often unexpected extra costs when building.

- Perhaps the ground needed more work than planned once the earthwork began?
- Maybe you decided to upgrade the quality of your kitchen or bathroom fittings?
- Or did the weather cause delays and rework?

Whatever delays or problems you might experience during the build that is out of your control, at least the pre-planning is within your control.

There are many different choices to be made, and each decision brings a cost with it.

Knowing your costs is the key to creating, and maintaining, your house building budget.

Especially if you are getting a mortgage (home construction loan) to construct the building.

One way to keep costs down right from the start is with the design and plans. You might seriously consider purchasing a set of blueprints that are already complete. Often the design of whatever you are building is quite straightforward, but you still end up paying a lot for the plans.

Building A Green House

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