Financing a home purchase can be straightforward with the right information. Read our guide on financing options and tips.
Purchasing a new build home in New Zealand can be an exciting yet complex process. Understanding your financing options is crucial to making your dream home a reality. Here’s a comprehensive guide to help you navigate the financial aspects of buying a new build.
1. Understanding Your Financing Options
Home Loans: Most new build homes are financed through home loans. It’s important to compare different lenders to find the best interest rates and terms. Banks and non-bank lenders offer various loan products tailored to your needs.
Construction Loans: These are specific to new builds. They cover the costs of construction and are usually drawn down in stages as the build progresses.
Turnkey Loans: With turnkey loans, you pay a 10% deposit upfront and the remaining balance upon completion of the build. This option minimises financial stress during construction.
2. Government Support and Schemes
KiwiSaver HomeStart Grant: First-time home buyers who have contributed to KiwiSaver for at least three years may be eligible for a HomeStart Grant. This grant can provide up to $10,000 for new builds.
Welcome Home Loan: This government-backed loan scheme is designed to help low to middle-income New Zealanders buy their first home with a low deposit of just 5%.
3. Tips for Securing Financing
Check Your Credit Score: A good credit score can significantly impact your loan approval and interest rates. Obtain a copy of your credit report and correct any discrepancies.
Save for a Deposit: While some loans require as little as a 5% deposit, aiming for 20% can provide better loan terms and reduce the need for lenders' mortgage insurance (LMI).
Get Pre-Approval: Pre-approval gives you a clear idea of your borrowing capacity and shows builders and real estate agents that you’re a serious buyer.
4. Budgeting for Additional Costs
Legal Fees: Budget for conveyancing and other legal fees associated with purchasing a new build.
Council Fees: Be aware of council fees such as rates and building consent costs.
Insurance: Ensure you have adequate insurance to cover the construction period and once the home is completed.
5. Choosing the Right Builder
Reputation and Experience: Research builders with a solid reputation and extensive experience in new builds.
Fixed Price Contracts: Opt for fixed-price contracts to avoid unexpected costs during the build.
6. Key Takeaways
Financing a new build home in New Zealand involves understanding your options, planning your budget, and securing the best loan terms. By following these tips, you can make the process smoother and more manageable.
At KEY2, we’re committed to helping you find and finance your dream home. Contact us today to learn more about our available properties and how we can assist you in your home buying journey.
