What Insurances Will You Need

Completion-final-statement Builder’s risk insurance is an essential element of lending.

Builders’ Risk Insurance

Prior to any construction taking place you should receive from your builder a copy of their builder's risk Insurance (BRI) certificate. Builder's risk insurance is a specialist type of insurance which indemnifies against damage to your home while it is under construction.

All lenders will require a copy of the builder's risk insurance certificate prior to making any progress payments to your builder. If you are funding the progress payments to your builder from your own cash resources you should also ensure the builder's risk insurance is in place.

When speaking with your builder, you need to ensure that the interested parties that are listed on this policy not only include the lender but yourselves as well. For NewBuild loans, the interested party that must be noted on your policy is Mortgage Holding Trust Company Limited

Your builder's risk policy will not protect you once you take possession.  In fact, this policy may cease the moment you put any personal belongings on the property (even in storage), so the moment you want to starting moving, even before official hand over of the property, you must ensure you have your home owner's policy in place first.

Home Owner's Insurance (House and Contents)

Once your home is competed your builder's insurance policy ceases and you must now insure your home.  The bank will require you to provide a home owner's policy in force before you take possession.

Commonly, our clients want to take possession weeks before Code Compliance Certificate (CCC) is issued, and some insurers will not provide cover without this, so you may need to shop around to find an insurer who will protect you before the CCC is issued.

Your lender will require you to include them on the cover.  You will need to ask for a Certificate of Currency noting Mortgage Holding Trust Company Limited as first mortgagee.

Mortgage, Income and Life Insurance

Increasingly, the lender requires clients to be adequately insured and this may even be a loan condition.  The lower the deposit the more important this will be.  So where your loan is conditioned on this cover and you do not have (adequate) cover in place to protect you NewBuild will provide this protection in advance of settlement of the loan.

Low Equity Insurance

This insurance protects the lender and not the borrower from the [greater] risk of default where the lender is offering a loan to clients with less than 20% deposit. Lenders in New Zealand are fairly evenly split on how this is charged. Whereas previously this was a one-time lump sum premium charged at settlement (often called a Low Equity Fee), more frequently, this is reflected as a premium to the interest rate (often call a Low Equity Margin) until a loan value ratio reaches 80% or less (read why you should request a Valuation instead of a Completion Certificate)

Low Equity Margin*



80.01 –   85.00% LVR

0.30%   p.a.

85.01 –   90.00% LVR

0.75%   p.a.

90.01 –   95.00% LVR 

1.30%   p.a.

*LEM may change without notice