Lower Deposit Pathways for New Builds – Find Out More
You can own a brand new home with less deposit than you think and less than needed to purchase an existing home.
Lower Deposit Pathways for New Builds – Find Out More
Regulators have allowed you to build a brand new home with less deposit than it takes to buy a used home. Minimum deposit requirements can range from 10 - 20% depending on whether you want a land and build package, want to design your own home, or want a turnkey build. Turnkey homes are currently very popular, requiring a minimum deposit of just 10%.
Even investment land and build properties require a lower deposit, as low as 15%. And the best news is that while existing investment homes are no longer tax deductible, an investment build is able to have the interest costs deducted with the IRD - that's a whopping savings of up to 30% on your interest costs.
Turnkey or Progress Payment? Know the pros and cons
We will help you with the best loan to get you into your new home.
Turnkey or Progress Payment? Know the pros and cons
Turnkey or Progress Payment?
There are pros and cons to both types of loans. Here are a few things to note:
A ‘turnkey’ loan might better be described as a ‘take-out’ loan. The lender provides the loan approval for the finished product. It’s up to you to find a builder who can offer the build finance.
A progress payment loan is just what it sounds like – a loan that draws down progressively as the house is built. This is one of the most common types of build loans.
With a turnkey loan:
You need to find a builder who can offer a turnkey loan
10% deposit is payable on declaring unconditional and the balance on build completion.
Finance costs are built into the contract so you have no interest repayments while you build.
This gives you certainty but also potentially higher cost and a lower equity position (capitalised costs) because the builder will include their finance costs in your build contract price and you pay that finance cost regardless of how fast the build is completed.
Builder owns the land and the house until you make final payment
With a progress payment loan:
You only pay interest on the amount you draw down. If the house is built promptly the amount of interest you pay will likely be less than what you would have paid in a turnkey loan.
Interest is calculated at the banks’ variable rate which may be lower than your builder’s finance costs.
10% deposit at loan settlement with the balance paid progressively to your builder.
You make the interest payments during the build with the option to fix the rate on the drawn portion along the way.
You own the land and the build as soon as the loan advances
Not sure you can afford the progressive payments? Let one of our brokers look at your lender options and help you with the best loan to get you into your new home.
Owner-occupied or investment?
The current regulations encourage building. If you’re planning to build an investment property you can continue to offset interest costs — a huge benefit!
Owner-occupied or investment?
New investment properties require a lower deposit than buying existing, as low as 15%. And better still, while existing investment homes are no longer tax deductible, an investment build is able to have the interest costs deducted with the IRD - that's a whopping savings of up to 30% on your interest costs. You can also use the equity in your current home as deposit.
Talk to the team at NewBuild to see if now is the best time to build your investment home.
Have you seen the interest rates?
See today's rate offer above. Depending on which lender you choose for your build loan, you may be eligible for a discount on the floating interest rate during your build.
Have you seen the interest rates?
Your NewBuild advisor will find you the most competitive floating and fixed interest rates for both your build project and after you move in. This can save you thousands on interest costs during your build. You are eligible for these rates with a progress payment loan or a turnkey build.
A competitive interest rate is just one of the many benefits of securing your finance through NewBuild. We help you secure sufficient finance to make sure you get all the way to the end of your build project with sufficient funds. Sounds obvious, but you'd be surprised how often Kiwis start their build without sufficient funds. A NewBuild broker/adviser can help avoid this pitfall. We're with you all the way!
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Lending criteria (including minimum equity requirements), terms and fees apply
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