Many Kiwis families dream of the day they can build their own brand new home to a design that suits their lifestyles.
The key issue for many people is knowing where to start.
Of course you want a great section to build on and then you want a house designed to suit you, your lifestyle and the section.
Most people will also want things with the build to run smoothly, the house be completed on time and the finance to be suitable with low home loan interest rates meaning lower mortgage repayments once your home is built.
Finding Sections To Build On
In recent times this has been one of the biggest challenges especially in the more popular areas of Auckland.
Many of the sections are snapped up by the larger building companies and sold as house and land packages, but there are also some sections sold as bare land. If you are happy with a house and land package then you might find it easier to source a section.
Ask around to ensure that you will be happy with any building company that you shoose. There is plenty of information put out there on blogs and social media, but be a little careful as some people are intent on sharing bad news stories.
What Will You Build?
Most people have some ideas of what they like or want; however often it does not quite match their budget.
When you are looking at building a new home you need to be realistic and spend the money on the right things. Think about what is really important to you and what cannot easily be changed later. There are plenty of ways to be more efficient with the build costs, but also it is generally more cost effective to add the extras at the time you are building.
Some of the large building companies have house plans that have quite detailed specifications and can be a good place to start when looking at what your money will buy. The bigger building companies like you to believe that they can build houses cheaper due to their buying power; however it is always worth speaking to some of the smaller builders too as they will almost certainly have buying arrangements that mean they can match prices, but also sometimes are more flexible too.
Once you have an estimated cost you can start looking into things in more detail and get more accurate costs.
The Different Build Contracts
Once you have located the land to build on and a suitable house to build then you need to start looking at the build contract and finance. Most banks and other non-bank lenders will insist on a fixed price contract as this provides certainty regarding the build cost, but also within most contracts there is a completion guarantee as well.
A fixed price build contract has a lot of detail down to specifying each product being used so it is important that you review the contract and understand what products are being used and to make sure that you are happy with them. If you want to make changes it is best to do so at the outset so that the build process and financing can run smoothly.
In most contracts there will be some “pc sums” (prime cost sums) which are estimates for those parts of the build that have not been finalised or are difficult to quote exactly. Typically these are used for ground works, electrical and kitchens and you need to make sure they are adequate.
There are generally two types of construction processes used by builders and building companies;
A Turn-Key Solution
You will see quite a few of the bigger building companies offering turn-key packages which means you pay the deposit and then are not required to pay anything more until the construction is finished and signed off ready for you (the new owner) to turn the key to open the front door of your new home.
This is a convenient way to buy as you do not have a lot of money outlaid until the finish of the build project, but it often can mean that the overall cost is a little higher as the builder have the cost of funding the project.
Building companies will often offer a turn-key package when they are still waiting to get title on the land.
A Build With Progress Payments
This is the most common way to finance a new residential building project.
The advantage is that you purchase and therefore own the land, and then pay as the build progresses. This means you are funding the cost of the build which should mean the builder does need to factor a finance charge into the build – it should therefore be cheaper.
It also will generally allow you to make changes if needed (and at an extra cost) during the build process.
With the right advice and by following a set process it is easier than you might think.
Getting The Right Construction Finance
Many bank staff and mortgage brokers are not experienced in residential construction lending and therefore will source a finance package from a main bank, but not necessarily what would really suit.
Mortgage Link operate throughout the country but also have an office in Hobsonville, North West Auckland where they are right in the heart of one of the biggest areas of residential development in Auckland and New Zealand and are therefore financing a lot of people building new homes.
The Mortgage Link advisers are also not limited to using a single bank so can use the bank or lender that suits your individual situation.
Contact an adviser who can help you with the finance options to build your new home.
