Turn Key Builds/ House and land Package
New Build managed by a building company/ Construction Loan
Whichever type of building or construction path you are planning to take we are here to help you understand the process.
A Turn-key build also called a house and land package are often a little more expensive than a construction loans but there are significant advantages. A Turn- key home is a finished home that is ready for you to move into once completed. You pay an initial deposit usually 10% (Will need to be negotiated if you are on a 5% FHL) Then you don’t pay anything until the build is completed and code of compliance is received.
If servicing is tight then a Turn Key build would be more appropriate because you do not have to service the build loan while you are still paying your current mortgage or rent payments.
This contract is exempt from RBNZ (Reserve Bank of NZ) rules. That means you don’t need a 20% deposit – a 10% deposit (20% for investment properties) is required for turn key contracts, and some banks may even stretch to allow 5% in special circumstances, making this an attractive option for those with good income but less savings.
Many building companies have turn-key packages on offer at a fixed price arrangement. At Dixon Mortgages we work with the top Building companies that offer great service for our clients so please get in touch if you are wanting some information.
A bit more work is involved in a construction loan. You will need to search for land, a Geo tech report maybe needed by the bank. Once you have found the land you will need to engage a reputable building company (We can refer one if you do not have one already) they will listen to your wants and come up with plans that suit your lifestyle and your budget.
Once your plans are designed and consented the build will be able to proceed, and you will need to begin staged payments upon completion of relevant stages such as foundations, roof on etc. This is the main difference to a turn- key build and is harder on your cashflow if your household income is a little lower.
However the total build costs are generally a little bit cheaper than a turn key as the holding costs are not incorporated by the building company (Generally at a higher % then what you are charged with a bank)
Often the bank will not pay out the final 5-10% of lending until a completion certificate and/or consent is granted.
Self Managed builds are similar to a build managed by a building company but you are responsible for finding your own land, design your own home and council consent. You organise all the quotes to build the house and sign up labour only contracts with builders, plumbers, electricians etc to do the work. You organise the materials, insurance during the construction and the local council inspections.
Would not recommend signing one of these contracts unless you are relatively experience in construction and contacting and how it all works
The bank will also include a 10% – 20% contingency as these loans almost always go over budget.
Not only does buying off the plan require a small leap of faith, it also comes with a whole heap of other lending conditions. Here are some typical conditions to expect in a build loan approval:
Ben and I were referred to Jonny to purchase our first home. Jonny was prompt with emails and met with us both at the beginning of the process to get to know us and our goals. He made us both feel comfortable and supported and answered the 101 questions thrown at him quick and concise. As someone who didn’t know a thing about buying property or mortgages it was important we found someone who was able to support us through the whole process and explain the ins – and – outs, we both believe we found that in Dixon Mortgages.
We went through 3 different mortgage brokers before Jonny, they all said purchasing our first home was impossible to do due to financials. Jonny didn't just make it work, he helped us in every way to make it happen. Great communication especially purchasing through lock down. Highly recommend. Thank you so much for everything you've done for us, we still cant believe we are sitting in our OWN home!
Deciding to use Dixon Mortgages was the best decision I could have made. I was worried about all the work involved in buying my first house but Jonathan did everything and had great communication all the way. I know for a fact I still wouldn't be in my first home if it wasn't for them. I fully recommend using the team at I know you won't regret it.
I got in contact with Jonny after being referred to him about my property portfolio. He was very personable, quick to reply and helped with the necessary documents I needed to initiate the process. I felt he was 100% behind me and my ideas.
Jonny was very knowledgeable about the property market and what we had to do to further our portfolio. He was very personable, easy to deal with, and I would highly recommend to any prospective purchaser.