Embarking on the journey of building your own home is a dream for many, but it involves significant effort. From locating suitable land to overseeing the construction process, it can be a daunting task, compounded by the unpredictability of unforeseen challenges and potential budget overruns.

However, when faced with challenges, opportunities arise, and this is where house and land packages come into play. Including benefits such as reduced maintenance costs and the assurance of no major repair bills in the near future, these packages simplify the process of investing in a new build, making it straightforward, secure, and efficient. Moreover, developers often provide options for standard or custom-built homes, allowing buyers to have a say in their property’s design and location.

In the end, opting for a house and land package ensures that you receive a home tailored to your lifestyle, ready for move-in upon completion. Moreover, financing such packages differs slightly from traditional mortgages, making it particularly appealing for first-home buyers.

Here’s what you need to know about financing a house and land package:

Reduced Deposit Requirements

In New Zealand, while most first-home buyers typically require a 20% deposit, house and land package new builds enjoy exemptions from Reserve Bank’s LVR restrictions, allowing buyers to secure a brand-new home with a lower deposit requirement of 10%.

Construction Loan Borrowing

Financing a home construction project involves two main steps: purchasing the land and building the house. While land purchase follows a standard real estate transaction requiring a regular home loan, construction financing involves a specific construction loan tailored for funding new home builds. House and land packages streamline these loans into one, with payments disbursed progressively throughout the construction process, minimizing interest payments until completion.

Building Contracts and Payment Management

Your building contract should align with your loan agreement, outlining all land and construction costs for your lender’s clarity. Payments are usually scheduled based on various construction milestones, with lenders agreeing to advance payments to ensure continuous progress. Delays in payment could result in work stoppages or penalties, highlighting the importance of timely payment management.

Leveraging KiwiSaver Benefits

First-home buyers may leverage their KiwiSaver accounts to contribute towards house and land package payments. Additionally, eligibility for a KiwiSaver HomeStart grant could provide further financial assistance, subject to property value and income criteria.

Preparedness for Delays

Despite meticulous planning, unforeseen delays due to weather, regulatory requirements, or material shortages can occur. Maintaining a financial buffer within your budget can help mitigate the impact of such delays.

Final Payment and Completion

Upon practical completion of your home, the final payment is typically required. This marks the culmination of months of hard work by your building team, signaling the transition from construction to occupancy.

In conclusion, house and land packages offer a straightforward and stress-free path to owning a modern home, suitable for both first-home buyers and property investors. For seamless financing, partnering with a knowledgeable mortgage broker experienced in construction loans is crucial.

Considering a house and land package? Contact us at Swift Mortgages for an expert guidance.

Disclaimer: These guidelines are general and may not reflect specific bank or lending policies. Always consult with a qualified financial advisor for personalized advice.