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JUL 24 2019
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How can I have a newly built house if I can’t find my perfect home in the current property market?

Posted by: Connie in Finance 101

House hunters often complain that it’s hard to find a home that has exactly what they want and need. Even if it takes more time and energy to build a new house than it does to buy an existing one, some New Zealand home buyers choose to build because they can get their dream house which is tailor-made for them.

That’s why, in this week’s blog, we discuss three options of how you can achieve a newly built house in New Zealand. We will look at the pros and cons of each path, so you can balance the benefits with the potential disadvantages and make an informed decision on how you want to build your dream house. 

How can I have a newly built house if I can’t find my perfect home in the current property market?

Video Timeline

Option 1: Buy off-plan -- 00:46

Option 2: Build your new house by buying land and engage builders yourself -- 01:43

Option 3: House and land package --04:05

Option 1: Buy off-plan

Would you buy a house before it’s built? Some people do exactly that.

It’s called buying off-plan and it’s a common way to buy a new house that is not yet built. To secure your property, you need to pay a deposit – usually 5-10% of the price. You can expect a timeframe of one to two years for settlement, and then you pay the remaining balance on settlement day.

Pros:

  • Save energy

Buying off-plan can save you a lot of energy, compared to the other two options of building a house. You just need to wait between the time you pay the deposit and the final settlement day.

Cons:

  • Uncertainty

A one or two-year settlement period means that you might experience financial uncertainty. Should your circumstances or your bank’s lending policies change, your bank may not approve your loan application on your settlement day. This is because your previous pre-approval application will expire before you’re ready to settle your house. If buying off -plan is an option you’d like to explore, we highly recommend you engage a mortgage broker early on and get your finances in order.


Option 2: Build your new house by buying land and engage builders yourself

Building a house from the ground up will give you the floor plan you want, but it will take months to construct. You need to buy a section yourself and then choose architects and builders to build a house for you.

Pros

  • You choose the location

By buying land, you can choose the location that suits your needs, such as a section that offers great views or is close to your office. Bear in mind though, it’s easy to buy land that’s far away from the city centre, but it takes time and energy to find land that’s closer and more convenient.

  • Design flexibility

When building a house, you can discuss your ideas with your architect to ensure that every aspect of your house is designed to fit your preference, such as the layout, colour theme and floor plan.

  • Save money

Compared to buying off-plan, buying land and building your own house can save you a lot of money.


Cons

  • Manage the project by yourself

When you build your dream house, you need to manage the early process by yourself, which includes finding your own architect to design the house, applying for building consent, and engaging a construction company to build your house. It takes a lot of time and energy to manage the building project, and you might feel stressed if you’re not familiar with the process.

  • Unforeseen building costs

Compared to buying an existing house, you can’t foresee the building costs when you buy land. You won’t have an idea of how much your project costs until the design stage. If you don’t know how much you can afford, then you won’t know how to work with your designer to fit a project into your budget. So, it’s important that you work with a professional mortgage broker who understands all the complexities of building finance.


Option 3: House and land package

If you are not confident about project managing the building of your dream home yourself, you might consider a house and land package. Some of New Zealand’s large and reputable building companies, like G.J. Gardner, offer house and land packages, where they build a house for you.

There are two main types of house and land packages: a turnkey package, and a fixed price package. 

A turnkey package is a popular option because the package is ready for you to “turn the key” and move in straight away. This package removes the stress of choosing a builder and managing all the project details yourself.

A fixed price package provides you will all the elements that are essential for living in a house. This contract may not include some of the smaller jobs like landscaping or your letter box.

Pros

  • Good quality and fast

Home building companies, like G.J. Gardner, have built hundreds of homes across New Zealand. They are master builders and have a large team, which guarantees the houses are built quickly and to a good quality.

  • An easy-to-approve construction loan

New Zealand banks are likely to approve a construction loan if the house is built by master builders. So, it’s crucial for you to choose a credited and reputable building company.


Cons

  • Inconvenient location

A large building company often buys several sections in one area. As they buy land in bulk, they choose locations that are more affordable, and therefore a decent distance from the city centre. If you are only considering living in an area that’s close to the city centre, the house and land package may not be the best fit for you.


Disclaimer: The content in this article are provided for general situation purpose only. To the extent that any such information, opinions, views and recommendations constitute advice, they do not take into account any person’s particular financial situation or goals and, accordingly, do not constitute personalised financial advice. We therefore recommend that you seek advice from your adviser before taking any action.


Prosperity Finance - here to help

Whether you’re ready to start building or you’re still planning your new home, Prosperity Finance can empower you to make the best long-term, informed decisions. We are professional mortgage brokers and are here to help. Give us a call today on 09 930 8999.

Other Recommended Blogs:

How are residential construction loans different to home loans for existing houses?

How much more mortgage can I afford? (Tips to quickly increase your borrowing power by 800k)

What should you do when your interest-only mortgage ends within the next two years?


Tags:

House hunters often complain that it’s hard to find a home that has exactly what they want and need. Even if it takes more time and energy to build a new house than it does to buy an existing one, some New Zealand home buyers choose to build because they can get their dream house which is tailor-made for them.

That’s why, in this week’s blog, we discuss three options of how you can achieve a newly built house in New Zealand. We will look at the pros and cons of each path, so you can balance the benefits with the potential disadvantages and make an informed decision on how you want to build your dream house. 

How can I have a newly built house if I can’t find my perfect home in the current property market?

Video Timeline

Option 1: Buy off-plan -- 00:46

Option 2: Build your new house by buying land and engage builders yourself -- 01:43

Option 3: House and land package --04:05

Option 1: Buy off-plan

Would you buy a house before it’s built? Some people do exactly that.

It’s called buying off-plan and it’s a common way to buy a new house that is not yet built. To secure your property, you need to pay a deposit – usually 5-10% of the price. You can expect a timeframe of one to two years for settlement, and then you pay the remaining balance on settlement day.

Pros:

  • Save energy

Buying off-plan can save you a lot of energy, compared to the other two options of building a house. You just need to wait between the time you pay the deposit and the final settlement day.

Cons:

  • Uncertainty

A one or two-year settlement period means that you might experience financial uncertainty. Should your circumstances or your bank’s lending policies change, your bank may not approve your loan application on your settlement day. This is because your previous pre-approval application will expire before you’re ready to settle your house. If buying off -plan is an option you’d like to explore, we highly recommend you engage a mortgage broker early on and get your finances in order.


Option 2: Build your new house by buying land and engage builders yourself

Building a house from the ground up will give you the floor plan you want, but it will take months to construct. You need to buy a section yourself and then choose architects and builders to build a house for you.

Pros

  • You choose the location

By buying land, you can choose the location that suits your needs, such as a section that offers great views or is close to your office. Bear in mind though, it’s easy to buy land that’s far away from the city centre, but it takes time and energy to find land that’s closer and more convenient.

  • Design flexibility

When building a house, you can discuss your ideas with your architect to ensure that every aspect of your house is designed to fit your preference, such as the layout, colour theme and floor plan.

  • Save money

Compared to buying off-plan, buying land and building your own house can save you a lot of money.


Cons

  • Manage the project by yourself

When you build your dream house, you need to manage the early process by yourself, which includes finding your own architect to design the house, applying for building consent, and engaging a construction company to build your house. It takes a lot of time and energy to manage the building project, and you might feel stressed if you’re not familiar with the process.

  • Unforeseen building costs

Compared to buying an existing house, you can’t foresee the building costs when you buy land. You won’t have an idea of how much your project costs until the design stage. If you don’t know how much you can afford, then you won’t know how to work with your designer to fit a project into your budget. So, it’s important that you work with a professional mortgage broker who understands all the complexities of building finance.


Option 3: House and land package

If you are not confident about project managing the building of your dream home yourself, you might consider a house and land package. Some of New Zealand’s large and reputable building companies, like G.J. Gardner, offer house and land packages, where they build a house for you.

There are two main types of house and land packages: a turnkey package, and a fixed price package. 

A turnkey package is a popular option because the package is ready for you to “turn the key” and move in straight away. This package removes the stress of choosing a builder and managing all the project details yourself.

A fixed price package provides you will all the elements that are essential for living in a house. This contract may not include some of the smaller jobs like landscaping or your letter box.

Pros

  • Good quality and fast

Home building companies, like G.J. Gardner, have built hundreds of homes across New Zealand. They are master builders and have a large team, which guarantees the houses are built quickly and to a good quality.

  • An easy-to-approve construction loan

New Zealand banks are likely to approve a construction loan if the house is built by master builders. So, it’s crucial for you to choose a credited and reputable building company.


Cons

  • Inconvenient location

A large building company often buys several sections in one area. As they buy land in bulk, they choose locations that are more affordable, and therefore a decent distance from the city centre. If you are only considering living in an area that’s close to the city centre, the house and land package may not be the best fit for you.


Disclaimer: The content in this article are provided for general situation purpose only. To the extent that any such information, opinions, views and recommendations constitute advice, they do not take into account any person’s particular financial situation or goals and, accordingly, do not constitute personalised financial advice. We therefore recommend that you seek advice from your adviser before taking any action.


Prosperity Finance - here to help

Whether you’re ready to start building or you’re still planning your new home, Prosperity Finance can empower you to make the best long-term, informed decisions. We are professional mortgage brokers and are here to help. Give us a call today on 09 930 8999.

Other Recommended Blogs:

How are residential construction loans different to home loans for existing houses?

How much more mortgage can I afford? (Tips to quickly increase your borrowing power by 800k)

What should you do when your interest-only mortgage ends within the next two years?


Tags: