10 QUESTIONS ABOUT: Finance

Thursday, August 1, 2019 - 1:00pm

Whether you’re building a small two-bed cottage or a designer homestead, find out everything you need to know about financing and pricing your new home.

 

1. How much does it cost to build a Signature home?

Our Pacific and Smart Collection homes have price guidelines and all plans are available to view here. However, every family is different and the perfect home for you may require tweaking or different consents from your local council. There are also regional differences for building homes, based on Building Code requirements for the region, and every section is also different and requires various site works that will impact the total cost to build. The great thing is that once you’ve moved through our design process, you will know exactly how much your Signature home is going to cost upfront prior to signing a build contract, and that price is guaranteed.

2. What deposit do I need to build a Signature home?

You can build your own Signature home with as little as 5 percent* deposit. Due to the security and reliability of Signature Homes’ market-leading guarantees, Sovereign Home Loans (part of ASB Bank and the backers of NewBuild Finance) can offer Signature Homes clients their specialised home-loan services for building a new home through NewBuild, specialists in construction finance. Visit NewBuild and use the Home Loan Qualifying Calculator to find out if you are eligible. 

3. What is construction finance?

Construction Finance is similar to a mortgage but is used to fund the building of a home. There are different progress payment schedules and conditions which can be negotiated with a specialist construction finance lender or your bank, and each lender’s offering is slightly different. Because a new home build is built over a period of time you should only ever pay for work once it has been completed at pre-agreed stages of the build. This ensures the builders get paid regularly (progressively) through the build and also that you only draw down funds as required. Once the build is completed and the final payment is made the end sum is then generally moved into a standard mortgage arrangement. It’s best to discuss your options with your bank or broker as our clients often negotiate their lending depending on what they can afford, to continue to pay rent or the mortgage on an existing home.

 

4. Can I afford a Signature home as my first home?

House-and-land new-builds are exempt from the New Zealand Reserve Bank’s Loan-to-Value Restrictions (LVR), which means first-home buyers can obtain finance with a smaller deposit than the 20 percent typically required. Paul Bull, CEO of Signature Homes, thinks home and land packages are a great option for first-home buyers. “That’s a home that is built to modern building standards,” he says. “It’s well insulated, dry and warm and all the electrics are new – that means lower electricity bills, healthier homes and healthier families.”

If you have been a KiwiSaver member for three years or more you may be able to withdraw some of your savings to put towards your new build with KiwiSaver's First Home Withdrawal and you may even be entitled to KiwiSaver's HomeStart Grant. 

5. Can I pay rent and pay the loan for my new home at the same time?

This depends on your financial situation, however while banks generally require a minimum 20 percent of an existing property’s value as a deposit, that requirement may be much lower for new builds. One thing to remember is that you pay for your new home as it is being constructed, so you aren’t paying for the full amount of the build during the construction of the home, and the payment schedule is laid out in the building contract so you can plan for the payments as they come up throughout the project. If you would struggle with making construction loan repayments and rent at the same time, then NewBuild Home Loans offers a construction loan where you don’t need to start your mortgage repayments* until you move in. This is also why Signature Homes gives a Guaranteed Completion Date soon after the build contract is signed, so you can discuss your funding needs with your bank or broker and plan ahead for things like selling an existing property or moving out of your rental.

6. How much do all the added extras cost?

As part of the work we carry out to provide you with a comprehensive quote and to ensure you get everything you want in your new home, the Signature Homes design team will consult with you to finalise important details regarding design, claddings, colours, fixtures and fittings. At your request, we have expert interior designers and colour consultants on hand to provide assistance. Once the detailed price and design work has been completed, the fixed-price quote, specifications and final drawings will be presented to you for sign-off. These documents will include detail about exactly what your new-home investment will be, along with a comprehensive list of everything that is included.

 

7. How do I know the quoted price of my home is accurate?

We have been building homes for Kiwis since 1983 and we believe we have a responsibility to provide clients with a quote based on facts, not guesswork. In order to reduce the risk of price escalation prior to signing a building contract, Signature Homes will request a small investment from you for our Plan Deposit Service – generally one percent of the build. This investment is there for your protection as it allows Signature Homes to thoroughly investigate every single cost that is likely to be incurred during the construction of your new home (including an estimate for site works, landscaping and decorating), before you commit to building with us. By signing a build contract, the amount you invest in the Plan Deposit is deducted from the final cost of your home should you decide to proceed, and is often less than you would pay for a similar service with an architect.

8. Can I keep my existing home as well as building a Signature home?

Banks often won’t use equity from an existing home to fund a new home loan, which doesn’t work for clients who want to keep their current home as an investment or keep it long enough to avoid needing to move their family twice. In the right circumstances your broker or bank may be able to fund up to 100 percent of the land and build using only equity in the existing home. With NewBuild any rental income on the existing home can be used to offset the loan. The NewBuild approach also allows an investment property to be 100 percent geared for tax purposes. Banks are normally unable to do this for a new home.

9. What guarantees cover me when I buy a Signature home?

Our Comprehensive Guarantee Programme offers you total peace of mind during the build process. This programme includes our exclusive Home Completion Guarantee, which provides 100 percent protection on any payments made during construction of your home. 

10. Are there any hidden costs or fees I should budget for?

In short, no! There won’t be any unexpected costs or charges after you’ve signed the contract on your new home, unless you make any changes after the contract has been signed. If you do make changes, we work with you to understand any impacts those changes will have on the cost of building your home. As part of our work to provide you with a comprehensive quote and ensure you get everything you want in your new home, the Signature Homes design team will consult with you to finalise important details regarding design, claddings, colours, fixtures and fittings. These costs will all be included in the final price in your Build Contract.

*- Lending and credit criteria and conditions apply.

To learn more about the Signature Homes building journey you can view our series of videos or order your brochure here

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