TMG Finance for Builds Guide

Finance for Builds

Finance
For
Builds

Types Of
builds.

Types of Builds
01. House and Land Package

This is the most common type of build we often see. This is when you purchase your section, then your build is completed in stages via progress payments. These payments are set out in a fixed-price contract drawn up by your chosen build company. Your lending increases as the build progresses with a House and Land Package.

02. Turn Key

Turn-Key builds are set up for you to pay a small deposit at the beginning of the build,
there are no progress payments, and your lending is drawn down when your build is
completed and has passed its code of compliance. This saves you from having to make
mortgage repayments whilst the build is happening, so you will still be able to manage rent
or board whilst the build is being completed.

03. Labour Only

Also known as “self-managed” or “cost and quote builds.” This is where you purchase a
section then contract out all the work for the different stages of your build yourself,
utilising your experience in the industry to self-manage the build.

04. Kit Sets

Kit sets are manufactured off-site, and the pieces are then delivered and put together
on-site. In most cases, we can only lend against the section purchase. The kit set, as well
as the construction of the kit set, would need to be paid with savings. Speak to your
adviser about the finance requirements for kit sets.

05. Transportable Homes

Transportable homes are where your home is either built new off-site or an existing
home is relocated to your section. For transportable homes, we can only lend against
the section purchase, with savings required to cover the cost of purchasing your home,
fully attaching, and connecting it to your section. Speak to your adviser about the
finance requirements for transportable homes.

06. Renovations

Renovations refer to when you intend to make improvements, additions, maintenance,
or repairs to your home. Renovations can be cosmetic or structural.

It pays to get approved for a build from the outset, this is because the assessment criteria for construction loans is slightly different from that of purchasing an existing established property.

When assessing a build application, the bank needs to look at additional costs such as:

01. Cost overruns: In the bank’s servicing calculations, they take into consideration a percentage of your total contract price, usually between 10-15%, for cost overruns. The reason behind this is to account for variations/changes to the original build contract, as they are quite common. The calculations help provide an indication as to your affordability for the lending based on the amount required and what could potentially be required down the track if the build ends up costing more. It’s important to note this will only be an internal indication for build overruns and not an approval for additional lending.

02. Living situation whilst the build is completed: If your new build is going to be your place of residence, the bank will need to understand whether you will have rent or other regular outgoings to pay whilst your lending is increasing. This is so the bank can understand how you will manage the increasing mortgage whilst covering your living costs for the duration of the build. For Turn Key Builds, this does not apply, as the mortgage begins once the build is completed.

Labour-Only Builds – Key Bank Considerations

Embarking on the journey of building your own home—whether it’s your first time or a subsequent project—can be incredibly rewarding. However, from the bank’s perspective, labour-only builds represent a more complex undertaking than standard fixed-price contract builds. These types of projects are typically subject to greater scrutiny and often require a higher deposit to offset the increased level of perceived risk.

As part of the approval process for cost-and-quote build applications, lenders will also want to understand your background and experience in the construction industry. Demonstrating a strong ability to manage and complete the project can play a crucial role in obtaining the bank’s support.
In addition to the usual documentation, some banks may also request a Quantity Surveyor (QS) report to independently verify and support the total projected cost of the build. This helps provide additional assurance around the accuracy of budgeting and cost management.

Build
Pre-
Approval.

get approved for a build from the outset…

Congratulations
On Being
Pre-Approved!

Next
steps from
here;

01. Take your time to fully read through your pre-approval to understand it, and feel free to ask any questions anytime. The Mortgage Girls Team is here to help.

02. Start covering off any conditions on your offer letter that can be met now to save stress later.
03. Start thinking about your deposit. If it is coming from gifting, overseas, or an international source, ensure you have allowed enough time to use these funds for your purchase. If your deposit is coming from a Locked Fund or Term Deposits, these may have timeframes in place for early withdrawal. It might be best to put plans in place now to ensure the funds are accessible when required.
04. House Hunting! Now you can start looking for your new home! If you would like help from a buyer’s agent (a real estate agent who can assist you in finding the right home), keep scrolling down for a list of The Mortgage Girls’ trusted contacts.
05. Take note of the expiry date on your pre-approval. Sometimes, finding the right property can take longer than expected. If needed, we can work together to extend your pre-approval or explore alternative options.

06. Kāinga Ora – First Home Loan Clients – Please review The Mortgage Girls additional information booklet on Kāinga Ora – First Home Loans to ensure you’re well-informed.

Budgeting.

What will your new budget look like?

Now that you’re pre-approved, it’s the perfect time to sit down and review your new budget.
Your financial outgoings may look a little different compared to your current expenses, so it’s important to review everything and plan for the changes ahead. To help you work through your numbers, we’ve included a couple of budgeting calculator sheets below. 

You can also use The Mortgage Girls’ online calculators to help you create your budget or work out your mortgage repayments with ease.

Calculating your new weekly
outgoings for an Owner‑Occupied
Home Purchase
$ 1
New Expenses
$
$
$
$
$ 2
Sum 1 - 2
Other items to think about they may be new expenses or may have changed are power, internet/phone and Personal Protection Insurances including Mortgage Protection.
Calculating your new weekly
outgoings for an Investment Purchase
$ 1
Expenses
$
$
$
$
$
$ 2
Sum 1 - 2
A reminder to think about your vacancy rate (weeks non-rented) per year and how you plan to cover those periods of time along with planning for any tax payments that may be applicable at the end of the financial period, your accountant will be able to work through this and let you know any expenses you can claim.

These budget sheets are for your information
and to be used as a guideline only for your reference,
for full financial we recommend you seek legal independent financial and/or tax advice.

Here is a link to The Mortgage Girls handy calculator for working out your potential mortgage repayments.

Choosing A Solicitor Or Conveyancer.

Firstly, it will pay to start phoning around or checking websites to decide on a Solicitor or Conveyancer and check on their costs.

 

Remember to request the costs to organise:

 

  • Your will (which is really important)
  • Relationship/contracting out agreement if required in the costings


Firstly, understanding Solicitor Vs Conveyancer.

Conveyancer;

Conveyancing is the term used to describe the legal work required to transfer the ownership of real estate from one person or entity to another, which also includes the processing of subdivisions, leases, and refinancing of mortgages. A conveyancer will not be able to help work through Relationship Agreements and will often refer you to a Solicitor for this.

Solicitor;
A solicitor is a legal practitioner who traditionally deals with most of the legal matters in some jurisdictions. A person must have legally-defined qualifications to be described as a solicitor and enabled to practise there as such. A solicitor will most likely be able to help with all your legal requirements, including your property transaction, will, and a Relationship Agreement.
A quick tip for deciding which solicitor to work with:

Find someone who you connect with, call or email around in order and ask questions in order to find someone who your feel best suits you and will be able to help you with your home buying goals

It’s handy to know who you wish to work with in advance of making an offer on a home, as you will require your solicitors details including their name, firm and email to be listed on the Sale and Purchase Agreement
Here’s a few Solicitors and Conveyancers we use regularly;

Amanda Varga

Sarah Bee

Oliver Lee

Kathryn Lawry (Evening appointments)

Nicole Gibson

Simon Ford

Property Transfer Office

Steamline Conveyancing

Melissa Thornton

Daniel Beker

Helen Wallace

Caitlin Stack

Natasha McClure

Tracy Yarrell

Tracy Yarrell

Tracy Yarrell

Charlotte Grimshaw

Naahi Taiaroa

Relationship Agreements;
When organising a contracting out agreement (relationship agreement), you will both need to see separate lawyers to ensure both parties are well informed and have independent legal advice. This is something that we at The Mortgage Girls highly recommend, as it creates a process to follow if the relationship comes to an end. Not all firms have lawyers who practice family law, so it pays to ask in advance.
Here’s a few which we have worked with regularly, whom could help;

Sarah Bee

Claire Finn

Amanda Varga

Jenny O’Neil

Buyers Agents
  • Want some help finding a home? Here’s a few people who may be able to help you;

Denise Robinson

Eneka Burroughs

Simon Corkindale

Hayden Roulston

Jill Lange

Fernanda Hammett

Gerardo Guzman

Sandy Dahiya

Tracy Thomson

Lee Robinson

Paul Lawrence

Rhys Kerr

Chanelle Bond

Real Estate Agents
  • For when your thinking about selling we know some pretty amazing agents that could help!

Hayden Roulston

Rob East

Eneka Burroughs

Jack Marshall

Paul Lawrence

Simon Corkindale

Vanessa Golightly

Building Broker
Want some help with the whole process? Here’s a couple of contacts whom may be able to help you;

Canterbury Building Brokers

Builders we know & trust

Want to chat to a builder who
we work with regularly? Here’s a
contact who may be able to help you;

Alex Bielski

Kent Homes

Swift Builders and Contractors

Taylormade builders

A quick tip for deciding which solicitor to work with:

Find someone who you connect with, call or email around, ask questions in order to find the person who you feel best suits you and will be able to help you with your home buying goals.

It’s handy to know who you wish to work with in advance of making an offer on a home, as you will require your solicitors details including their name, firm and email to be listed on the Sale and Purchase Agreement.

Is Your
Build An
Investment?

Some extras to think about when purchasing an investment.
Deposit The deposit required for an investment is typically higher than that of an owner occupied home, it can be made up of equity in your existing property and/or savings. The Mortgage Girls are happy to run calculations on your behalf in order to determine the deposit or equity required for your investment purchase.
Accounting If your thinking about investing in a property the first step would be to chat to an accountant here are a few reasons why;
> To help decide if you are going to keep your property in your personal name or a Look Through Company (LTC)

> To ensure you understand your accounting and tax obligations whilst owning an investment property. Including understanding your annual tax requirements,along with obligations when you buy and sell.

> To discuss your lending structure to ensure you have it set up to best benefit you, especially where you are using the equity from another property to purchase your investment

> It’s also a great idea to discuss your rental’s budget in order to understand potential tax obligations
Accountants recommended by The Mortgage Girls:

John Small

Lisa Meads

Abhi Shrikhande

Property Managers recommended by The Mortgage Girls

Want to have your property managed on your behalf, here’s some options
for property managers that could help

Chris Uren

  • (03) 339 0081
  • 027 444 7950
  • priorityproperty.co.nz

Sharon Layton

Taylor Staines

Michelle Bayliss

Rental income and expenses
When working out the return on your rental property, consider key income and expense factors. Use the template below to guide you, or click here for the digital calculator. 

Rental yield

Rental yield is the % of return on your investment after removing expenses. Work out your rental yield by dividing your annual rental income by your total investment – or use a yield calculator. Your accountant will also be able to help you with these calculations.

Need help arranging insurance?
The Mortgage Girls can assist you with this through Intio, Tower, or one of our trusted insurance advisers. Simply click here to complete the form, and one of our specialists will be in touch to guide you through the next steps.

Insurance
When arranging insurance for your investment you will want to ensure it’s set up correctly, in order to have adequate cover in the event of a loss, including cover for loss of rent and chattels. Let your insurance company know that the property is tenanted so they can discuss the policy options with you.

The Mortgage Girls have a great contact who can help with your Home Insurance their details are below;

Gerrards
Ethan Gerrard
027 358 6588
[email protected]
gerrards.co.nz

If you are considering Ando or Tower for your policy The Mortgage Girls team can arrange them to contact you directly also.

Where to find more information?

Here is a link to the New Zealand Tenancy website. This will give you everything you need to know in regards to your obligations when owning an investment property in New Zealand.

Making
An
Offer.

How much should I offer, when purchasing a section or newly built home?
First things first, the advertised price usually indicates the vendors expectations, whether or not these match the market.

Here’s some tips to help you when making an offer:

01. Try talking to the agent or developer; they should be more than happy to discuss the sale price of the Turn Key or section verbally.

02. Do your market research. For example, drive around the local area in the day and at night. If possible, check the local council’s website to find out what the rateable value is.

03. Request a transcript of local area sales from the agent. This may help to show why it’s valued at that amount.

04. Drive past the properties or sections listed on the recent sales transcript. This can sometimes help to show differences between properties as to location, street appeal, presentation, and the type of building. homes.co.nz often lists estimated values of properties in New Zealand. Otherwise, there are other options, for example: making your written offer subject to a registered valuation (this will come at a personal cost; however, it’s done by a registered valuer who walks right through the property in order to write a report which determines and explains their reasoning behind the property’s value).

05. homes.co.nz often lists estimated values of properties/sections in New Zealand. You can choose to make your written offer subject to a registered valuation (this will come at a personal cost; however, it’s done by a registered valuer who completes a full report on the property or section which determines and explains their reasoning behind the property or section’s value). For a subdivided or developer section – As this section will not currently have a rateable value listed from the government or determined market value other than the sale point, the bank will require a registered valuation to determine its value.

06. If you believe the Turn Key Property or Section is worth 20k less, tell the agent or developer and advise your reasonings.

07. Check out the real estate agent’s authority page for more helpful guides and information.

Some extra notes from The Mortgage Girls, to help you when formally write up an offer:

01. Contract Deposit: When completing the Sale and Purchase Agreement, the agent/vendor will request a deposit to be paid once the contract is confirmed unconditional in order to secure the sale. Most property/section sales require a 10% deposit of the purchase price as security for the sale; however, there are some options to negotiate this.

> This deposit amount is negotiable. If your KiwiSaver + savings do not add up to 10% of the purchase price, request this to be reduced to either match or come below the total combined figure.

> Your lender may be able to organise a temporary overdraft to cover this cost if you are unable to come up with the required amount on contract confirmation. However, there would be a daily interest charge, and all finance conditions would need to be met prior to the bank approving this. Please check with your adviser as not all banks operate this facility.

> If your deposit is coming from gifting, an international source, or Locked Fund/Term Deposit, ensure you have allowed enough time to be able to use these funds for your purchase.

02. If KiwiSaver is included in your deposit, remember your KiwiSaver provider requires a minimum of 10 business days’ notice in order to approve and process the funds to your solicitor’s trust account. KiwiSaver needs to be withdrawn for the section purchase; it cannot be withdrawn after you have settled on the section.

03. For sections: Please allow at least 10 clear business days if the section you’re making an offer on is pending its formal title. This is to ensure there is enough time to complete everything required to settle, including the bank providing loan documents to be submitted to your solicitors for signing.

04. For sections: Add a due diligence clause in order to provide you more time to find out everything you need to know to build on the land and what implications it might have financially for your build. 20+ days if possible. This gives you additional time to read through covenants in order to fully understand them, along with providing time for your solicitor to request your land information memorandum (LIM) to be checked over and discussed.

> Covenants are the set of rules in place for your section outlining what you can and cannot build on the section, along with any other rules such as animals allowed on the property. (For example, the fences on the front of your section may not be able to exceed 1m).

> The LIM outlines the history of your section. Your solicitor will be able to advise you from the report on items that could impact building. For example, if there was previously landfill on the section, this may mean there are additional standards or requirements to be met in order to build on your section.

05. Turn Key Builds: Please ensure at least 10 business days until settlement is allowed for after receiving the Code of Compliance (COC).

How the lending
works…

once your ready to move forward with your build…
Lending for

House
And Land
Package
Builds.

we will generally require the following information;

Stage 1 – Section approval

01. Sale and Purchase Agreement for the land

02. Title for the land or approx date for title to be issued

03. Understand your contract and lending deposits to know when they need to be paid.

04. If you’re using KiwiSaver, now is the time to talk to your solicitor and find out your obligations here to ensure you are able to withdraw this for the build.

05. A Registered Valuation Report may be required to determine section value – NOTE: If required at this point, you will end up requiring a minimum of 3 valuations if you are not able to complete the Stage 2 build conditions at the same time. (Needs to be ordered through the bank’s independent valuation ordering system)

06. Any other specific conditions noted on your letter of offer from the bank

Stage 2 – Build approval

01. Fixed price contract add: For any items excluded in your contract such as the letter box, curtains, and/or driveway, the bank may want to know and understand more about the total cost for these items and how you intend to cover these costs.

02. Build Specifications

03. Council consents

04. The Plans

05. A Registered Valuation Report (ordered through the bank’s independent valuation ordering system) will need to be paid for in order to determine the expected completion value of your project for the bank. (There may be a requirement for additional valuations throughout the build as well as one at the last 5% stage)

06. Builders Risk Insurance

07. Your first invoice for the build and notification of when this is due

08. Expected completion date

How the finance works for house and land builds

Once all the conditions on your pre-approval are met and your finance is confirmed unconditional by the bank, The Mortgage Girls will email you and your solicitor to advise. From here, The Mortgage Girls will work to the specified dates in your Sale and Purchase Agreement.

If your title is pending: we can continue to meet all the other finance conditions for your section, ensuring that when the title is through, there are fewer actions to complete once issued to ensure a smooth process to settle. Without title, the bank will not settle on a section.

Some things to think about when lending for a build are listed below;

Your Deposit for the Builder, Contract and Lending;

There are three times where deposits are generally required with house and land builds:

01. The Building Company Deposit: Often a payment will be required up front in order for your chosen building company to work on the plans for your build. Confirm with your solicitor first prior to paying any required deposit.
NOTE: If this is not written into the progress payments schedule in your fixed price contract, it will be a cost over and above the total contract price for your build, and personal savings (not included in your lending deposit) will be required to cover this cost.

02. Contract deposit: Your Sale and Purchase Agreement will have two dates on it, one outlining the date to confirm your contract including finance, and the second, the settlement date. The finance date is the same date your contract deposit will need to be How much should I offer, when purchasing a section or newly built home? How much should I offer, when purchasing a section or newly built home?

03. Lending deposit: Your overall deposit for the project can be put down either in 2 stages or 1.

> Option 1: Put your full deposit down upon purchase of the section, reducing the amount of lending required at the beginning of the build.

> Option 2: Put 20% of the land purchase price (note, if the valuation of the land is noted lower than the purchase price, you may require more down payment on the section) down on settlement of the section and utilize the remainder of your deposit to start the build invoices (your full deposit must be utilized prior to the bank starting to make progress drawdowns on your build loan).

Making payment for deposits:

Your solicitor will advise the account number to which these need to be paid to and let you know when payment is due. If your deposit funds have been paid to your solicitor’s trust account through KiwiSaver and cover 100% of your contract deposit, your solicitor will organise paying your deposit(s) on your behalf.

If you’re using KiwiSaver;
It’s important to let your solicitor know when you engage their services. This is because the time frame to complete these forms is important. The forms (attached to your original emails from your KiwiSaver provider) need to be completed with your lawyer and sent a minimum of 10 clear days of settlement for your section (or finance if required for your contract deposit), in order to ensure they are processed and the monies are advanced to your lawyer’s trust account in time.

Accounts
The bank will be in touch prior to your section settling to discuss opening new or sorting existing accounts in order to ensure they match your new requirements as well as setting up applicable account signatories. You can, if it is more convenient, pop into your local branch and arrange an appointment. The bank will need you to bring in two forms of identification and address confirmation for verification purposes.

Lending Structure
We will send you an email outlining your options here once we have a Sale and Purchase Agreement in place, have met all the bank’s conditions and have been provided available interest rates for your lending from the bank. Generally, your lending will be split into two loans:

    01. The first loan: Will be for your section (less your deposit and potentially if ready it may include your first progress payment invoice). This way, if you choose, you can look to lock this portion of your lending on a fixed rate term. 02. The second loan: Is for the remainder of the build. This is usually set on a floating or variable interest rate and often can be interest-only upon request for the duration of the build. The lending draws down in stages to match the invoices received from you and/or the builder as the build progresses.

    If you don’t require any lending to settle the land purchase, we will still try to get some loan documents drawn at the same time as the section settles in order to avoid two trips to your solicitor. This lending will not require repayments until the invoices are produced.

    Note once the build is completed:
    The Mortgage Girls will revisit your lending in order to restructure, if desired, to a structure that best suits you and your individual circumstances.

    Solicitor
    Once we have confirmed the structure for your lending, you need to make an appointment with your solicitor. Please advise The Mortgage Girls the date of this appointment – this way we can ensure we can give time for the bank to process everything in order to send your loan agreements to your lawyer prior to your appointment. Remember to organise a will and relationship agreement if required whilst you are there!

    Settlement Day for Your Section;
    Congratulations, the day has now arrived! You are now the proud owner of a section! Your solicitor will be working through this with the bank involved.

    • 01. Cash Back: If there is a cash back, this will be paid to the nominated account after settlement.
    • 02. Deposit: If this was via a temporary overdraft, this limit will drop off today. Remember, the interest for the use of this overdraft will either be charged upon settlement date or with your following monthly bank fees.
    • 03. Rates: A bill is automatically mailed from the council every 3 months; however, you can set up an automatic payment or direct debit with the council at any time to have this paid on a regular basis if you prefer. (Your rates will be based on land value only at this stage. The council will increase these after the build is completed.) Make sure the council is aware of your current postal address. Once your build is completed and you’ve moved, change this to your new address.

    How then lending works after the section settles;
    As you receive the progress payment invoices from your building company, email them through to your Mortgage Girls Mortgage Adviser and they will submit them to the bank on your behalf. The bank will then increase your lending, and with some banks, they will pay the invoice on your behalf. Some banks will request you to pay the invoice through branch or internet banking.

    During the build, the bank may require you to do progress valuations to ensure they keep track of the build and the equity. This will be an extra cost that you need to be aware of.

    The Final 5% Draw Down Process
    Time to start packing your bags and get ready to move into your newly built home. It’s exciting times, however, before you get to this step, there are a few things left to complete. Once The Mortgage Girls receive your final invoice, we will generally require a few items in order to satisfy the bank’s approval conditions listed in your original approval, as per the following:

    • 01. A Final Valuation: To confirm the build is completed and its current value. The report will be ordered by The Mortgage Girls once we receive your final invoice. A link will come to you for payment.
    • 02. Full home insurance: With the appropriate bank listed as an interested party.
    • 03. Your Code of Compliance Certificate
    • 04. Your final invoice

    Home Insurance
    The Mortgage Girls will require a copy of your insurance details showing the bank listed as an interested party. Remember to organise a direct debit for this to come out of a nominated account.

    The Mortgage Girls have a great contact who can help with your Home Insurance. Their details are below:

    Gerrards
    Ethan Gerrard
    027 358 6588
    [email protected]
    gerrards.co.nz

    If you are considering Ando or Tower for your policy, The Mortgage Girls team can arrange them to contact you directly as well.

    Here is a handy link to the Cordells Calculator.

    This calculator can help you calculate your “sum insured.” Sum insured is the amount you expect to pay to demolish, remove, and re-build your home if an event occurred.

    Lending

    It’s now time to sit down and revisit how you would like to structure your lending, as a vast amount of the amount may still be on a floating or variable interest. Unless, of course, you would like the lending to remain on these terms.

    The Mortgage Girls will now request interest rates from the bank on your behalf and provide some options for you to consider.
    Lending for

    Turn
    Key
    Builds.

    we will generally require the following information;

    Stage 1 – Meet the conditions on the letter of offer and provide timeframes to the bank

    1. Turn Key Contract (Including sale & purchase, build specifications, and consented plans)

    2. Title for the land or approx date for title to be issued

    3. Projected completion date for your build

    4. If you’re using KiwiSaver, now is the time to talk to your solicitor and find out your obligations here to ensure you are able to withdraw this for the build.

    5. Understand your contract and lending deposits to know when they need to be paid.

    6. Any other specific conditions noted on your letter of offer from the bank

    Stage 2 – Code of Compliance (COC)

    1. Certificate: A copy of code of compliance

    2. Home Insurance: The Mortgage Girls will require a copy of your insurance details showing the Bank listed as an interested party. Remember to organise a direct debit for this to come out of a nominated account.

    The Mortgage Girls have a great contact who can help with your Home Insurance. Their details are below:

    Runacres
    Brooke Millett
    027 624 2501
    [email protected]
    runacres.co.nz

    Gerrards
    Ethan Gerrard
    027 358 6588
    [email protected]
    gerrards.co.nz

    If you are considering Ando or Tower for your policy, The Mortgage Girls team can arrange them to contact you directly also.

    Registered Valuation Report (RVR): The Mortgage Girls will have this ordered through the bank’s internal ordering system. The bank requires all RVR reports to be ordered through their internal system and not directly with a valuer. An email will be submitted to yourself in order to make payment prior to the valuation proceeding.

    How the finance works for Turn Key builds

    The objective of a Turn-Key build is to have no lending while your build is being completed, which helps remove the stress of paying regular rent while your home is being constructed. Turn-Key projects often have settlement dates set beyond the timeframe that any bank will approve finance for. To make the process smoother, we aim to get you conditionally approved for your lending from the outset. This involves sending all required information to the bank to keep them informed about your project and timeframes. It’s important to keep The Mortgage Girls updated on expected timeframes throughout the process, including notifying us early about any anticipated delays and when your build is nearing completion. The next few pages will outline the key information you need to know about the finance for your Turn-Key purchase.

    Contract Deposit

    Your Sale and Purchase Agreement will include two key dates: one for confirming your contract, including finance, and another for the settlement date. The finance date also marks the deadline for paying your contract deposit to confirm your Turn Key purchase, as noted on the front page of your agreement. Please refer to the ‘making an offer’ section for more details on your options regarding the deposit.

    For Turn-Key properties, the building company typically requires a minimum of 5% to be paid upon confirmation of the contract. This deposit amount is set by the building company and can vary. This nonrefundable deposit is paid to confirm the contract, allowing the project to proceed. Only proceed with payment once your solicitor has confirmed that it’s okay to do so and the contract is confirmed.

    Your deposit to the building company or developer is usually covered by savings or KiwiSaver. If this isn’t the case, you may need to discuss options with The Mortgage Girls on a case-by-case basis.

    Paying the Contract Deposit:

    Your solicitor will inform you of the account number to which the deposit should be paid and will let you know when the payment is due. If your deposit funds have been paid to your solicitor’s trust account through KiwiSaver and cover 100% of your deposit, your solicitor will arrange the deposit payment on your behalf.

    Solicitor

    Ensure your solicitor reviews your Turn-Key contract to confirm they are satisfied with the agreement before proceeding with the deposit payment.

    If you’re using KiwiSaver for the Turn-Key purchase, it’s crucial to inform your solicitor when you engage their services. This is because the time frame for completing the necessary forms is important. The forms (attached to your original emails from your KiwiSaver provider) need to be completed with your lawyer and submitted at least 10 clear days before settlement (for your section or finance if required for your contract deposit) to ensure they are processed on time.

    Accounts

    The bank will reach out before your section settles to discuss either opening new accounts or sorting existing ones to ensure they meet your new requirements. They will also assist with setting up account signatories. If it’s more convenient, you can visit your local branch and arrange an appointment. Be sure to bring two forms of identification and address confirmation for verification purposes.

    Once Code of Compliance is Issued

    We are now working within the timeframe agreed in your signed Sale and Purchase Agreement. A Registered Valuation Report will need to be ordered once the build is finished as one of the conditions, which can take about five business days. Please stay in touch and let us know when your build is close to completion. You’ll also need to organise home insurance with the appropriate bank listed as an interested party. Please refer to the contact provided below for help with your home insurance.

    It’s important to remember that your original pre-approval may need to be re-approved to ensure you still meet servicing criteria. Keep track of important dates, such as your pre-approval expiry, so we can address this in a timely manner. If re-approval is necessary, The Mortgage Girls will inform you of the required documents to complete the process and ensure everything is in place for your settlement date.

    Lending Structure

    Once your build is completed, and all bank conditions are met, we’ll begin working on your lending structure. We’ll need to submit the loan documentation to your solicitor for formal signing. The Mortgage Girls will request interest rates from the bank on your behalf to provide options for you to consider.

    Solicitor

    Once your lending structure is confirmed, schedule an appointment with your solicitor and inform The Mortgage Girls of the appointment date. This ensures we can provide enough time for the bank to process everything and send the loan agreements to your solicitor before your appointment. While at your solicitor’s office, remember to arrange a will and relationship agreement, if necessary!

    Home Insurance

    The Mortgage Girls will need a copy of your insurance details, showing the Bank listed as an interested party. Be sure to set up a direct debit for the insurance payments to come out of a nominated account.

    The Mortgage Girls have a great contact who can help with your Home Insurance their details are below;

    Gerrards

    Runacres

    If you’re considering Ando or Tower for your policy, The Mortgage Girls team can arrange for them to contact you directly as well.

    Here is a handy link to the Cordells Calculator. This calculator will help you calculate your “sum insured.” The sum insured is the amount you expect to pay to demolish, remove, and rebuild your home in case of an event.

    Settlement Day

    Congratulations, the day has now arrived! You are now the proud owner of your newly Built Home! Your solicitor will be working through this with the bank involved.

    > Cash Back: If there is a cash back this will be paid to the nominated account after settlement.

    > Deposit: If this was via a temporary overdraft this limit will drop off today, remember the interest for use of this overdraft will either be charged upon settlement date or with your following monthly bank fees.

    > Refer to “What happens after I have moved into my build” section, on page 51 for more information on the final stage of your journey.
    Lending for

    Renovations.

    Lending for renovations may be done by increasing your existing home loan or looking to refinance your total borrowing with another lender. You will need a summary of the work to be completed, approved plans (if required), and quotes for the work to be completed.

    It is important to note that with a few exceptions, major renovation work is going to need your local council’s building consent. The following list is a summary of building work that will need a consent, but you should always check with your local council to confirm before you start.

    01. Structural building – including additions, alterations, re-piling and some demolitions

    02. Plumbing and drainage where an additional sanitary fixture is created (some repair and maintenance may be exempt)

    03. Relocating a building

    04. Installing a woodburner or air-conditioning system

    05. Retaining walls higher than 1.5 metres (3.0 metres in rural areas if designed by a chartered professional engineer)

    06. Fences or walls higher than 2.5 metres, and all swimming pools and their associated fences

    07. Decks, platforms, or bridges more than 1.5 metres above ground level

    08. Sheds greater than 30 square metres in floor area (sheds between 10 and 30 square metres will still need the help of an LBP or engineer or must use lightweight material in accordance with Acceptable Solution (B1/AS1))

    09. Some earthworks

    Your offer letter from the bank will have many standard conditions noted on it as per the below:

    01. A Fixed Price Contract for the build and/or invoices – (We do recommend having your build contract checked over by an independent professional, there may be a charge to do this.) For any items excluded in your contract, the bank may want to know and understand more about the total cost for these items and how you intend to cover these costs.

    02. Build Specifications

    03. Council consents

    04. The Plans

    05. A Registered Valuation Report (ordered through the bank’s independent valuation ordering system) will need to be paid for in order to determine the expected completion value of your project for the bank. (There may be a requirement for additional valuations throughout the build as well as one at the last 5% stage)

    06. Builders Risk Insurance

    07. Your First Invoice for the build and notification of when this is due

    08. Expected completion date

    01. Once all the conditions are met, with the bank we sort the loan structure and have loan documents prepared for signing.

    02. Once signed we will await the settlement date to occur.

    The Final 5% Drawdown Process

    Exciting times now your renovations are almost completed! Just a few small items to complete in order to draw down the final 5% of your lending.

    Once The Mortgage Girls receive your final invoice we will generally require a few items in order to satisfy the banks approval conditions listed in your original approval as per the following:

    01. A Final Valuation to confirm your renovations are completed and your home’s new value. The report will be ordered by The Mortgage Girls once we receive your final invoice. A link will come to you for payment.

    02. Full home insurance with appropriate bank listed as an interested party.

    03. Your Code of Compliance Certificate.

    04. Your final invoice.

    Home Insurance

    The Mortgage Girls will require a copy of your updated insurance details showing the Bank listed as an interested party. This is a great opportunity to review your existing policy or if you want a second opinion The Mortgage Girls have a great contact below who can help you:

    Gerrards
    Ethan Gerrard
    027 358 6588
    [email protected]
    gerrards.co.nz

    If you are considering Ando or Tower for your policy, The Mortgage Girls team can arrange them to contact you directly also.

    Here is a handy link to the cordells calculator.

    This calculator can help you calculate your “sum insured.” Sum insured is the amount you expect to pay to demolish, remove, and re-build your home if an event occurred.

    Lending

    Now your renovations are completed, it’s a good time to sit down and revisit how you would like to structure your lending, as your additional lending may still be on a floating or variable interest (unless of course you would like the lending to remain on these terms). If you wish to alter, The Mortgage Girls will now request interest rates from the bank on your behalf and provide some options for you to consider.

    Lending for

    Labour Only Builds.

    we will generally require the following information;

    Stage 1 – Section approval

    01. Sale and Purchase Agreement for the land

    02. Title for the land or approx date for title to be issued

    03. Understand your contract and lending deposits to know when they need to be paid

    04. If your using KiwiSaver now is the time to talk to your solicitor and find out your obligations here to ensure you are able to withdrawal this for the build.

    05. A spreadsheet clearly outlining all the cost and quotes obtained in order to fully complete the project as well as the stages of the build each payment/cost is expected to be required/paid – The Mortgage Girls have a templated example for your reference available.

    Extra points

    • As the project is to be self-managed it is important that you ensure everything is accounted for from hammer and nails to the final coat of paint and landscaping. The Mortgage Girls and The Bank of approval are unable to check off and ensure every item is accounted for this is up to yourself with a self-managed project to ensure every item required to complete the build is completed utilising your experience in construction.

    • It is becoming more and more common for the banks to request all Labour only builds to be checked over by a quantity surveyor in order to ensure everything is accounted for, it may pay to allow for this in your budgeting.

    Labour only builds (cost & quotes)

    Once all the conditions on your pre-approval are met and your finance is confirmed unconditional by the bank, The Mortgage Girls will email you and your solicitor to advise. From here The Mortgage Girls will work to the specified dates in your Sale and Purchase Agreement.

    If your title is pending: we can continue to meet all the other finance conditions for your section ensuring when title is through there are less actions to complete once issued to ensure a smooth process to settle. Without title the bank will not settle on your section.

    Your offer letter from the bank will have many standard conditions noted on it as per the below: 01. A Fixed Price Contract for the build and/or invoices – (We do recommend having your build contract checked over by an independent professional, there may be a charge to do this.) For any items excluded in your contract, the bank may want to know and understand more about the total cost for these items and how you intend to cover these costs.

    Some things to think about when lending for a build are listed below;

    Your Deposit for the Contract and Lending;

    There are two times where deposits are generally required with Labour Only Builds;

    01. Contract deposit: Your Sale and Purchase Agreement will have two dates on it, one outlining the date to confirm your contract including finance and the second the settlement date. The finance date is the same date your contract deposit will need to be paid in order to confirm your section purchase, noted on the front page of your agreement. Refer to the making an offer section to understand more about your options around the deposit. This nonrefundable deposit, paid upon confirmation of the contract in order to confirm your purchase. Only pay the deposit once your solicitor has confirmed it is ok to do so and the contract is confirmed.

    02. Lending deposit: Your overall deposit for the project can be put down either in 2 stages or 1.

    Option 1: Put your full deposit down upon purchase of the section, reducing the amount of lending required at the beginning of the build.

    Option 2: Put 20% of the land purchase price (note if the valuation of the land is noted lower than the purchase price you may require more down payment on the section) down on settlement of the section and utilise the remainder of your deposit to start the build invoices (your full deposit must be utilised prior to the bank starting to make progress drawdowns on your build loan).

    Making payment for deposits: Your solicitor will advise the account number to which these need to be paid to and let you know when payment is due. If your deposit funds have been paid to your solicitor’s trust account through KiwiSaver and cover 100% of your contract deposit, your solicitor will organise paying your deposit(s) on your behalf.

    06. A copy of the plans for your build – they will be required to obtain the quotes above

    07. A copy of all quotes and any invoices to match the spreadsheet paid to date matching the spreadsheet

    08. A Registered Valuation Report may be required to determine section value – NOTE: If required at this point you will end up requiring a minimum of 3 valuations if you are not able to complete the Stage 2 build conditions at the same time. (Needs to be ordered through the bank’s independent valuation ordering system)

    09. Any other specific conditions noted on your letter of offer from the bank

    Stage 2 – Build approval

    01. Council consents

    02. A Registered Valuation Report (ordered through the bank’s independent valuation ordering system) will need to be paid for in order to determine the expected completion value of your project for the bank. (There may be a requirement for additional valuations throughout the build as well as one at the last 5% stage)

    03. Builders Risk Insurance

    04. Your first invoice for the build and notification of when this is due

    05. Expected completion date

    If your using KiwiSaver for the build;

    It’s important to let your solicitor know when you engage their services. This is because the time frame to complete these forms is important. The forms (attached to your original emails from your KiwiSaver provider) need to be completed with your lawyer and sent a minimum of 10 clear days of settlement for your section (or finance if required for your contract deposit), in order to ensure they are processed and the monies are advanced to your lawyer in time.

    Accounts

    The bank will be in touch prior to your section settling to discuss opening new or sorting existing accounts in order to ensure they match your new requirements as well as setting up applicable account signatories. You can if it is more convenient, pop into your local branch and arrange an appointment. The bank will need you to bring in two forms of identification and address confirmation for verification purposes.

    Lending Structure

    We will send you an email outlining your options here once we have a Sale and Purchase Agreement in place and have met all the bank’s conditions and have been provided available interest rates for your lending from the bank. Generally, your lending will be split into two loans;

    01. The first Loan: Will be for the section (less your deposit and potentially if ready, it may include your first invoice(s). This way, if you choose, you can look to lock this portion of your lending on a fixed rate term.

    02. The second loan: Is for the remainder of the build. This is usually set on a floating or variable interest rate and often can be interest-only upon request for the duration of the build. The lending draws down in stages to match the invoices received from you, matching your outlined schedule as the build progresses.

    If you don’t require any lending to settle the land purchase, we will still try to get some loan documents drawn at the same time as the section settles in order to avoid two trips to your solicitor. This lending will not require repayments until the invoices are produced.

    Note, once the build is completed: The Mortgage Girls will revisit your lending in order to restructure, if desired, to a structure which best suits you and your individual circumstances.

    Solicitor

    Once we have confirmed the structure for your lending, you need to make an appointment with your solicitor. Please advise The Mortgage Girls the date of this appointment – this way we can ensure we can give time for the bank to process everything in order to send your loan agreements to your lawyer prior to your appointment. Remember to organise a will and relationship agreement whilst you are there!

    Settlement Day for Your Section

    Congratulations, the day has now arrived! You are now the proud owner of a section! Your solicitor will be working through this with the bank involved.

    01. Cash Back: If there is a cash back, this will be paid to the nominated account after settlement.

    02. Deposit: If this was via a temporary overdraft, this limit will drop off today. Remember, the interest for use of this overdraft will either be charged upon settlement date or with your following monthly bank fees.

    03. Rates: A bill is automatically mailed from the council every 3 months; however, you can set up an automatic payment or direct debit with the council at any time to have this paid on a regular basis if you prefer. (Your rates will be based on land value only at this stage; the council will increase these after the build is completed.) Make sure the council is aware of your current postal address. Once your build is completed and you’ve moved, change this to your new address.

    How the lending works after the section settles:

    As you organize and receive your invoices for the build, email them through to your Mortgage Girls Mortgage Adviser and they will submit them to the bank on your behalf. Reminder, these need to match the schedule you originally provided. The bank will then increase your lending, and with some banks, they will pay the invoice on your behalf. Some banks will request you pay the invoice through branch or internet banking. During the

    build, the bank may require you to do progress valuations to ensure they keep track of the build and the equity. This will be an extra cost that you need to be aware of.

    The Final 5% Draw Down Process

    Time to start packing your bags and get ready to move into your newly built home. It’s exciting times, however, before you get to this step, there are a few things left to complete.

    Once The Mortgage Girls receive your final invoice, we will generally require a few items in order to satisfy the bank’s approval conditions listed in your original approval as per the following:

    01. A Final Valuation to confirm the build is completed and its current value. The report will be ordered by The Mortgage Girls once we receive your final invoice. A link will come to you for payment.

    02. Full home insurance with appropriate bank listed as an interested party.

    03. Your Code of Compliance Certificate.

    04. Your final invoice(s).

    Home Insurance

    The Mortgage Girls will require a copy of your insurance details showing the Bank listed as an interested party. Remember to organise a direct debit for this to come out of a nominated account.

    The Mortgage Girls have a great contact who can help with your Home Insurance. Their details are below:

    Gerrards
    Ethan Gerrard
    027 358 6588
    [email protected]
    gerrards.co.nz

    Need help arranging insurance?
    The Mortgage Girls can assist you with this through Intio, Tower, or one of our trusted insurance advisers. Simply click here to complete the form, and one of our specialists will be in touch to guide you through the next steps.

    A Few Things To Help Think About Your Build…

    Building can be very exciting and daunting at the same time, especially if it is your first build. Take your time read over everything and do your research prior to signing any documents.

    It pays to make a checklist of everything you would like in your home, go to show homes, even open homes of existing houses to help you get ideas. Many building companies will often give you a list of other houses they have built so you can drive by and have a look at the exteriors to see if there are colours/styles you like.

    Take your time to read over your building contract and understand any items excluded from your build such as the Letter box, curtains, driveways. The bank may want to know and understand more about the total cost for these items and how you intend to cover these costs.

    Here’s some questions to help you think about your project, from The Mortgage Girls’ personal build experiences;

    > Shiny tap’s look pretty, however do require a vast amount of cleaning to keep shiny..

    > Do you want inbuilt cupboards in the bathroom, instead of ones coming attached to the wall?

    > Inner walls often do not have pink batts of a home, this is normal however does not help block noise through walls, especially if you have plumbing going up a wall!

    > Is the kitchen sink fall enough for the water to fall into the drain? Do you need a spray gun tap to make it reach?

    > Is there a place to put a dryer and a washing machine, do you have children and want your cupboards up higher?

    > Soundproofing, is there going to be a T.V. on a wall? If it worth soundproofing that wall? Does the toilet plumbing go up the side of a bedroom wall, is it worth soundproofing that wall?

    Are you having an ensuite in the master bedroom? Pays to check the layout to make sure your bed is not facing the toilet…

    > USB plugs, everything seems to charge by USB these days, is it worth putting these in at the same time?

    > Do you want solar power in your home, is now the time to investigate into this?

    > Do you want gas or electric cooking?

    > Is the house easy to heat? Does the heating get to the rooms or only the lounge?

    > Is there a way to have more off-street parking?

    > Is there a way to better ventilate bathrooms / laundry in order to better future proof your home?

    > Visualise your layout, do you want a bigger lounge or would you prefer a smaller lounge and larger rooms?

    > Is there enough storage? Do you need more storage in the roof space?

    > Will you use your garage to park a car or will you use it as an extra room for your kids or maybe a couple of couches for a chill-out zone? If so, maybe talk about insulation and double-glazed windows.

    > Does your furniture fit your new home? It may pay to leave some money aside for small items you may not think about like a rubbish bin or a bookshelf or some beautiful matching towel sets for the guest bathroom. If this is your first home, then you may need to think about stocking your house with EVERYTHING! From cleaning products to herbs and spices. Purchasing these things in bulk can really hurt your wallet in your first week in your new home.

    > Are you building in a subdivision or a ready-built area? It may pay to get to know your neighbours early and give them your contact details. You will have trucks and diggers and cranes (oh my!) likely in close proximity to them, so being in their good books from the start will help to alleviate any tension in the future. If you are sharing a driveway this is especially important! Plus, people are really nosy, so they will keep an eye on your property when you or the contractors aren’t there.

    > Is there services to the gate? (Power/water) How easy is it going to be to get these to the site of your home? If you have a long driveway, there may be extra costs involved, try to work these costs in from the beginning if possible.

    Most importantly ask questions!

    Ask your builders, subbies, mortgage broker, lawyer, and friends and family lots of questions and ask them often. If you are unsure about anything it’s better to ask now than to regret later.

    Remember try to relax / chill out there will be a dozen or more things that don’t go to plan or become really hard along the journey. Sometimes there will be extra expenses however cross those bridges as they pop up they are often outside of your control and sometimes you have to accept them and move on to what’s most important, completing your new home. The Mortgage Girls are here to help where we can and are happy to be a part of your journey.

    What Happens After I Have Moved Into My Build?

    Now everything has settled down and you’re all moved in…
    congratulations on owning your new home!

    01. Your mortgage repayments will be deducted automatically from your nominated account.

    02. If you have not set up a direct debit for your rates, it would not hurt to give the council a call or wait for your first bill to arrive.

    03. Update your address. Now is the time to update your postal address if required on items such as your drivers licence, electoral roll and bank statements.

    04. Moved to a new bank? Once settlement occurs a reminder if you wish to close the accounts with the bank you shifted from you may need to go in to organise this as they will not automatically close off.

    05. KiwiSaver: Now is a great time to review your KiwiSaver in order to start planning your future savings for retirement. Want The Mortgage Girls to get someone to give you a call? Get in touch here, please leave a note to say you would like a KiwiSaver specialist to get in touch. Alternatively, we have a direct link to kōura KiwiSaver you can sign up yourself by clicking here. Learn more about the kōura KiwiSaver Scheme here.

    06. Mortgage Protection (lifestyle insurances): Insurance is one of those things that you hopefully never need to use. If you do need it, you’ll be thankful it’s there! This is a friendly reminder to review your insurance or look into your first policy. Insurance can take time to review and be put in place, so the sooner you start, the better. Want the team at The Mortgage Girls to get someone to call you? Give your adviser a call today or send us a message here and we can get someone to give you a call.

    07. Maintenance: Whether your home is new or old, upkeep is important! It is important to keep your home maintained in tip-top shape to prevent major issues in the future and to preserve its value for decades to come. This is your biggest investment and if you take care of it, you will reap the rewards later on. If you would like a comprehensive seasonal checklist click here or reach out as we have some excellent suggestions for professionals that can help you.

    08. Future proofing: Relationship Agreements, Wills & Power of Attorney’s, have you sorted these out? Are you protecting what’s most important to you? After all, you’ve insured your home, you may have even insured yourself and your income, but it’s important to put measures in place for you and your family’s financial wellbeing now and into the future. As these are all legal documents, you’ll need a lawyer to help you write them up. The Mortgage Girls can refer you to our trusted network of legal advisers if you want to know more.

    09. The Mortgage Girls are here to help with any questions you have, do not hesitate to get in touch anytime. We have a great web page which talks about the things to think about when you own a home click here. We will be in touch when your fixed rate is up for review.

    Important information about The Mortgage Girls and how our business works.

    Please head to; themortgagegirls.co.nz/important-information

    Here you will find:

    >Terms of Engagement – Obligations

    >Our disclosures – What we do and how we work, fees and expenses information & complaints process.

    >Our privacy policy

    >Hard copies are available on request

    Disclaimer: The Mortgage Girls Ltd believes the information in this publication is correct as at May 2024, and it has reasonable grounds for any opinion or recommendation found within this publication on the date of this publication. However, no liability is accepted for any loss or damage incurred by any person as a result of any error in any information, opinion or recommendation in this publication. Nothing in this publication is, or should be taken as, an offer, invitation or recommendation to buy, sell or retain any investment in or make any deposit with any person. The information contained in this publication is general in nature. It may not be relevant to individual circumstances. Before making any investment, insurance or other financial decisions, you should consult a professional financial adviser. This publication is for the use of persons in New Zealand only. Copyright in this publication is owned by

    The Mortgage Girls Ltd. You must not reproduce or distribute content from this publication or any part of it without prior permission.

    Thank you for choosing The Mortgage Girls, we look forward to helping you now and in the future.

    Please do not hesitate to get in touch anytime with any questions you have.
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