Home loans for the brand new

There’s nothing quite like a brand new property, be it house or apartment, and many people aim to buy or build a new home rather than an existing one.

Your home loan options may differ when you are looking at something new, depending on whether you are buying a house and land package, land to build on later, a brand new apartment or an apartment off-the-plan.

Generally speaking, the mortgage requirements for purchasing a house and land package or a newly constructed apartment will be very similar or even the same as for purchasing an existing property – basically, if you pay a deposit and then nothing else until the house has been completed, then normal lending criteria will most likely apply.

It’s when you start to get into the properties that aren’t built yet that things change.

For example, if you buy land with the intention to build, you will probably need a loan that makes use of progress payments. With this type of loan, payments are made at regular intervals of a build, based on a progress valuation which shows the cost of the project to date. You will normally need to have a fixed price contract, unless you have a deposit of more than 40 per cent.

If you are buying off-the-plan, the same rules for financing a build will apply, but you will also need copies of building consents, a valuation, and builders risk insurance to cover you and your lender in case anything happens while the property is being constructed.

If you are purchasing an apartment, either new or off-the-plan, it’s important to consider the size as many lenders will restrict or simply deny funds for very small apartments.