Building Your Dream Home
What do you do when you’ve searched countless homes but still can’t find the one that’s perfect for you?
For many, the solution is building their own home. While this may sound exciting, it’s important to know that the process can become overwhelming if things don’t go as planned. The first step is understanding the costs involved, from purchasing land to construction, and then determining how much your bank is willing to lend for your dream project.
What Costs Are Involved in Building a Home?
Architect’s Fees
If you’re not opting for a standard house plan, hiring an architect to turn your ideas into a detailed floor plan will be essential.Purchase of Land
If you don’t already own land, purchasing a plot will be necessary before you can begin building your home.Resource Consent
Resource consent is approval from your local council under the Resource Management Act 1991, ensuring your home won’t negatively impact the surrounding environment or properties.Building Consent
Building consent, granted under The Building Act 2004, confirms that your plans meet current building standards and codes, giving the green light for construction.Utility Connections
Connecting your home to essential utilities like electricity, gas, and water will come with additional fees.Construction Costs
This represents the largest cost, covering the work done by your registered builder or construction company to bring your dream home to life.Valuation Costs
To secure a home loan, the bank will require a registered valuer to assess the property’s value at various stages of construction to ensure their investment is aligned with the home’s progress.Legal Costs
A lawyer will help you navigate the building contract and manage the legal aspects of your loan approval, ensuring everything is in order.
Other Services
Having Trouble Managing Your Finance?
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What Documents Are Required for a Construction Loan?
Each bank has specific requirements for approving a construction loan, in addition to standard home loan documents. Here’s what you’ll need:
- House Plans: Building plans approved by an architect and your local council.
- Fixed Price Building Contract: A signed agreement between you and the builder, detailing the exact costs and stages of the project.
- Building Consent Approval: Council-approved consent to begin construction.
- Resource Consent Approval: Council-approved plans for your home.
- Registered Valuation: An estimate of your home’s value upon completion.
- Builder’s Risk Insurance: Insurance coverage in case of damage during construction.
- Rental Appraisal: If you plan to rent the property, a real estate agency will need to provide an estimated rental value.
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How Much Can I Borrow on a Construction Loan?
Most lenders are willing to offer up to 80% of your home’s value upon completion. In some cases, banks will lend up to 90%, provided the home is for your own residence and the construction costs are fixed and detailed in a contract.
Building a home often costs more than initially expected due to unforeseen delays, material shortages, or changes in the plans. Banks account for this by ensuring your loan approval includes an additional 15% buffer to cover potential overages.
Why Choose Aarit Finance?
Select the Right Lender
We engage with multiple lenders to give you the flexibility to select the one that perfectly suits both your financial needs and your project goals.
Maximize Your Loan Approval
We focus on securing the maximum loan amount possible, ensuring you won’t experience a cash shortfall at any point during your home’s construction.
Become Mortgage-Free Sooner
After your home is completed, we offer expert advice on how to structure your loan to pay down the principal faster, reducing your mortgage over time.
Stress-Free Paperwork
We handle all the essential documentation for your construction loan in advance, making sure the entire application process is smooth and hassle-free.
Choose a Bank that Fits Your Project
Each bank has a unique approach to construction loans. We assess your needs and building contract to help you pick the bank that aligns best with your project.