Building can be fun – or it can be stressful. Often the difference comes down to good planning. That includes getting money matters shipshape. While the subject of how to finance a build can be dry (and, in our opinion, nowhere near as exciting as discussing design features or actually seeing your home rise from the ground), it’s essential the foundations include a fiscal strategy which will streamline the process so you can be relaxed enough to enjoy the creative stuff. That’s why Box™, in association with Kiwibank, has created this timeline and guide.
10 Months Before The Build – Be An Early Bird
Once you’ve decided to embark on a new-build journey, before you even begin to scan the classifieds for your patch of dream dirt or research who to commission to design your home, touch base with those professionals who have an eye on your finances. It’s never too early to contact your accountant [there may be tax impacts or incentives to consider], solicitor and banking representative. We recommend you pick up the phone and have a high-level discussion to get an overview of your financial position. A picture of your budget and the way forward will need to form in your mind before the first dollar is spent. Even if you’re the type of person who used to pull all-nighters before exams as a teenager, change your approach. Last-minute lending is an oxymoron and contradictory to the relationship you want to establish and encourage with your bank.
Land – What’s The Deal?
You wouldn’t design a ball-gown for someone you’d never seen so why would a house to be any different? Box™ doesn’t go in for cookie-cutter concepts so it makes sense to have secured the land before approaching us for a prototype plan. (Of course give us a call anytime if you want to gauge a bit about costs – or just read up on the Box™ website).
Banks have stricter criteria when it comes to lending for land including a higher deposit requirement. Factors such as how large the land is and its location also have a bearing on what they will be prepared to lend you. They do like to know you have firm plans to build so Box™ charges around $9K for their Prototyping phase where you will spend time with the architects and they will create a construction estimate to show the bank.
8 Months Before The Build – On Your Marks
Once you move past the Prototyping design stage, things start to get very serious and well past pocket-change territory so you’ll need all your financial ducks in a row: it would be heart-breaking, not to mention expensive, to stop the process short now. After considering how you will service a loan, the bank will let you know what your maximum borrowing is. Now you have a budget for Box™ to design to and that’s brilliant news for all of us. Box™ is committed to complete transparency with their costs which they present to clients on a granular level. (Read ‘Show me the Money’ on their blog). That’s helpful not just for you but for the bank too. Not only do they need to feel confident in your ability to service the loan but also Box™’s ability to deliver the project on time and on budget.
3 Months Before The Build – A Budget Built For You
At least three months out from the build, in an ideal world (and we like to aim high) you’ll be involved in serious discussions with the bank with support from Box™. Just as a home is designed particularly for you – around your needs and wants – so it takes time to craft a financial package tailored to your unique situation. There is no one-size-fits-all formula. When it comes to financing a new build, there are so many ‘depends’ your bank takes into account. They’ll look at the land – and what it is worth. They’ll ask for payslips, details of insurance, utility bills (all the regular stuff you need when taking out a mortgage). And, yes, there will be the inevitable forms to fill out. Again, give yourself the luxury of time to complete this stage so when, later on, you’re agonising over your final design details, you can at least be Zen about how you’re going to pay for it.
One Month Before The Build – Green Light, Let’s Go
Once finance in approved, Box™ asks their clients to forward them a copy of the Confirmation of Finance. That lets them know that you are in a financially viable position to sign the construction contract and protects you against over-committing. Box™ recommend you show this to your legal advisor before you make your mark on the dotted line. But wait… there’s more. The bank can require a registered valuation by an independent professional who will look at the land, study the Box™ designs and the cost to build and then value the entire property. Other requirements by Kiwibank may include a certified Master Builders guarantee copies of building consents, and evidence of Box™’s risk insurance cover (don’t worry they’ll sort all this for you).
Pay By Play: Ongoing
Box™ operates on a month-by-month charge basis, invoiced to reflect the stage of the work completed. Some months the cost will be higher than others but each step of the way will be far more exciting and yet simultaneously, more cool, calm and curated if you know you have the money matters sorted. Before the keys are handed over and the final drawdown of the loan, we want to know you’re happy with your new home. And, guess what? So does the bank! Along with the final invoice, they need a confirmation from you to say all is tickety-boo, plus they usually ask for a copy of your house insurance policy and the Practical Completion certificate from Council™ that gives sign off on the build. Once the paperwork is processed, you can move in and begin to enjoy the process of making the spaces your own. Remember, there’s no rush. Except of course to celebrate and share the achievement. Did you remember to budget for the roof shout?