New builds
A house and land package bundles a section with a new home designed for it, usually from a group housing company. The finance depends on how the contract is set up.
By Yatin Kainth, Financial Adviser. Last reviewed
A house and land package is a new home sold together with its section. It’s either turnkey, where you pay a deposit and the balance when the finished home is handed over, or a split land-and-build contract paid in stages. New builds are exempt from the Reserve Bank’s deposit limits, so some lenders need a smaller deposit.
| Turnkey | Separate land and build | |
|---|---|---|
| How you pay | Deposit on signing, balance at completion | Buy the land, then pay the builder in stages |
| Finance | Works like buying an existing home, at the end | Construction loan, drawn down as the build progresses |
| Interest during the build | None, until settlement | On the amount drawn so far |
| Main risk | Long wait; value and your circumstances can change before settlement | Cost overruns and managing the build |
New builds sit outside the Reserve Bank’s loan-to-value restrictions, which covers buying a new home from the developer within six months of completion. That means banks aren’t rationing low-deposit lending on them in the same way. Each bank still sets its own limit, and some participating lenders allow a Kāinga Ora First Home Loan on a new build. New builds are also exempt from the debt-to-income limits.
I line up lenders who are comfortable with the builder and contract type, plan for approval timing on long builds, and keep an eye on the valuation. See construction loans for the staged-payment side.
Usually yes, for your first home, including for the deposit on a turnkey contract. Timing matters because the withdrawal has to line up with the payment. See using KiwiSaver for your first home.
It depends on the lender. Because new builds are exempt from the Reserve Bank’s LVR limits, some lenders go below 20%, and first home buyers may qualify for a First Home Loan with 5%.
The bank lends against the valuation, so you’d need to cover the difference yourself. Keep a buffer and check recent sales in the development.
It’s simpler, because there are no stage payments and a fixed price. But there’s less control, and a long gap between signing and settlement.