Building A New Home

Building A New Home

Building a new home can be stressful, so the last thing you want to worry about is the finance. Thats where Nest can help. We have two types of financing options; progress payments and fixed price contracts.


Progress Payments

Progress payment loans are when the lender makes payments to the builder at certain stages of the construction. For example, a payment may be made when the foundation is complete then when the roof is on, and so on. The advantage of progress payments is allowing you some flexibility to alter the building plans as the construction takes place. The overall price of the property will fluctuate, but this loan gives some flexibility. The disadvantage is you begin paying the mortgage while the house is being built. So for a period of time you will pay your current rent/mortgage plus you will be paying for the new house mortgage.


Fixed Price Contract

A fixed Price contract is where the builder takes ownership of the entire construction process. You purchase the property at a fixed price on a Sale and Purchase Agreement and the price cannot deviate from this. The builder needs to construct the property to the specifications you both agreed on and the builder pays for the costs of labour and materials until you both settle. If the builder incurs additional costs then they have to absorb that into their costing and they cannot increase the sale price to you. The advantage for this loan is it is a fixed price so you know how much the property will cost when it is complete. You also wont be making any mortgage repayments while it is being built because the loan settles when you move in. The disadvantage of this loan is you cannot alter.


Reserve Bank Restrictions

The Reserve Bank restrictions have an exemption for construction finance. This means you can potentially build a new home with as little as a 5% deposit and this is exempt from the Reserve Bank restrictions. Certain conditions apply and we are happy to discuss this.


 

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