Borrowing to build

Draw down money as you need it

When you’re approved for a home loan to build a house, you won’t have to take the entire loan out at once. You can take it in chunks as building work progresses. By not drawing down your full loan in one go, you'll save on interest payments.

How much you’ll be able to borrow

We’ve all heard horror stories about building projects running over time and over budget. It’s important to talk to us before you commit to anything, so you know how much you’ll be able to borrow and can start your project off on a realistic footing.

The amount we’ll lend will depend on how much you earn, the size of your deposit, the value of the land you’ll be building on, the cost to build the house and the estimated value of the finished property.

What you’ll need to show us when you apply

We’ll need to see:

• A Sale and Purchase Agreement for the land you'll be building on (if you don't already own it)
• A Registered Valuer’s report of the estimated value of the finished house, based on the plans
• Your contract with the builder
• Your builder’s details, including their risk insurance (this is different to your home insurance)
• The building consent and any resource consents.

During the build

As the building work progresses, you’ll not only have the joy of seeing your house take shape, you’ll also have to pay your hard working tradies. Your building contract should set out a payment schedule. You can structure your loan so you can draw down funds to suit this schedule.

When you draw down funds, we’ll need to see:

• Invoices for the building work
• Independent certification that the work being invoiced has been completed
• We may also ask for interim valuations as the build progresses.

After the building work is complete

Once the final nail has been hammered into your new house, there’ll still be a bit of paperwork to complete. This will include:

• The Registered Valuer’s completion certificate
• A code compliance certificate
• Invoices still to be paid
• Full replacement house insurance, with our interest as mortgagee noted.

If you’re using an architect or a design-and-build company, they’ll usually take care of this for you.