If you’re unable to finance a new-build home without a mortgage, you can facilitate this funding process by providing the bank with confidence regarding the project’s anticipated costs.
Banks are often hesitant to lend money for projects where costs could escalate unexpectedly. To address this concern, you might consider purchasing a home through one of our House & Land packages or our Turnkey service. This leads to the question: what exactly does ‘turnkey’ mean?
The word ‘turnkey’ encapsulates how effortlessly you can begin using the property once it’s built. Essentially, you would just need to “turn the key” and step into the building!
Before that, you would still need to complete a few tasks, although perhaps not as many as you might have anticipated. Once you’ve signed a Sale & Purchase (S&P) agreement with the developer, you’ll be required to pay them a deposit, typically around 10% of the project’s total projected cost.
You will not need to foot the bill for the remaining cost until the property is handed over to you. This whole process very much places simplicity at the forefront.
As with a turnkey service, you pay a small deposit on the home at first. However once you’re issued a title for the land, you’ll need to secure financing for it through a mortgage. While the house is still being built, you’ll be responsible for paying interest on this mortgage.
At the same time, you will require a separate mortgage for the construction work itself. As milestones of this work are reached, you will need to draw down this mortgage so that you can make ‘progress payments’ to the builder.
If the system for funding a House & Land home sounds somewhat complicated to you, or you are simply worried that you wouldn’t be able to keep up mortgage payments while waiting for the house to be finished, a turnkey solution could be a much better option for you.
After all, there is greater certainty on the total cost of the home, since the builder would cover all of the construction costs along with the interest costs resulting from the purchase of the land. Right from the beginning, you’ll have a clear idea of the type of home you’ll receive and consequently, a good understanding of what you’ll likely need to pay for it.
That’s because, at the design stage, a turnkey home offers less scope for customisation than a House & Land alternative.
If you would like more detail on what ‘turnkey’ means and whether a more bespoke strategy — e.g. our custom Design & Build service — would better suit your specific needs, please phone us on 09 236 5150.
We care about the protection of your data. Read our Privacy Policy.
