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Building or renovating.

Financing your construction goals.

Make the dream real.

When you decide to build or renovate, you get to create something that’s brand new, energy-efficient and exactly how you’d like it. To help you plan, here’s a summary of steps from financial planning to project completion.

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Building or renovating FAQs

Whether you’re planning to build a new home or renovate an existing one, you’ll probably have a long list of questions. That’s why you need a team of support people who provide essential information throughout your build. To get you off to a good start, here are some of the most common questions people ask.
Assuming the loan sizes are the same, this will mainly depend on your construction contract. A fixed price contract for a house and land package with a well-established construction company will present minimal risk to a lender. In addition, new-build home loans are usually available with a deposit as low as 10%, because they’re not included in the government’s loan-to-value ratio (LVR) restrictions. For more see our guide to new-build construction loans.

The easiest way is to use our handy mortgage calculators to work out a budget, your borrowing power and likely home loan repayments. Then you can compare what you can afford to pay, with the prices for group-build house and land packages with a floorplan you like and in the area you’re considering. If you already have a section, ask a few of the larger building companies for the typical cost to build the home you’d like on the land you have.

If you have a turnkey construction contract, where you pay an initial deposit and the remainder on completion, then the loan will be much like a standard home loan. If you have a build-only contract, with payments due at set stages of construction, then the loan will allow progressive drawdowns. Progressive loans have a floating interest rate during the drawdown period and may be available as an interest-only loan for that time. For both types of contracts, lenders use a registered valuation of the completed home when deciding how much they’ll lend, along with your deposit and the repayments you can afford of course. For relocatable and pre-built homes, they’ll only lend based on the land value until the home is permanently attached to the section. For more see our guide to new-build construction loans.

Assuming the loan sizes are the same, this will mainly depend on your construction contract. A fixed price contract for a house and land package with a well-established construction company will present minimal risk to a lender. In addition, new-build home loans are usually available with a deposit as low as 10%, because they’re not included in the government’s loan-to-value ratio (LVR) restrictions. For more see our guide to new-build construction loans.

The easiest way is to use our handy mortgage calculators to work out a budget, your borrowing power and likely home loan repayments. Then you can compare what you can afford to pay, with the prices for group-build house and land packages with a floorplan you like and in the area you’re considering. If you already have a section, ask a few of the larger building companies for the typical cost to build the home you’d like on the land you have.

If you have a turnkey construction contract, where you pay an initial deposit and the remainder on completion, then the loan will be much like a standard home loan. If you have a build-only contract, with payments due at set stages of construction, then the loan will allow progressive drawdowns. Progressive loans have a floating interest rate during the drawdown period and may be available as an interest-only loan for that time. For both types of contracts, lenders use a registered valuation of the completed home when deciding how much they’ll lend, along with your deposit and the repayments you can afford of course. For relocatable and pre-built homes, they’ll only lend based on the land value until the home is permanently attached to the section. For more see our guide to new-build construction loans.

The only way to answer this for your situation is to cost up the renovation you have in mind, check you can afford to do it, then compare that with houses in your area that already have what you want. If there are other areas you’d be happy to live in you could include those as well. The best way to cost up a renovation is to work out exactly what you’d like to do or talk to a designer about what you’re trying to achieve, and then pay an experienced builder or quantity surveyor to estimate the total cost, including things like council consents. You should also include a healthy allowance for cost over-runs and unforeseeable challenges, such as rotten framing.
Most people increase their existing mortgage, either with their current lender or by refinancing with a new one. Your renovation loan plus your existing mortgage balance can usually be up to 80% of your home’s estimated value once the project is finished. You’ll need a registered valuer to provide this estimate. If your construction contract has a schedule of payments due at set completion stages, your lender will arrange for these amounts to be drawn down as required. That way you don’t have to borrow and pay interest on the full amount from the very beginning.
Obviously, this depends on the renovation you have in mind. The best way to find out is to talk with an experienced builder or quantity surveyor. There may be more than one way to achieve your goals, so it can be worth hiring a home renovation specialist or designer first. In the meantime here are some very approximate estimates. An extension costs about $3,000 per square metre. A basic kitchen renovation can be about $25,000. A bathroom refresh is about $10,000, but if you’re changing plumbing locations or making structural changes it can be $20,000 to $50,000.
The only way to answer this for your situation is to cost up the renovation you have in mind, check you can afford to do it, then compare that with houses in your area that already have what you want. If there are other areas you’d be happy to live in you could include those as well. The best way to cost up a renovation is to work out exactly what you’d like to do or talk to a designer about what you’re trying to achieve, and then pay an experienced builder or quantity surveyor to estimate the total cost, including things like council consents. You should also include a healthy allowance for cost over-runs and unforeseeable challenges, such as rotten framing.

Most people increase their existing mortgage, either with their current lender or by refinancing with a new one. Your renovation loan plus your existing mortgage balance can usually be up to 80% of your home’s estimated value once the project is finished. You’ll need a registered valuer to provide this estimate. If your construction contract has a schedule of payments due at set completion stages, your lender will arrange for these amounts to be drawn down as required. That way you don’t have to borrow and pay interest on the full amount from the very beginning.

Obviously, this depends on the renovation you have in mind. The best way to find out is to talk with an experienced builder or quantity surveyor. There may be more than one way to achieve your goals, so it can be worth hiring a home renovation specialist or designer first. In the meantime here are some very approximate estimates. An extension costs about $3,000 per square metre. A basic kitchen renovation can be about $25,000. A bathroom refresh is about $10,000, but if you’re changing plumbing locations or making structural changes it can be $20,000 to $50,000.

Essential reading for building or renovating.

Building from scratch or remodelling an existing home requires a different home loan approach. It also means keeping a sharp eye on costs, especially during times of inflation. Here’s some background reading to build a foundation of knowledge.
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Check out the latest mortgage rates.

While interest rates are only one consideration when choosing a construction loan, they have a big impact on what you can afford. Our handy rates table makes it easy to compare the latest interest rates for most of New Zealand’s main lenders.
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Calculators to get you there.

When you’re looking at building or renovating, working out how much you can afford to borrow is a crucial early step. Our handy calculators can help you to create a construction loan payments budget, confirm your borrowing power and explore the effects of different mortgage structures.

Budget Planner
Budgeting is the best way to steer your finances, stay in control and prepare for managing your mortgage.
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Borrowing Power
Work out how much you could borrow based on some quick questions about your current financial situation
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Mortgage Repayments
Get an estimate of what your repayments could be, based on your mortgage amount, term and interest rate.
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Visit the Learning Centre.

Before you start talking to lenders or a mortgage adviser, brush up your knowledge about building costs and construction loans. Our Learning Centre has informative articles and guides that can help you to understand the options and make good decisions. They’re all written by expert authors and checked by our panel of mortgage advisers.

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As an independent platform, mortgages.co.nz makes it easier for you to find the home loan you need. Use our Learning Centre, calculators, interest rates information and unique Loan Check software to plan a simpler, smoother journey towards your property ownership goal.

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DISCLAIMER – The information and calculators contained in this website are provided as general information and is not intended to be financial advice. Before making any financial decisions, you should consult a professional financial adviser. Nothing in this website is, or should be taken as, an offer, invitation or recommendation to buy, sell or retain a regulated financial product. mortgages.co.nz accepts no responsibility for any loss caused as a result of any person relying on any information or calculations in or from this website.

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