When it comes to buying a home, one of the decisions you’ll need to make is whether to buy an existing property or to build new. While many people choose an established character home, there are those who love the idea of a brand-new home. No matter which option you choose, buying a home is a big investment. So, to help you make an informed decision about the type of home you’d like to buy, here are some of the benefits of buying a new build, as well as the pitfalls to look out for.
1. Energy efficiency and comfort
Unless it’s been renovated, older homes can be cold and damp, usually lacking in good insulation. With advancements in technology and housing standards, new homes are being built to a much higher specification. Better insulation and construction means a warmer, drier home, which is generally more energy efficient, so it saves you money too.
2. Customised to your requirements
Building a new home can provide you with some control over the details. Even if you’re buying off the plan or a pre-set plan, you may be able to make some of the design decisions to help create a home that better reflects your specific taste and style. With an older home, unless you spend some serious money on a major renovation, what you see is what you get. New homes generally have more floor place, a well-thought-out layout, and extra storage space, features that may be lacking in older homes.
3. Fewer running costs
Because new build homes are built to specification, homeowners can expect fewer surprise repairs or necessary renovations, at least in the first few years of occupancy. With an older home on the other hand, you could end up spending on plumbing or electrical fittings in order to modernise the property and bring it up to date. New build homes are move-in ready, perfect for those who fear DIY!
4. More deposit with KiwiSaver
Saving a deposit is one of the toughest challenges that first home buyers face. As hard as they save, the faster the property market climbs, which means having to save even more. It’s a crazy cycle! As a first home buyer, building new means you could benefit from Government’s First Home Grant, which is effectively doubled for newly built homes, so you could get into your new home much sooner than you think.
5. LVR exempt
In a bid to meet market demand for housing, with an ongoing housing shortage across New Zealand, Government has made all new home builds exempt from Loan to Value Restrictions (LVR). New home builds can be defined as new houses that are being built or purchased from a developer within 6-months of completion. While banks still need to adhere to their own lending criteria, it may be possible to get finance for a new build with less than a 20 per cent deposit.
What to look out for
It’s easy to get caught up in the planning and creation of your brand-new home. But, just as there are benefits to building a new home, so too should you be aware of the pitfalls to avoid. Some things to consider include:
- A decline in the property market, although unlikely, could mean the price you pay for your new home is more than what it’s worth when it’s eventually built, which will leave you paying above market value for your new home.
- Do your homework and be sure to check out the developer’s or builder’s credentials and history of previous builds. After all, you won’t have a tangible home until much further down the line, so it’s a good idea to visit recent builds so that you know what you’re getting.
- Have your lawyer go over the paperwork before you commit to ensure you’re covered in case you decide to cancel the contract.
- Be aware too that some larger off the plan developments only begin construction once all properties are sold. So if you’re in a hurry to get into your new home, buying off the plan may not be the right solution for you.
- It’s not uncommon for construction projects to take longer than anticipated – things like weather and supply shortages can extend the time it takes to build your new home.
- Although you may be able to look at online drawings of your new home, until it’s finished, there is always some risk that you won’t get exactly what you want.
Talk to a specialist
Consulting with a mortgage adviser makes good financial sense. Mortgage Express branded mortgage advisers work with a panel of bank and non-bank lenders, providing a choice of financial options to suit most buyers. Mortgage Express branded mortgage advisers are experienced at guiding first home buyers, experienced homeowners, and investors into making informed choices about their home buying preferences.