Construction Loan

First-time home buyers discussing mortgage options

Construction Loans and Home Renovations

Are you ready to give your home the upgrade it deserves or build a new one from the ground up? At Oliver Broomfield Mortgage & Insurances, we specialize in offering construction loans for both home renovations and new constructions, tailored to Kiwis who want to transform or create their dream homes.

Whether you’re looking to modernize your kitchen, add a room, carry out extensive repairs, or embark on building a new house, our expert mortgage services provide you with the financial support you need. With our guidance, you can transform or build your home while staying within budget and avoiding financial stress.

Home renovation financed by a construction loan
Investment mortgage broker advising a client

Finance Your Home Upgrade with a Construction Loan

We want to empower you to achieve your homeownership and renovation dreams with confidence. Upgrading your home through renovations or structural changes is a transformative process, but it often comes with a significant financial commitment. A construction loan is designed to help homeowners manage the costs of large-scale projects like additions, remodels, or major repairs. 

Our expert team provides personalized advisory services to assist you in navigating every step of securing a construction loan—from assessing your project’s financial requirements and selecting the best Albany mortgage option to streamlining the application process and providing ongoing support. Let Oliver Broomfield Mortgage & Insurances help you turn your home improvement dreams into reality with the right construction loan tailored to your needs.

Happy new homeowners with keys to their first home

My job is to walk you through the mortgage process and ensure you get the right mortgage and have a financially stable future ahead of you.

You don’t need to commit this to memory, but below is an overview of what my process looks like for first time home buyers:

Meeting and Chat

Every mortgage and loan is different, so I take the time to understand you and your situation, so we can prepare the right supporting documents for the bank

Set up for Mortgage Application Success

One of the biggest parts of my job, is making sure your application is complete and attractive to the banks to approve the loan. Particularly with first time homebuyers this can be a tricky to do. Your application is custom built to highlight your individual circumstance and lending eligibility.

Summary and Action Steps

I get it, it’s a lot to remember. After our first meeting, I will send you a summary that you can refer to at any time, plus a list of the action points we need to take to get ready for the next step.

Home Ownership Budget

Indicative home ownership budgets will be presented along with quotes for homeowners’ insurance to demonstrate that the budgeting for a new home has been well thought out and established.

A Home Buyers Financial Assessment

There are several hidden costs that come with buying a home that aren’t included in mortgage payments. To ensure you are fully prepared for the transition, we do a financial assessment to compare your existing fixed costs and the added costs of a new home to ensure you have the right finances in place.

Options for Deposits

First time home buyers are in a unique situation to utilize many different options to raise funds for a deposit. This includes grants, kiwi saver, family guarantees, and much more. I will ensure no stone goes unturned to find the best deposit option for you.

First Time Home Buyers Checklist

Buying your first home and securing lending is a time sensitive process with many steps. To help keep things on track, I offer a full checklist of steps and timeframes that need to be met. You will never be unsure of where we are in the process.

This is just a brief summary to give you an idea of what the process looks like to prepare for a mortgage. If you are ready to get started or want to ask a few more questions, contact me today.

How Does a Construction Loan Work?

A construction loan operates differently from a typical mortgage. Instead of receiving the full loan amount upfront, the funds are disbursed in stages as the project progresses. Here’s a breakdown of the key steps involved in securing and using a construction loan, and how our advisory services can assist you throughout the process:

Pre-Approval

The process begins by determining how much you can borrow, based on your financial situation, income, and credit history. You’ll also need to provide an estimated budget for the renovation or construction of your new home. Pre-approval gives you a clear borrowing limit to plan your project accordingly. Our experts can guide you through the pre-approval process, helping you gather necessary documentation and understand your borrowing capacity.

Before and after home renovation images
Best Options

Construction Plan Review

Your lender reviews the construction details, including project scope, cost estimates, and timelines. This ensures the loan will cover all expenses, and you may need to submit documents like building contracts and permits to confirm the project is feasible. We assist in preparing and organizing these essential documents, ensuring your construction plan meets lender requirements and increasing your chances of home loan approval.

Progress Payments

As construction progresses, funds are released in stages when milestones such as the foundation, framing, or roofing are completed. Both you and the lender approve each payment request to ensure the work is being done according to plan. Our team monitors the progress payments process, providing advice to ensure timely approvals and addressing any issues that may arise during construction.

Is it a Good time to buy property?

Completion

Once the renovation is finished and all compliance checks are passed, the loan transitions into a standard mortgage or is repaid, depending on your agreement. This phase finalizes the loan and marks the completion of your home upgrade project. We offer support during the final stages, helping you navigate the transition to a permanent mortgage or repayment, ensuring a smooth conclusion to your construction loan journey.

Eligibility Requirements For Securing Construction Loan

Securing a construction loan requires meeting specific qualifications to ensure your project is financially viable and well-planned. Below are the key eligibility requirements and how our expert guidance can help you fulfill each one seamlessly.

Credit Score

A good to excellent credit score is essential for loan approval, demonstrating your reliability in managing debt. We can review your credit report and provide strategies to improve your score, enhancing your chances of securing favorable loan terms.

Income and Employment

Lenders need proof of stable income and a solid employment history to ensure you can repay the loan. We help you organize and present your income and employment documents effectively, highlighting your financial stability to lenders.

Debt-to-Income Ratio

A low debt-to-income (DTI) ratio indicates better financial health and higher eligibility for loan approval. We analyze your DTI ratio and offer advice on managing and reducing existing debts to meet lender requirements.

Down Payment

Construction loans typically require a downpayment of 20% to 30% of the total project cost, demonstrating your commitment to the project. From time to time, we can offer as little as 5% or 10% down payments depending on the construction type and changing Govt and bank lending rules. We assist you in calculating the necessary down payment and explore financing options to help you meet this requirement without financial strain.

Property Requirements and Documentation

Comprehensive documentation related to the property and construction project is necessary, including: 
  • Sale & Purchase Agreement
  • Build Contract & Builders Risk Insurance
  • Consented Plans, Permits, and Specifications
  • Registered Valuations
  • New Title for the Land
  • Code of Compliance for the Build
We guide you through the preparation and organization of all required documents, ensuring everything from your Sale & Purchase Agreement to compliance certifications meets lender standards, streamlining the approval process. 

Property Appraisal

A professional appraisal assesses the value of your land and the projected value of the completed project, helping lenders determine the loan amount. We coordinate with certified appraisers to obtain accurate valuations, ensuring your project meets the lender’s criteria and supports your financing needs.

Title and Ownership

A clear and updated title confirms ownership and ensures there are no legal disputes or liens that could affect loan approval. We assist in verifying and updating your property title, resolving any issues that might hinder the loan approval process.

Compliance with Building Codes

Your construction project must comply with local building codes and regulations, including safety standards and zoning laws. We help you navigate building codes and compliance requirements, ensuring your project adheres to all necessary standards to avoid delays or legal issues.

READY TO START YOUR CONSTRUCTION OR HOME RENOVATION?

Frequently Asked Questions (FAQs)

Eligibility for a construction loan typically requires that you own the property you intend to renovate and have sufficient equity in it. Lenders look for borrowers with a stable income and a good credit history. Additionally, having detailed renovation plans and a reputable contractor can strengthen your application. Some lenders may also consider your experience with previous renovation projects if applicable.

The amount you can borrow depends on several factors, including the current value of your property, the anticipated value after renovation, your income, and the specific criteria of the lender. Generally, lenders in New Zealand may offer up to 80-90% of the property’s value once the renovation is complete. It’s essential to have a clear and realistic budget to determine the appropriate loan amount for your project.

While construction loans are versatile, they are best suited for major renovations that significantly improve the property’s structure or value. This includes projects like adding extensions, altering the layout, or upgrading essential systems such as plumbing and electrical. Minor cosmetic updates, such as painting or replacing fixtures, may not qualify unless they are part of a larger, value-adding project. It’s important to discuss your specific renovation plans with the adviser to ensure they meet the loan criteria.

    Testimonials

    • Oliver is amazing he made the whole process of buying and selling super easy and hassle free. Would highly recommend

      Lisa Johnson Avatar Lisa Johnson
      30/10/2022
    • We cannot fault Oliver & highly recommend his services to potential clients. We've been using Oliver for almost a decade now and always think of him first when considering our finance requirements. This 5 star review is long-overdue and have recently recommended his services to some friends who we're certain will in no doubt recommend him also. Thanks always Oliver for your support and assistance with everything, it's always much appreciated. Wishing you all the best and we'll be in touch again soon. Thank you, Ian & Grace

      Ian Barry Avatar Ian Barry
      04/12/2023
    • Oliver helped me with every step of my first home purchase. He's very responsive and helpful. Definitely saved me a lot stress and work 🙂 I'd recommend to anyone looking to purchase a house.

      mejsnarp Avatar mejsnarp
      26/02/2021
    • Me and my wife Rebecca had the opportunity to work closely with Oliver when purchasing our first property. We had already done some research and Oliver came highly recommended to us. Straight from the outset Oliver put us at ease! something which was so important as we started our process of being first time homeowners!. Throughout the course of the coming weeks and months Oliver was always on hand to guide us in the process and we felt completely assured step by step. Oliver was highly knowledgeable, experienced and professional and we can't thank him enough for all his guidance! he was outstanding and any question or concern we may have had he quickly put us at ease. We would highly recommended Oliver for any mortgage and insurances queries.

      Jess Ibrom Avatar Jess Ibrom
      02/03/2021
    • Working with Oliver was great! We felt like we had constant support throughout the journey, which is quite overwhelming for a first home buyer. We would highly recommend working with him.

      Chris Morgan Avatar Chris Morgan
      28/02/2021
    • We found Oliver to be very approachable when assisting us with our home loan enquires. Oliver gave us an explanation around all the options we had available and we did not feel pressured into having to take any specific options which can sometimes be the case. We even had some documents hand delivered for signing at our residence as we could not get to the offices at that very moment. Thank you Oliver.

      J C Avatar J C
      01/11/2022
    • I recently purchased my first home. It took 8 months to find the right house in the current market. Oliver patiently assisted me through the entire process. I found Oliver to be extremely knowledgeable, helpful and was very prompt on communication with the many queries I sent to him. I highly recommend his services.

      Hanna Marshall Avatar Hanna Marshall
      24/03/2021
    • Oliver has worked with our family for over 20 years and we will continue to use his expertise well into the future. He has personally help me purchase my first home and rental investment, and always finds us the best interest rates every time we refix. Oliver is your go to guy when it comes to buying property and I can't recommend him enough.

      Lis Garman Avatar Lis Garman
      01/10/2021
    • Oliver was unbelievable in helping us buy our first home. He was there every step of the way and was on hand to answer any questions we had. I don’t think we would have gotten our home without his help. Really nice to work with, highly recommend him.

      Shane Chambers Avatar Shane Chambers
      31/08/2023
    • Oliver provides concise mortgage advice enabling you to make informed decisions during the process. I have used Oliver's services several times over the years and each time been happy with the outcome.

      Patrick Long Avatar Patrick Long
      19/12/2021