Auckland-based NewBuildHome Finance has launched a financial package for people borrowing to build a new home.
Called NewBuild Plan, it's been developed in association with the Registered Master Builders Federation and with financial services firm Sovereign. Sovereign will provide the finance for the building phase as well as the permanent home loan.
Ian Webb, a director of NewBuild's parent company Northplan Financial Services, says that, in most cases, borrowers have needed at least a 50 per cent deposit on the bare land before they can get finance for a new home.
"Under NewBuildPlan lending criteria, finance is based on the estimated end value of a home - provided the home is built by a Registered Master Builder," Webb says.
"This will open up a new market of people who traditionally have not been able to afford a new home."
Webb says the product also includes a new progress payment system developed in conjunction with Sovereign. He says the emphasis is on reducing the risks involved with building finance, simplifying the owner's role and providing adequate, timely cashflows for the builder.
Webb says the biggest issue for lenders on new homes is the risk of the house not being completed. "With the Master Builders Federation guarantee in place, we know that every house started will be completed."
