Growing financial futures
Moving to meet growing family needs, fit into new school zones, to get that pool or downsize for a different pace of life is an exciting time. Not only is it a great time to get the home you’ve been dreaming of, it’s also an ideal time to make sure your home loan is best suited for your evolving lifestyle. Let us explore your options and make it easier to get you into your next home.
By now you’re no novice when it comes to home lending. You’ve probably fixed, floated, paid-down, topped-up and revolved. However, changing properties is often a lot more complicated than buying your first home. Should you buy first or sell first? Should you sell at all? That’s where we can really help.
Should you buy first or sell first? Should you sell at all?
Like a lot of things in life, when it comes to buying and selling your home it’s all about timing. In an ideal world, you would be able to sell your existing home and move into your new home on the same day. However, we realise that this isnt always the case; and that the most important thing is to maintain a roof over your head throughout the process.
Bridging finance is a timing mechanism that can provide flexibility between buying and selling and may be a great option for you. As part of the process you will need to consider when your property will be ready to sell, how long it will take to sell and how much it will sell for.
There are many moving parts to consider with bridging finance, including what you do with your existing loan. We’ll talk you through your options which may include moving your existing loan to your new property, it’s also a good time to review your loan structure.
Perhaps you’re in a situation where you don’t need to sell at all? You loved living in your home, perhaps someone else would? Maybe their rent and your equity can turn your old home into your first investment property.
Renovating your existing home
While buying your first home is exciting, eventually you’ll find yourself getting antsy about your next property move. Kiwis just can’t help themselves. Is the kitchen out-dated? Is one bathroom really enough? What would a study be like for the kids?
Moving to a new home isn’t always the solution; so instead, renovating by knocking down walls, adding extensions and installing a new kitchen is often the better solution. When renovating, it is critical to have the right finance in place, but with so many options, it pays to have us help guide you through the process.
In some cases property owners will be able to redraw any additional payments they’ve made on their existing loan to cover renovations. In other cases you will need to apply for a supplementary loan and draw on the equity you have built up in your home or investment property over time. Knowing the intricacies to fund and complete your building project is what we do best.
Building your own home
Building your own home can be a highly rewarding experience- you get to choose the land, the materials, the style of house and even the drapes this time! That said, it takes additional time, can cost more and can cause additional stress with all the additional decisions that need to be made.
Just like no two homes are the same, so too are banks when it comes to financing the construction of them. Each bank has a different set of criteria as to how much they will lend and the process involved in getting funding to complete your project. Some will require anywhere from 10% to 35% of the total cost as deposit. Others will look at the end value and work backwards from there.
Turn-key, fixed and labour-only contracts are another consideration. It can be about as confusing as choosing those tiles for the ensuite! Being organised and having a structured plan is key to obtaining a successful build.
That’s where we can really help. Think of us as your financial architects in the process. We work alongside the banks and builders to help facilitate the funding of the project. We’re in your corner for every step, nail and hammer of the journey.
The mortgage process when building
The mortgage process for building a new house
Building your home can be an exciting project and can be a great way to stamp your personality on to your home. Below is a step-by-step guide on how the home loan process works when building your own home.
1. Get pre-approved with Hatch.
Understand your financial position and borrowing capacity.
Calculate how much you could borrow based on basic information such as salary and financial commitments.
A pre-approval is a written indication of how much you can borrow before you start budgeting to build a new house.
2. Getting a lawyer
We strongly recommend that you get your lawyer (or solicitor) involved as early as possible.
3. Planning the build
Once you have the section where you would like to build, you are ready to start planning.
Before you start the build process you will want to ensure you find the right architect or group housing company.
There’s a lot to consider in managing a building project, whether this is something you will manage yourself or engage a professional project manager, builder or group housing company to complete this on your behalf.
4. The building contract
Written contracts are a good way to protect yourself and ensures everyone is clear about what has been agreed upon and what happens if things don’t go to plan. Its also a good idea to get your lawyer to review the contract beforehand.
5. Working out your finance options
When you’re building, your home loan is approved for the full amount, but you draw it down in instalments as the building work progresses (your building contract will set out a payment schedule).
6. Obtaining building and resource consent
You’ll need to obtain a building consent from your local council before building commences. Depending on your particular home and what you’re proposing to build, you may also need to obtain resource consent. Â In most cases your architect, designer, builder or building company will assist with these applications. If you’re going to submit the applications yourself contact your local council for information on how to apply.
7. Managing the building phase
Whether you’re managing the building yourself or not, you should keep a close eye on the building as it progresses. Ensure you keep a record of all invoices, variation, payments and correspondence.
8. Managing the completion phase
When the work is finished, make sure that:
– The builder leaves the site clean and tidy and that you have all product manuals and guarantees you need.
– A final building inspection is completed.
-The Code of Compliance Certificate is applied for; this certifies that the building complies with the building code. It’s important this is signed off as it could cause problems with your insurance or with resale if you don’t have it.
-Contact your local council for more information on inspection and consent requirements for your area.
Now’s a good time to get us to review or organise your house, contents and life insurance.
9. You are ready to move in!
Now that building is complete this is an ideal time to review your home loan and ensure it is set up in a way that suits you. Contact us to find out about how your can manage your home loan and see tips on how you could pay it off faster.
The mortgage process when renovating
Renovating your home can be a lot of fun and lets you incorporate the features and style youâ€™ve always wanted. See a step-by-step guide below on how the home loan process works when renovating your house.
1. Get pre-approved with Hatch.
Understand your financial position and borrowing capacity, get your funding pre-approved.
2. Planning your renovation
Finding the right designer or company
Before you start the renovation process you will want to ensure you find the right designer or company.
Consider how you will manage the project?
There’s a lot to consider in managing a complete renovation on your house and depending on the scale of the job, you may decide if this is something you will manage yourself or engage a professional interior designer or project manager to complete on your behalf.
Check your insurance policy
Depending on the value or nature of the renovations that you are about to embark on, you may need to notify your insurance company. Different insurance providers have different requirements so check your policy document or call your insurer.
3. The building contract
Written contracts are a good way to protect yourself and ensures everyone is clear about what has been agreed upon â€“ and what happens if things don’t go to plan. Itâ€™s also a good idea to get your lawyer to review the contract beforehand.
4. Working out your finance options
When you’re renovating, your home loan is approved for the full amount, but you draw it down in instalments as the work and costs progress (your contract may set out a payment schedule).
To find out more about how this process works, contact us.
5. Building and resource consents:
â€¢ Depending on your particular home and what you’re proposing to build, you may need to obtain a building consent from your local council before any building commences.
â€¢ You may also need to obtain resource consent. In most cases your architect, designer, builder or building company will assist with these applications. If you’re going to submit the applications yourself contact your local council for information on how to apply.
â€¢ Whether you’re managing the building yourself or not, you should keep a close eye on the building as it progresses.
â€¢ Ensure you also keep a record of all invoices, variation, payments and correspondence.
â€¢ Nowâ€™s also a good time to review or organise your house, contents and life insurance.
6. Managing the completion phase
When the work is finished, make sure that:
â€¢ The project manager leaves the site clean and tidy and that you have any product manuals and guarantees you need.
â€¢ If there have been any structural changes made – a final building inspection should be completed.
â€¢ Ensure that the Code of Compliance Certificate is applied for â€“ this certifies that the building complies with the building code. It’s important this is signed off as it could cause problems with your insurance or with resale if you don’t have it.
â€¢ Contact your local council for more information on inspection and consent requirements for your area.
â€¢ This is also a good time to update your sum insured amount for your house insurance.
7. Your renovations are complete!
Now that renovation is complete this is an ideal time to review your home loan and ensure it is set up in a way that suits you. Find out about how your can manage your mortgage and see tips on how you can pay off your home loan faster.
Building and renovation guide
Building a new home
Some people really enjoy the opportunity to participate in the design and build process, and the feeling that theyâ€™ve stamped their personality on their own home. Others may find the experience a bit more challenging. So before you decide to build, consider the advantages and disadvantages. It also pays to create a budget for the project. This is a worthwhile exercise to get you thinking about likely costs and what you can afford. When you’re building or renovating, your home loan is approved for the full amount, but you draw it down in instalments as the building work progresses.
Advantages of building a new home
â€¢ You get the kind of home you want (within your budget).
â€¢ You choose the house, fittings and appliances you want.
â€¢ You can enjoy the personal satisfaction that comes from being involved in your homeâ€™s design and build process.
Disadvantages of building
â€¢ The building process takes time and effort and it can be stressful. If you decide to project manage the build yourself, you may need to manage a variety of relationships like the builder, designer, and architect.
â€¢ Some building projects may go smoothly from start to finish, but be prepared that it may take longer and cost more than planned. Its best to factor in a contingency for cost and time overruns.
Renovating your home can be a lot of fun and lets you incorporate the features and styles youâ€™ve always wanted. As with building a home, renovating can sometimes be stressful or the final result may be different to what you originally planned. So before you decide to renovate, consider these advantages and disadvantages:
Advantages of renovating
â€¢ If you like the area you live in, renovating your existing home is a great way to get the type of home you want while staying in an area you know and love.
â€¢ If youâ€™re looking to sell your home, some well thought-out renovations could add value to the sale price and make it more attractive to potential buyers.
Disadvantages of renovating
â€¢ Depending on the extent of your renovations, the cost could be very expensive. Working around an existing structure has its own challenges as opposed to building from scratch.
â€¢ You may run into delays or extra costs due to unforseen problems (e.g. structural issues) that could not have been anticipated before you started. Renovating certain parts of the house may mean you have to move out for a while which can add to the cost.
Other things to consider
How are you adding value to your property?
â€¢ Improving flow â€“ this makes it easier to get around your home, which can be appealing.
â€¢ An indoor-outdoor flow is also a much sought after feature.
â€¢ Landscaping â€“ utilize your land with lawns, gardens or entertainment areas to make a big difference to how others perceive your home.
â€¢ Better lighting (including more natural light) â€“ this makes your home feel more inviting and spacious.
â€¢ You should get legal advice about the contract before signing.
Be careful not to over-capitalise (spend more on renovations than you are likely to get back if you sell). Consider the following:
â€¢ Spending too much â€“ location plays a part in determining property values and how much potential buyers are willing to spend.
â€¢ Unusual or very personal features â€“ they may be important to you but potential buyers may not share your views.
â€¢ Taking away features â€“ for example, removing a bedroom to make it into an office. Doing a bit of research on your area will provide insight into what living spaces are most desirable. Neighbourhoods with a number of young families the number of bedrooms is generally an important factor for buyers.