Planning your project
Once you’ve got your deposit and conditional pre-approval sorted, you can start thinking about putting together your support team, what kind of home you want and how to build it.
Your support team
Having the right people around you is crucial. Your ANZ Construction Coach can play a key role in helping you through the building process – other key people may include:
Builder
You should approach a number of builders so you can compare their credentials and costs. Check out our list of key questions to ask your potential builders in our Building and renovating handbook:
Make sure they’re either a Registered Master Builder, certified builder or licensed building practitioner – for more information visit masterbuilder.org.nz and nzcb.nz.
Project manager
You’ll need to establish whether your builder will also act as project manager for your build. If not, you could hire a separate project manager. If you have built previously or have experience in the industry you may save some money if you wanted by project managing yourself.
You’ll also need to consider whether you need to engage an architect, draftsman, valuer and quantity surveyor (QS). For building contracts over $1million a QS will need to validate your quotes.
Solicitor
There are a number of legal matters associated with purchasing land and building a home, so it’s important to involve your solicitor before you make an offer or bid at an auction.
If you need to find a solicitor check out propertylawyers.org.nz. Legal fees vary, so ask around and get an estimate.
Family and friends
They can help you throughout your journey, whether sharing their own experiences, providing recommendations on good trades people, supporting you through the process or celebrating with you once it’s finished.
Consents, valuations and insurance
Resource and building consents
Every building project must comply with the Resource Management Act 1991 and the Building Act 2004.
- Resource consents are permits issued by your local council for activities that affect the environment. Examples include complying with height restrictions, distance to boundaries or subdividing. You may require a resource consent prior to starting your building project.
- Building consent is a formal approval granted by your local council to allow you to carry out the building work in accordance with local building code.
Your local council’s planning department will be able to provide advice and information on any consents you may require. You can also find more information at building.govt.nz
The consent process is typically handled by your architect or builder. It can take a lot of time and be expensive. Check if these costs are included in the contract or if they will need to be funded separately by you.
Valuations
With all home loans, the amount you can borrow is based on the value of your property. When building or renovating, the value of your property increases as your project progresses. We approve a total borrowing limit based on the ‘Tentative on Completion Value’ (which is what your home will be worth once the work is completed).
At various stages of the project you may need to provide us with a Registered Valuation Report to show the value of the work to date, commonly referred to as the ‘As is Value’. This is to make sure the amount you borrow is appropriate to the value of your home.
Make sure you know when valuations may be required, arrange them ahead of time to avoid potential delays and factor the cost of valuations into your budget.
Insurance
Things can go wrong even with the best laid plans. You need appropriate insurance to protect your project against some of the things that could go wrong.
- Insurance cover held by your builder – Is referred to as 'builder’s risk insurance' and covers the general build project and would usually be stated within your contract. Each builder may set up their insurance covers differently, so it is important to review in detail what is covered and if there are any gaps. You should get professional advice.
- Contract works insurance – Covers the build in cases where the builder’s insurance is not adequate or when you’re managing the build yourself.
This cover also provides protection for extensions and renovations to your existing house. Remember that structural work being carried out on your house may not be covered under your existing home insurance cover. Contract works insurance would therefore be required until the house has received its final Code Compliance Certificate from your local council.
Your ANZ Construction Coach can help you arrange the appropriate cover.
Building contracts
To get construction lending, you must have a written contract for residential building work costing $30,000 or more, including GST. If your project is less, it’s still a good idea to get everything in writing so everyone understands the requirements and expectations. Before signing a contract you need to review the clauses carefully and ensure everything you’ve agreed is covered. You should seek professional advice and have your lawyer review the contract.
Key things that may be in your building contract
Here are some of the key things that may be in your building contract (this is not an exhaustive list):
- A detailed outline of what work is being carried out and by whom.
- All associated costs (including labour, materials, and insurances). There may be a number of Provisional Costs (PC sums) where the exact cost is not certain yet. Common PC sums include excavation, plumbing, wiring, kitchens, bathrooms and plans and specifications.
- Payment terms or schedule.
- Your name and physical address along with all other parties involved.
- The address of where the work is being carried out.
- The date the contract is signed by both parties.
- Expected start and completion date and how potential delays will be dealt with.
Types of building contracts
Fixed price contracts
A contract where the cost of the project usually remains ‘fixed’ even if labour and material costs increase during the project. Before signing a fixed price contract get your lawyer to review to ensure you’re clear on what’s included so there are no cost surprises.
Advantages
- More price certainty.
- If your builder manages the project, this removes the effort and stress of managing it yourself.
- You may benefit from the better buying power of larger building companies.
Key things to consider
- Cost overruns can still occur.
- You may need to pay for items outside of the contract, e.g. curtains, landscaping, decking and any additions during the build.
- Provisional Costs (PC sums) may still change and are calculated by the builder for materials or services, where the exact cost is not yet certain. Excavation is commonly listed as a PC sum due to the unknown nature of what’s in the ground.
- Contract variations (to upgrade or add features) will require our approval. Talk to your ANZ Construction Coach if you intend to make changes.
What we’ll need from you
- Sale and Purchase Agreement.
- A copy of the contract.
- Floor plan and specifications.
- Valuation Reports – at the outset and throughout the build.
- Evidence of insurance cover held for the project.
Cost and quotes
Is when you obtain quotes from different trades people and suppliers who are responsible for completing different parts of the build.
Advantages
- You can be more hands on with your project.
- Cost effective if you’re not paying for a project manager and you have experience in this area.
Key things to consider
- Cost and quote projects usually experience higher cost overruns compared to fixed price contracts.
- If you’re planning to manage the project or pay sub-contractors yourself, do you have the time and experience required? It requires lots of decision making and time to co-ordinate.
- The lowest priced quote is not always the best. Ask for references of other work completed, check the quality of the materials proposed and make sure they’re qualified.
- Can take longer to complete and there is a risk of increased costs and non-completion due to co-ordinating multiple sub-contractors.
What we’ll need from you
- Sale and Purchase Agreement.
- Floor plan and specifications.
- Valuation Report – at the outset and throughout the build.
- A copy of all your quotes and your payment schedule.
- Evidence of insurance cover held for the project.
Relocatable homes
You can purchase an existing house and relocate it to your section.
Advantages
- Likely to be quicker and cheaper than building.
Key things to consider
- Is the house in good condition and how far does it need to travel? Are there any issues accessing the house you're relocating or the new site?
- Does your building company specialise in dwelling relocation? What type of contract has been supplied?
- Budget for all costs involved to avoid cost overruns. This can include connection to foundations and services, or additional insurance requirements.
- You may need a larger deposit to fund the purchase and transportation of the dwelling.
- Due to the risks of damage during relocation, until the house is fixed to the foundations and connected to services, you can only borrow against the value of the new section alone.
- If anything were to happen to the house in transit, standard contract works insurance may not cover the damage. Transit insurance may be required when relocating an existing home, however this may only cover the house until it reaches the boundary of the new site. Check with the relocation and building company if transit insurance is included, if not, consider whether this needs to be included in your contract works insurance.
- Remedial work is often required from damage caused in transit. Bad weather conditions is often the main cause of damage.
- Council consents may be required before you can connect to the new site.
- Valuations may be required during the project to support progress payments of your home loan after the house is fixed to the land and prior to final drawdown.
What we’ll need from you
- Confirmation of transit insurance.
- Once fixed to the land and connected services we’ll need:
- Valuation Report.
- Code Compliance Certificate.
- Confirmation of house insurance.
Pre-built homes
This type of build is where a new home is built offsite (in a factory) and delivered to your section, partially or fully completed. These are also known as 'pre-fab houses' and are different to 'relocatable homes'.
Advantages
- Are fast to build and can be an eco-friendly option.
Key things to consider
- Get your lawyer to review your contract to check that it includes all costs including getting the dwelling fixed to the land with all services connected.
- You may need a larger deposit to fund the purchase and transportation of the dwelling. We will lend on the land value of the property once the house has been located on the property and fully connected to all services.
- We can only provide funds to you once the house has been fixed to the land and connected to services.
What we’ll need from you
- Full costings to complete the project – these may be multiple fixed price contracts and/or cost and quotes.
- Evidence of insurance cover held by your builder.
- Council and building consents.
- Valuation Reports at the outset, once the dwelling is fixed to the land, and on completion of the project.
Turnkey homes
Turnkey homes are offered by a number of larger builders or building companies. They allow you to choose from a range of plans, which you can have built on your own section or one provided by the builder.
Advantages
- Gives you price certainty, removes a lot of the effort, and allows you to take advantage of the buying power of larger building companies.
- The builder manages all the suppliers and subcontractors.
- There are no progress payments – you pay a deposit when you sign the contract and the balance is paid on completion.
Key things to consider
- Late changes can be more difficult to make and expensive. Take the time to get your plans right before work begins.
- Contracts can be less customisable than a fixed price contract.
What we’ll need from you
- Copy of the Sale and Purchase Agreement or contract.
- Evidence of house insurance.
- Valuation Report.
- Code Compliance Certificate.
Full loan approval
This will confirm the amount we agree to lend you. Depending on which type of contract and build you’ve selected, you may need to meet additional conditions to get full loan approval.
If there are still conditions that need to be met before we can fully approve your loan, your ANZ Construction Coach will advise you what conditions need to be met for your build.
These may include providing copies of any required consents, insurances, valuations and contracts. These conditions will be outlined in your loan approval letter, and once they’ve been met, we can release the funds for the first loan drawdown.
The process for getting full loan approval
- Review all contracts and requirements with your solicitor. Once you have all your documents (contracts, consents, insurance) ensure your solicitor is comfortable with the documentation.
- Sign the contract with your builder and pay the initial deposit.
- Obtain your Valuation Report and Tentative on Completion Value.
- Confirm with your Coach that all conditions have been met.
- Secure full loan approval.
What we need from you
- A copy of the signed building contract.
- A copy of resource and building consent.
- Confirmation the property is insured while building.
- Valuation Report.
Important information
Eligibility, lending criteria, terms, conditions and fees apply. Interest rates and fees are subject to change.
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