Ready to turn those house plans into reality? We’ll help you from start to finish
You’re here researching construction finance, which means you’ve probably spent months perfecting your house plans, researching builders, and dreaming about that perfect kitchen. But now you’re facing the reality of construction loans, progress payments, and floating interest rates. It’s enough to make anyone’s head spin. If you're feeling overwhelmed or confused, you’re completely normal — we see it with nearly every aspiring home builder.
And that’s why we’re here — to smooth the path, take away the stress and, short of building the home ourselves, be your partner in creating your perfect home. Keep reading to find out more, or...
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Why use Nest for your construction mortgage?
Building a home represents one of life’s most exciting ventures, but it can also mean sleepless nights worrying about finances. We’re your partner throughout the entire building journey, giving you the knowledge and confidence you need to focus on what matters – creating your dream home.
Why would you bother with a mortgage broker when you could just walk into your local bank branch and sort out construction finance yourself? Here are six solid reasons why using us beats going it alone with a bank.
Zero cost to you.
You don’t pay anything. We get paid by the bank once your construction loan settles, so your success is our success.
Construction lending expertise.
Not all lenders approach construction finance the same way. We know which banks excel at progress payment loans, who offers the best turnkey packages, and which institutions understand the unique challenges you face when building a house.
Reserve Bank exemption.
Construction finance enjoys special exemptions from the Reserve Bank restrictions, potentially allowing you to build with just a 10% deposit. We know how to structure these arrangements properly and which lenders offer the most competitive terms.
We manage the complexity.
Construction loans involve multiple stages, valuations, and progress payments. We coordinate with your builder, handle all bank communications, and ensure payments flow smoothly so you can focus on your build.
Ongoing support through every stage.
From initial approval through to final settlement, we’re with you every step. When issues arise — and they often do with construction — we’re your advocate with the bank.
Post-completion optimisation.
Once your home is complete, we help transition your construction loan to the most advantageous long-term mortgage structure, ensuring you maximise your investment from day one.
What our clients have to say.
Jeff knows his job inside and out, and his team consistently go above and beyond to get results. When the vendors activated the escape clause in our contract, pulling our unconditional date forward, Jeff remained calm, collected, and reassuring throughout what was a stressful moment for us.
Thanks to his expertise and steady guidance, we successfully purchased and moved into our first home last week. It was an absolute pleasure having Jeff and the Nest Homes team on our side.
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Construction and home build – what to expect from the banks
- Borrowing limits and deposits: Most banks will lend up to 90% of the total construction price. This means you’ll need at least a 10% deposit, as well as a contingency fund (given the increasing cost of materials and labour).
- Payments: The process isn’t complicated – once the bank approves your loan, you progressively draw down in stages as the builder invoices you. The bank is most likely to pay the builder or supplier directly.
- Interest rates: Until the house is built, you’ll pay a floating interest rate. You’ll only pay interest on the amount you’ve drawn. Once you have the keys, the interest rate will shift to a fixed rate, which reduces interest costs, and you’ll have a fixed amount to budget for.
- Applicable construction contract types: Turnkey, build-only, partial contract and prefab/transportable. We can talk you through what all these terms mean.
- Mortgage Cashback offers: May apply but usually only when the build is completed and the balance reverts to a fixed term.
Start your construction finance journey with confidence.
Understanding your construction finance options
We’ve developed collaborative relationships with all major construction lenders and understand each lender’s criteria. Construction finance differs significantly from standard home loans, requiring specific lenders who understand the building process and its complexities. We’ll help structure your finances to present the strongest possible application, whilst ensuring you’re prepared for the realities of construction finance management.
- Construction Loan (Progress Payment). This represents the most flexible approach to construction finance. The bank releases funds in stages as each construction phase reaches completion — foundations, framing, roofing, and finishing. You typically pay interest only on drawn amounts during construction, transitioning to principal and interest once building completes. This structure provides flexibility to modify plans during construction but means you’ll be servicing the mortgage whilst your current accommodation continues.
- Turnkey Build Loan. Here, you purchase a house and land package, paying a deposit upfront with the balance due upon completion. The builder manages all construction costs and timing whilst you avoid progress payment complexity. This offers price certainty and eliminates construction-phase mortgage payments, though it provides less flexibility for modifications during the build process.
The property specifications and building approach significantly influence lending decisions. Factors such as builder registration, contract type, construction methodology, and location all affect different lenders differently. Some institutions excel with innovative building techniques, whilst others prefer traditional approaches.
Let us help you structure your construction finance properly from the start.
Construction finance works differently.
The Reserve Bank restrictions include a valuable exemption for construction finance, potentially enabling you to build with as little as a 10% deposit. However, specific conditions apply, and structuring these arrangements correctly requires expertise.
Your KiwiSaver can also play a role in funding your build. If you’ve not owned a home before and have been contributing for over three years, you’re probably sitting on a significant portion of your deposit. New builds also qualify for enhanced First Home Grant amounts — up to $10,000 per person — providing additional funding that can make the difference between dreaming and building.
Even if you’ve previously owned property but no longer do, you might qualify for KiwiSaver’s ‘second chance withdrawal.’ Life circumstances change, and this provision recognises that former homeowners sometimes need a fresh start with a purpose-built home.
We’ll help make your building dreams a reality
Building your dream home should be exciting, not financially stressful. No question is too complex or simple, so contact us by phone or form and take that first step towards turning your house plans into reality.
Frequently Asked Questions
How much deposit do I need to build a home?
Special Reserve Bank exemptions allow building with just 10% deposit in certain conditions. Most banks require a 10% deposit as a minimum.
How do progress payments work during construction?
Banks release funds in stages as construction phases complete. You only pay interest on amounts drawn down, and banks typically pay builders/suppliers directly.
What interest rate will I pay during construction?
You'll pay a floating rate during construction on amounts drawn down. Once complete, you can switch to a fixed rate for predictable budgeting and reduced interest costs.
What's the difference between a construction loan and a turnkey build loan?
Construction loans involve stage-by-stage payments with flexibility to modify plans. Turnkey means you pay a deposit upfront with the balance due on completion - less flexibility but price certainty.
Can I use my KiwiSaver to help fund my build?
Yes, if you've contributed for 3+ years. New builds also qualify for enhanced First Home Grants up to $10,000 per person. Former homeowners may be able to use their KiwiSaver if they qualify for 'second chance withdrawal.'
What types of construction contracts can banks finance?
Banks finance turnkey, build-only, partial contract, and prefab/transportable homes. Different lenders prefer different contract types – we match you with the right lender.
Do I need to keep living somewhere else while building?
With construction loans, yes – you maintain current accommodation while servicing the construction mortgage. Turnkey arrangements avoid construction-phase payments but you still need accommodation until completion.
What happens to my loan once construction is finished?
We help transition your construction loan to an optimised long-term mortgage structure. Cashback offers typically apply at this stage, and you can fix competitive rates. A cashback contribution is a financial incentive that banks offer to borrowers when they take out new lending.
What if problems arise during construction?
We act as your advocate with the bank, coordinate with builders, handle communications, and ensure smooth payment flow so you can focus on resolving building issues.
Why use a mortgage broker instead of going directly to the bank?
We know which banks excel at different construction types, manage the complexity, provide ongoing support, and structure applications for success – all at no cost to you.
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