The ultimate guide to buying a new build off-plan in NZ

Buying a home is stressful enough. Buying one that doesn’t technically exist yet? A little nerve-wracking. But buying a new build can be an awesome way to get into a warm, modern home in the area you actually want to live in – you just need to know what to look out for before you sign on the dotted line. 

We’ve taken all we’ve learned from helping Kiwi buy new builds and turned it into a practical new build checklist, so you can feel confident when buying your new home off-plan.

Buying a new build off-plan guide
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Important questions to ask the new build developer

How do you know if the townhouse will feel big enough? What if you can hear every step your neighbour takes? Are body corporate fees going to eat half your fun money? When it comes to buying a new build off-plan, there’s no such thing as a dumb question – and chances are, someone’s already asked it.

Man and women looking at a plan while considering buying a new build off-plan

How does the process of buying a new build off-plan work?

In most cases you’re signing what’s called a turn-key contract. In plain English: You’ll pay a deposit upfront – usually around 10% of the purchase price. The developer then builds the home (sometimes in stages). Once the home passes final inspection and gets its Code of Compliance, you pay the balance and… turn the key.

Pros of buying a new build off-plan

  • No loan repayments until move-in day – more time to save while it’s being built
  • You’re locking in a home at today’s prices – handy if the market rises while it’s under construction
  • Developers usually only require 10% deposit, held safely in a lawyer’s trust account until settlement
  • With a Kāinga Ora First Home Loan, you may be able to get in with as little as a 5% deposit (subject to criteria)

The risks to be aware of

  • If property values fall between signing and settlement, you’re still committed to the original price
  • You usually can’t lock in an interest rate until closer to settlement, so plan for rates being higher than today
  • If construction costs balloon, there’s a risk the developer can’t complete the build
  • The sunset clause in the contract may allow either party to walk away if the development isn’t finished in time – you want that clause worded so it works in your favour
Opening door to your new build
Calendar on a mobile phone looking at the sunset date of their new build

What's a sunset date and why does it matter?

The sunset date is the final date in the contract by which your new home is meant to be completed and handed over. If it’s not finished by then, the contract can potentially be cancelled.

You’ll want your lawyer to:

  • Review the wording carefully
  • Push for a clause that means you decide whether to cancel if there are delays, not just the developer
  • Make sure your deposit is protected if things don’t go to plan.

What happens if my mortgage pre-approval expires before the build is complete?

Most mortgage pre-approvals last around three months (some banks may stretch to 12 months). If your sunset date is well beyond that, you'll need to reapply closer to completion. 

If your situation has changed (higher expenses, new debts, reduced income, or tighter bank policy), that could impact how much the bank is willing to lend to you. 

If you've already gone unconditional and paid your deposit, but can't get lending approved at the end, your deposit may be at risk. This is where talking to a Squirrel adviser early pays off - we can help you structure things to reduce that risk and have a back-up plan. 

Still working on getting your deposit together? Check out all the helpful ways you can get your house deposit together

Squirrel mortgage adviser talking to a client about buying a new build off-plan

Everything you need to know about buying a new build off-plan

Grab a copy of our handy checklist to help you successfully buy your new townhouse off-plan.

The guide to getting a mortgage with a low desposit

Prefer to talk it through?

Still have questions about the new build process? No worries, we've got you. Chat with an expert adviser today. 

Stay in the know

Our blog has heaps of helpful articles to help you through your home buying journey. 

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