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How to finance a prefab home in 2023

Building a new home can be a complicated process, especially when it hinges on financial approvals. Fortunately, building a prefab home is an affordable and viable option.

In this article, we explain the average costs of building a prefab and the considerations to make when looking for financing. We also explain the steps you should take to ensure your financing is approved. 

Prefab home prices

A prefab home is a more streamlined and predictable way to build than conventional on-site houses of equivalent quality. This comes down to the efficiencies of the prefab build process. 

Prices vary depending on the size, finishes, and number of customisations you choose. For reference, our prefab home prices in 2023 start at $293,560 for a standard three-bedroom home. 

Obtaining a prefab home loan 

Obtaining a home loan for a prefab has been challenging in the past and some people are hesitant to choose a prefab home for this reason. However, positive changes have been made and there are more options available now. 

The reason financing can be difficult for prefab homes is because a traditional construction loan for building on-site is released by the bank at agreed stages of construction. The concern over prefab homes is that banks cannot take security over an offsite building and therefore are unable to provide funds until after the house is delivered, completed, connected to services and in most cases, CCC (code compliance certificate) approved.

However, banks and government agencies are beginning to roll out financing solutions that support Off Site Manufacturing construction. This is because they can deliver quality homes at a faster rate and overruns in budgets are eliminated in the building process.

Prefab home loans with BNZ

In 2022, Genius Homes launched a partnership with BNZ to offer home loans for our prefabs, as well as land and site services. This loan is available to first-home buyers, as well as existing owner-occupiers and investors.

The loan works similarly to a conventional construction loan by ensuring builders are paid at each stage of the build whilst establishing ownership of the work in progress by BNZ and the customer. By taking security over the land, they can release funds at different stages of the process, making prefabrication a viable and practical solution for potential buyers.

Typically, a 10% deposit will be required. This can consist of cash savings, existing equity, Kiwisaver savings, gifted funds, and up to $20,000 worth of First Home Grants

Learn more about the BNZ partnership here ›

Fixed-price contracts for prefab homes

Another way to lower any financial stress when building a home is to ask about a fixed-price contract. With the building industry currently recovering from material shortages and delays, as well as high demand, prices have been difficult to predict.  

Fortunately, we have been able to support our customers with the security of a fixed-price contract. With a prefab home, you have confidence that your price is secure and fixed, regardless of any fluctuations. A fixed-price contract will also simplify the mortgage process, as you’ll be a much more desirable candidate to potential lenders.

How to get financing for a prefab

To simplify the financing process, we’ve broken this article into 6 simple steps and considerations. 

1. Save a deposit

In the same way as any construction or home loan, you will need to pay the required deposit. This can come from a combination of sources including Kiwisaver, cash, or equity release from another property. In general, the more you have saved, the better. 

2. Ask the experts

A great place to start is by talking to the people who have done it all before. Ask your prefab building company to discuss your financial options and they can direct you to the most suitable options. Here at Genius Homes, we’re experts in prefab construction and can help answer any questions you might have about the process.

3. Consult your mortgage broker

It’s also a wise idea to reach out to your mortgage broker to let them know your plans early on. This way, you can set a realistic budget to begin exploring your options. They’ll also let you know of any payment options you may not know about. 

4. Research prefab construction loans

Always keep an ear to the ground and look out for new financing schemes and building companies that offer financing. Since Westpac introduced its ‘Prebuilt Home Loan’ in 2019, it has become easier to attain financing for prefabs. In 2022, Genius Homes also launched our exciting partnership with BNZ to offer funding for our prefabricated homes.

5. Minimise construction costs 

Building a prefab is typically more cost-effective than conventional construction but there are ways to be even more strategic with your spending. Prices will increase when you opt for any customisations or upgrades so if your budget is tight, try to keep these to a minimum. 

To ensure the money you receive goes as far as you need it to, we recommend building a standard home from our pre-designed plans. This will keep the price down, ensuring your total loan amount covers the entire project from start to finish.   

Understand all the costs

Construction prices will vary from place to place so it’s worth researching the estimated transportation and site costs of your prefab home. A good way to avoid running into any surprise expenses is to book a free onsite consultation with our team. We’ll come to your proposed site and give you price estimates for delivery and connections. 

Genius Homes

Whether it's your first home, an investment property, a second dwelling, or farm accommodation our expert team at Genius Homes is here to help you obtain the financing you need. By contacting us early in your home-buying journey, we can provide a realistic budget estimate and assess the suitability of your site through a free onsite consultation.

If needed, we can also refer you to a BNZ representative specialising in our prefab home projects. Or explore our range of designs and find your perfect prefab home, download our designs brochure by clicking the link below to start your home ownership journey.

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