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Funding your prefab home

Building a new home can be a daunting prospect and often it’s the price tag attached that’s most intimidating. In the current climate, whether you’re considering buying an existing home or exploring options to build, it’s a massive investment. Fortunately, if a new build is a route you’re hoping to take, a prefab home could be a viable solution if you want the most bang for your buck.

Being prebuilt in a secure and controlled factory environment, the building process of a prefab home is simplified and efficient. Protected from the elements it is safe from the risk of damage and material waste is reduced. On the whole, a prefab home is a streamlined and sure safe way to build. The efficiencies in the prefab build process are what enables them to be priced more affordable than a conventional build of equivalent quality, which only adds to their popularity and appeal. 

The concern many people have, however, is whether or not a home loan can be granted for a prefab home in the same way as a regular new build home. And while there are some important considerations, the good news is, you absolutely can.

Accessing a loan for prefab homes

Prefab homes, and other such homes like transportable, kitset and modular homes, have gained huge momentum in recent years as an innovative solution to building. Not only are they more efficient and affordable, but gentler on the environment too. And while in the past accessing a loan for a prefab has proved complicated, it has gotten much simpler, with Westpac introducing their ‘Prebuilt Home Loan’ back in 2019, and now the introduction of BNZ’s funding for prefabricated homes, land and site services in 2022.

With a traditional construction loan, funds are released at agreed stages by the bank. This is so builders can be paid as construction is underway and so you, the buyer, are protected from paying for stages upfront for aspects of the build that might not get completed. The added benefit to this process is that you only pay interest on the amounts that have been released. So even though you'll never hope for a long and drawn out build process, at least, if it is, you won't be paying interest on amounts you haven't yet received.

While this construction loan process can often apply to some unconventional builds, such as kitset homes, a prefab home is built entirely offsite, rather than in stages and then delivered as a completed dwelling. So typically, the concern has been that banks cannot take security over an offsite building and thus are unable to provide funds until the house is delivered and complete. 

However, in recent years, both banks and government agencies have increasingly recognised the huge value in prefabrication and are beginning to roll out efforts that support builders and buyers using this method of build. General Manager Construction and Innovation of Kāinga Ora, Patrick Dougherty, says, “Kāinga Ora has a responsibility to invest in build methods that show a clear pathway to delivering more quality homes, at a faster rate, and with the best possible outcomes for people, communities, and the construction industry. We believe that offsite manufacturing can play a significant part in achieving these results.” With prefab homes posing a sustainable and efficient building solution their popularity and accessibility to buyers is only projected to rise. 

New home interiorIn early 2022, Genius Homes partnered with BNZ and their new prefabricated home loan offering. This loan works similarly to that of a regular construction loan differing only in that it is specific to dwellings prebuilt in a factory, supporting lending for an offsite build that’s then delivered to its site. 

To mitigate risk and provide security for all parties, the bank will take security over the land and the prefab as it is being built and funds will be released at various stages of the build. This opens up the opportunity to secure a loan without having existing equity that can be borrowed against. Other normal lending terms and criteria apply. 

For first home buyers or buyers with low existing equity, this is excellent news. The availability of this new prefab loan opens up the door to prefabricated housing as a new home solution. 

In most cases, a 20% deposit will be required. This deposit can be made up of cash savings and existing equity, or for first home buyers can include Kiwisaver savings, gifted funds and up to $20,000 worth of First Home Grants too. 

Fixed-price contracts for prefab homes

Another way to lower any financial stress when building a home is to enquire about a fixed price contract. With the building industry currently experiencing material shortages and delays, as well as high demands throughout the construction sector, material prices are unfortunately increasing rapidly. Genius Homes remains one of the few construction companies still supporting their customers with the security of a fixed price contract. 

Build a prefab home with us in confidence knowing your price is secured regardless of any surprise price spikes that could have otherwise been thrown your way. A fixed-price contract will also simplify the mortgage process, as you’ll be a much more desirable candidate to lenders.

Tips for keeping costs down

At Genius Homes we are transparent with all of our house prices. See a home you like? Simply enquire about the price! Our prefab range covers a wide spectrum of prices, meaning there’s a home and style to suit every family and budget. All prefabs come with the standard inclusions, that cover everything you need to move right in. 

Price variations will start to occur when customisation and upgrades are made and will be determined on a case by case basis. Another influencing factor where prices can vary significantly is location. The proximity and accessibility of your site can drastically affect the overall transportation and site works costs of delivering your prefab home. A good way to avoid running into these unwanted costs is to book a FREE onsite consultation. We’ll come to check out the proposed site and give you price estimates for delivery and connections so you know what to expect and what you’ll need to borrow.

Where to begin?

A great place to start is by talking to the right people. Our team are experts on prefab homes and can help answer any questions you might have. It’s good to reach out to your bank or mortgage broker too and let them know your plans and timeframes early on so you have a realistic budget to begin exploring your options. To view our full range of prefab homes available, download our latest catalogue below.

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