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The Lakes District is becoming an increasingly popular place to build a new home. Stats show that from 2017 to 2018 building consents increased by a third...
Funding, or getting a mortgage for your prefab home can be a little different to your traditional kitset home. This is because of the way a prefab is built over that of a more 'conventional' home.
It is frequently the case that lending for kitset homes is released at agreed stages. This is so you can pay your builders as construction is completed. This is mostly done to protect you, the buyer, from paying for stages up front for aspects of the build that might not be completed. Imagine having the full amount paid to you upfront and you pass that on to your builder to fund construction. If the work goes unfinished then you're still having to pay off the loan without anything to show for it.
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.
Because your prefab home isn't built in stages, rather it's built all at once and then delivered to your site the banks look at the build a little differently.
Speaking with mortgage specialist and company owner Stephanie Murray of Stephanie Murray Mortgages she explains some of the complexity around getting finance for a prefabricated home.
"In many cases the purchaser of the home is required to pay the full amount minus $5k before the "dwellIng" is delivered to site. The bank will often wait to release lending until the building is onsite. Banks will look more favourably upon borrowers that have a large deposit, or equity that can support the build."
Stephanie goes on to add that even though funding may be challenging for the home itself many will still back an associated purchase.
"Funding for the home may be problematic for some but if you're looking for a mortgage on the land banks are still likely to see that as a viable outlet for lending. Prefab homes are sometimes a cheaper route than conventional building so if you have equity tied up in another house, or land, the bank may still support your application."
In addition, Stephanie says, first home buyers may be able to get a guarantee from parent using the equity in their property to pay for the 'dwelling' before it is delivered to the site. Furthermore first home buyers, with the help of parents, may be able to borrow the funds from them and 'repay' once there is value on the site in the form of a property.
Mortgage brokers can often help with finding funding outside traditional lenders such as banks but even so it may not be easy for first home buyers, or people with low equity to find a mortgage for a prefab home.
To further discover our range of prefab homes download our free brochure to explore more.
To view the Stephanie Murray Mortgages disclosure statement visit www.stephaniemurray.mortgage
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Genius Homes designs and builds prefabricated and transportable homes for delivery across the South Island of New Zealand. From small studio homes to large 4 bedroom prefabricated houses we can be relied upon to deliver your next home.