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What Is The Definition Of A New Build For Lending Purposes

Most of us probable think we know what a new build is, but do we really know the definition of a new build for lending purposes?

It’s a little more complex than what one might think, and the definition of a new build differs depending where you look.

The Definition Of A New Build

When we talk about new builds for lending purposes we may be looking at what the banks can treat as exempt of the LVR rules especially for first home buyers that may not have the benefit of a large deposit or equity in another property. First home buyers may also want to see if they can qualify for the “free money” that might be available as a First Home Grant.

The definitions are different:

The Reserve Bank defines a new build as a house that the borrower must either commit to the purchase of at an early stage of construction, or be buying the residence (within six months of completion) from the developer. The LVR exemption for new builds applies for both owner-occupiers and residential property investors.

This definition is used when they talk about the loan to value ratio restrictions in data published on 28th February 2022.

Kainga Ora offer the First Home Grant for new builds and existing houses but at different rates, so it is important to define exactly what a new build is. On their website they call new builds vacant sections that will be built on, house and land packages or apartments purchased off the plans and newly built dwellings that received a building code compliance certificate less than twelve months before the date you apply for the First Home Grant.

You may be confused now!

The important thing is to check or work with an adviser who deals with new builds all the time.

Not all mortgage advisers know how to finance a new build.

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How does the Reserve Bank define a new build?

The Reserve Bank defines a new build as a house that the borrower must either commit to the purchase of at an early stage of construction, or be buying the residence (within six months of completion) from the developer. The LVR exemption for new builds applies for both owner-occupiers and residential property investors.

How does Kainga Ora define a new build?

Kainga Ora offer the First Home Grant for new builds and existing houses but at different rates, so it is important to define exactly what a new build is. On their website they call new builds vacant sections that will be built on, house and land packages or apartments purchased off the plans and newly built dwellings that received a building code compliance certificate less than twelve months before the date you apply for the First Home Grant.