Finance basics for new-home buyers

This is general information, not credit or financial advice. It does not take your circumstances into account. Speak to a licensed mortgage broker or your lender about your own position.

Pre-approval is useful, but it is conditional

Pre-approval tells you roughly what a lender is prepared to consider, based on the information you have given them. It is not a guarantee. It typically expires, it is subject to valuation, and it can be affected by changes in your income, your other debts, or the lender's own policies.

For a new build, the practical implication is important: the valuation that matters is usually the one done near completion, not the one at the time you sign. If you are buying something that completes in eighteen months, plan for that.

Off the plan is financed differently

For an off-the-plan apartment or townhouse, you generally pay a deposit at exchange and the balance at completion. Your loan is drawn at completion, against a valuation done at that point.

For house and land, the land and the build are usually financed separately, with the construction loan drawn down in progress payments as stages are completed. You typically pay interest only on the amount drawn.

Ask your broker which structure applies and what it means for your cash flow.

Questions worth asking

• What is my genuine borrowing capacity, and what assumptions is it based on?
• How long does pre-approval last, and what would cause it to change?
• What happens if the completion valuation comes in below the contract price?
• Are there lender restrictions on the postcode, the project, or off-the-plan purchases generally?
• What deposit is required, and is lenders mortgage insurance payable?
• For house and land, what are the progress payment stages and the interest cost during construction?
• What government grants, concessions or schemes might apply to me, and what are their conditions?

Where we fit

We are not a broker, a lender or a financial adviser, and we do not give credit advice. When you tell us where you are with finance, we use it to understand how to be useful — for example, whether it makes sense to show you homes completing soon or projects still some way off.