Many new home buyers in New Zealand purchase their houses off the plan from a developer. They are required to make a deposit up front, and then to make payments at certain milestones along the build process including a final payment once the house and grounds has been completed. This is quite a different process then simply buying a new house that has been put up for sale by developer, because in this case the developer has had to take all the financial risk and borrow using short-term money until the house is sold. At this point they should start looking for a good mortgage broker to help them.
Generally when builders are courageous enough to take on the additional debt while they build a house, the reason for doing this is because it is substantially more profitable. A finished completely new house is substantially more valuable then a house that has yet to be built, and can command a significantly higher price simply because of the certainty that the house exists and it is in a wonderful new condition. The Builder knows that if they can sell the house in a buoyant market within a certain time frame then the cost of the temporary finance will become inconsequential, and their profits will be significant.
Developers building a number of homes in a new subdivision will need to pre-sell the houses before they start building each house, simply because this will reduce the overall financing costs. To get things rolling the developers often need to price the first few houses lower so that they get buyer’s on board quickly. Once potential buyers see that houses are actually starting to sell in a new subdivision then the market wakes up and a lot more buyers will come on board and compete for the remaining houses.
Mortgage brokers Christchurch are vital to enabling both of these processes, as they will have been involved in gaining short term finance for both the developer and the builder, and will also have been involved in financing the new houses for the home buyers. A smart mortgage broker will make sure that they look after their developer or builder, is this can mean that the developer or builder will recommend their services to the home buyers. It’s common in many new subdivisions for there to be a recommended mortgage broker for the home buyers.
While the banks to get involved obviously, it is mostly using the mortgage brokers Canterbury as intermediaries.