Property Finance

Anna Horrocks, our Hawkes Bay-based Home Loan Adviser, recently worked with clients who wished to arrange finance to subdivide their existing property, purchase a tiny home to live in and fund the construction of a transportable home. Once the tiny home is on site they would move in, sell their existing home and repay the debt, resulting in them being mortgage-free with money in the bank.

Their existing bank (a mainstream New Zealand trading bank) was making it difficult for Anna’s clients to complete their request. Even though the resultant position would be mortgage free/unencumbered and money on deposit, the bank had concerns around their age (early 60s) and their servicing ability, and insisted on many inconvenient and expensive prerequisites before providing funding.

Along with registered valuations being required at the beginning of the project, progress valuations along the way were required as well as another valuation at the completion of the project. The bank also indicated that they may require a QS report to confirm the costs. A full schedule of costings was required along with quotes for all components of the project. The offer from Anna’s clients’ bank, along with the inconvenience and cost of meeting their requirements, could have potentially incurred more time when getting the valuations in return for having the funds available. The offer didn’t allow any flexibility for Anna’s clients to complete their project with ease.

Because Finance New Zealand work with a number of specialist property finance funders, Anna was able to facilitate a solution from one of our property finance partners that would enable her clients to get cracking. Although there were higher fees and higher interest rates (as this is a short-term loan), Anna’s clients would have otherwise needed a number of valuations to pay for if they went with their main bank as they wanted to draw progressively against progress valuations. Our specialist property finance partner made all the funds available to Anna’s clients to enable them to manage the project themselves without the stress of waiting for progress drawdowns to pay contractors or suppliers and also to take advantage of supplier early payment discounts.

Along with providing a flexible solution that allowed Anna’s client to progress their project with ease, the lender was willing to offer interest only at the clients request and have subsequently offered capitalised interest as there were delays due to poor weather. It’s highly unlikely that a main bank would have been so flexible in the same situation.