5 Essential Tips for Organising Your Finances

If you’re looking to build a home, you likely need financial support from a bank or other lender. It can be daunting approaching your bank, especially when you don’t know how to prepare.

Before beginning your building project, this article has our top 5 tips for getting your finances in order. Read it now for all the information you need to understand the financing process for a prefabricated home.

Top 5 tips for getting your finances in order

1. Prepare a budget 

The first step in arranging finance is to prepare a budget listing all personal expenditures. This doesn’t need to be complicated and can be done with various online budgeting tools, spreadsheets, or even on paper. Keep in mind that your bank needs to be able to compare this budget to your actual expenditure.

A budget gives you a clear understanding of what your expenses are and what mortgage you could realistically afford to pay. Additionally, it will highlight any areas where you can reduce unnecessary spending and reallocate the money to the mortgage.

2. Reduce expenses

Before approaching the bank, it’s good practice to trim unnecessary expenditures. This may include eating out, buying new clothes, entertainment streaming services, subscriptions, and anything else you can do without. You don’t have to eliminate these expenses completely – just be mindful of where your money goes and spend it wisely. 

Reducing these costs will increase your deposit value and your budget which goes a long way in a new prefab build. 

3. Build a deposit

The next step is to build your deposit value which can be a combination of savings, money gifted from family, work bonuses, and profits from the sale of assets. Typically, the higher your deposit, the more your bank will lend. 

The deposit is a percentage of the total purchase price – generally 20%. While it may be possible to purchase a home with a lower deposit of 10% or even 5%, this typically brings more risk for both you and your lender so it may be harder to get approval.

It’s a great idea to write down a savings goal and deadline to work towards. If you’re buying a home with someone else, you’ll need to specify how much you will each contribute to the deposit. 

4. Obtain a letter of employment security 

To assess your financial situation, your lender will require proof of employment as part of their accreditation of your income security. If you are employed in a permanent position, obtain a letter from your employer that states the following: 

• Your job is secure for the foreseeable future.

• Your length of employment.

• A declaration of your pay cycle. 

If you are self-employed, you will need to collate a document of your current business earnings after tax along with current and upcoming expenditures. 

5. Create an asset list 

To create an asset list, simply compile an inventory of your valuable possessions and investments. Include all possessions that are worth more than $2,500, such as real estate, vehicles, stocks, retirement accounts, savings, and valuable personal belongings. If you owe money, make a note of this as well. This will make the pre-approval process much faster. 

How to get finance for a prefab home

Prefab financing is slightly different from a conventional construction loan because they’re built off-site. That means banks typically won’t have security over the loan until the house is delivered and fixed to the foundation. Fortunately, the popularity and efficiency of prefab construction are leading banks to adapt their processes and offer specialised prefab lending.  

Here at Manor Build, our team will ensure our processes align with your lender’s expectations. We can also help you to obtain financing through KiwiSaver and Kāinga Ora or put you in touch with a specialist mortgage broker for prefabricated homes. With the five steps mentioned above, you will be in a great position to seek finance from your bank. 

KiwiSaver

It is usually worth planning your house design to meet KiwiSaver grant criteria as it can significantly boost your budget. For example, there is a grant for new builds with $10,000 available to most first-home buyers. The First Home Grant is subject to certain requirements so speak with your mortgage broker for advice before applying. 

Kāinga ora first home loans

To make homeownership more attainable for first-time buyers, Kāinga Ora First Home Loans only require a 5% deposit. Essentially, Kāinga Ora underwrites the loans and buyers pay as much of the deposit as they can. If you are a first-time home buyer, this may help to speed up the process. 

Speak to the experts

When applying for prefab financing, the team at Manor Build strongly suggest reaching out to a mortgage broker and your chosen prefab company early on. These professionals have a comprehensive understanding of the lending landscape and the range of restrictions that may apply to your situation.

Our team use these consultations to help us align our processes with your lender’s criteria and conditions. For more information or to discuss your next project, contact the Manor Build team today.