New build vs turnkey

As New Zealand’s housing market evolves, first-home buyers and investors alike are weighing the benefits of new builds against turnkey options — each offering distinct advantages, particularly when it comes to financing and deposit requirements.

Insights with Infinance by Brian Coogan

A new build refers to a property that is constructed from scratch, either by the owner or by a developer, where the purchaser becomes the first registered owner.

These homes can be financed through construction loans, where funds are released in stages tied to the progress of the build.

Turnkey, in contrast, is more like a traditional purchase: buyers agree to a fixed price with a builder, pay a smaller deposit upfront (often around 5–10%), and settle the balance when the home is complete and handed over.

One of the biggest incentives for both new builds and turnkey homes is how they interact with Loan-to-Value Ratio (LVR) rules set by the Reserve Bank of New Zealand. 

Under current regulations, LVR restrictions — which limit how much banks can lend relative to the property’s value — do not apply to new residential construction.

That means financing a new-build or buying a nearly new home can be dramatically easier even with a smaller deposit, compared with an existing property purchase where a typical 20% deposit (80% LVR) is expected.

This exemption often extends to turnkey contracts if the purchase contract is executed with the developer and the home is new.

However, borrowers must still satisfy the bank’s internal lending criteria. In practice, some lenders may offer 90–95% financing on a new build, whereas existing property purchases are usually more constrained.

For many buyers — especially those with limited savings — new build or turnkey options can make homeownership more attainable.

But while turnkey offers simplicity and certainty of cost, traditional construction loans provide more flexibility in design and choice. Prospective buyers should always consult a mortgage adviser to understand how LVR and other lending conditions affect their situation.

For more on the above go to www.infinance.co.nz/insights. Written by Brian Coogan, Licensed Financial Adviser and Director at Infinance - Taupo

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