Construction loans explained: building a new home in Takanini, Drury or Papakura
Takanini, Drury, Papakura and Karaka have some of Auckland’s busiest new-build areas. If you’re thinking about building or buying off the plans, here’s how the lending works.
A construction loan pays your builder in stages as the house is built, and you usually pay interest only on what’s been drawn. Most lenders want a fixed-price contract with a reputable builder. New builds can sometimes be bought with a smaller deposit than existing homes.
By the Moneyplant Advice Team · Last reviewed October 2026
Types of new-build purchase
- Build contract: you own the land and sign a contract with a builder.
- House and land package: the land and the build are sold together.
- Off the plans: you pay a deposit on a home that’s not built yet, and the balance on completion.
- Turnkey: you pay when the home is finished and ready to move into.
How progress payments work
With a build contract or some house and land packages, the lender pays the builder in stages, such as the foundations, frame, roof and completion. A valuer often checks the work before each payment. Your deposit is usually used first, and you pay interest only on the amount drawn so far.
Deposits for new builds
New builds are exempt from the Reserve Bank’s loan-to-value restrictions, so some lenders will accept a smaller deposit than for an existing home. The Kāinga Ora First Home Loan can also be used for eligible new builds. Every lender has its own rules, so get advice before you commit.
What to check before you sign
- That the contract is fixed-price and acceptable to your lender
- The builder’s track record, reviews and guarantee, such as Master Build or Certified Builders
- How long your finance approval lasts compared with the build timeline
- What happens if the build runs late or over budget
- Whether you’ll be paying rent and interest at the same time during the build
Protect it from day one
You’ll need contract works insurance during the build (often arranged by the builder) and house insurance from completion. It’s also a good time to review mortgage protection and life insurance.
This article is general information only, not personalised financial advice. Talk to us about your situation.
Common questions
Can’t see your question? Get in touch. There’s no such thing as a silly question.
How much deposit do I need for a new build?
It depends on the lender and the type of purchase. Because new builds are exempt from loan-to-value restrictions, some lenders accept a smaller deposit than for existing homes.
When do repayments start on a construction loan?
Usually you pay interest only on the amount drawn during the build, with full repayments starting once the home is finished.
What if my build goes over budget?
Lenders usually won’t increase the loan without a new approval, so a fixed-price contract and a buffer in your budget are important.
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