Building a home and income property offers a unique opportunity to generate additional income while securing a place to call home.
Unlike traditional construction finance, home and income projects involve creating separate living spaces within the same property, typically with one portion designated for personal use and the other for rental income. A duplex property consists of two separate dwellings under one roof, each with its own living spaces and amenities, typically separated by a firewall or intertenancy wall.
Building duplexes or home and income properties has emerged as one of the hottest trends, particularly in high-demand areas like Auckland and Queenstown. These properties offer a unique opportunity to generate rental income while providing flexible living arrangements for homeowners and tenants alike.
Understanding Home and Income Financing
When applying for financing for a home and income project, banks assess the viability of the rental income component to determine loan approval. If your personal income alone isn't sufficient to secure the entire loan amount, demonstrating a solid plan for generating rental income can strengthen your case. For example, if you're building a three-bedroom home with a separate two-bedroom unit for rental, banks may consider the rental appraisal for the additional unit when evaluating your application.
Bank Requirements
Different banks have varying appetites for home and income projects, with some offering more flexibility than others. While rental income from borders may be considered for servicing the loan on your primary residence, home and income properties are typically assessed differently. However, as the popularity of home and income properties continues to rise, banks are becoming more receptive to these projects.
Navigating Council Regulations and Costs
Council contributions, resource consents, and compliance with building codes are crucial considerations when embarking on such projects. However, councils are becoming more flexible in their approach, allowing for greater accessibility to these property types across New Zealand.
Why Should I Look into it?
Home and income properties represent a lucrative investment opportunity, particularly in high-demand areas like Auckland and Queenstown. With rental incomes from secondary units often exceeding expectations, these properties offer a path to financial stability and wealth generation. Additionally, borrowers can access construction finance for home and income projects, with some banks offering loan-to-value ratios of up to 90%.
At NZ Mortgages, we specialise in helping clients navigate the complexities of construction finance for home and income properties with our dedicated team, www.constructionloans.co.nz. Our experienced team can guide you through the financing process, ensuring that you secure the funding you need to bring your project to life. Contact us today to explore your options and embark on your journey towards building a profitable home and income property.
Key words: Home and income properties, construction finance, rental income, property investment, financial planning, mortgage financing, Auckland property market, Queenstown real estate, NZ Mortgages.
