When embarking on the journey of building your new home, the path you choose—be it a turnkey or a fixed price (often referred to as progressive build) contract—can significantly influence your construction experience and financial planning.
For those exploring their financing options, understanding these contract types is crucial for making informed decisions that align with your lifestyle and obligations.
What is a Turnkey?
Turnkey contracts represent a streamlined, worry-free approach to home construction. With a turnkey arrangement, you will pay a deposit, usually between 5-10% of the total cost, up front. Your mortgage then will start once you move into the home, giving you more financial flexibility while your build is happening. This setup is particularly beneficial for families or individuals with significant financial commitments, as it eliminates the stress of ongoing construction expenses. The term "turnkey" itself encapsulates the convenience of these contracts—you simply turn the key and step into your new life, without the financial strain of construction phases.
What is a Fixed Price/Progressive Build?
Fixed price contracts, also known as progressive builds, offer a different set of advantages. Under a fixed price agreement, you will purchase a section, settle on the section, engage a builder, draw up a contract, and make agreements on when payments must be made. Progressive builds require you to engage with the construction process more directly, managing payments throughout various stages of the build. This contract type is often favored for its potential for customization and greater control over the construction timeline and expenses.
The decision between a turnkey contract and a fixed price (progressive build) contract depends on several factors, including your financial stability, desire for involvement in the construction process, and risk tolerance. Turnkey contracts offer ease and simplicity, making them ideal for those who prefer a hands-off approach. In contrast, progressive builds appeal to those seeking customization and direct oversight of their home’s construction.
In conclusion, whether a turnkey or a fixed price contract aligns with your home-building aspirations, the most critical step is to arm yourself with knowledge. Understanding these contracts' intricacies will help you navigate the construction process smoothly, ensuring that your journey to homeownership is as fulfilling as stepping into your completed home. For more insights and assistance on securing your construction loan, explore constructionloans.co.nz and get in touch with our team today for expert advice for building your home.
