Turnkey vs. Construction Loan Calculator (NZ)
A quick heads-up before we dive in: This tool is strictly for general informational purposes and does not constitute financial, legal, or tax advice. Every situation is entirely unique, and bank lending policies change frequently. Before making any decisions about your property journey, it is highly recommended that you seek independent advice from a qualified financial adviser.
Is a construction loan actually cheaper than a turnkey package? While a construction loan often looks tens of thousands of dollars cheaper on paper, the sticker price is only half the story. To find the True Cost, you must calculate the Holding Costs and the Overlap Penalty (the cost of paying your rent and your snowballing mortgage interest at the exact same time).
Use our head-to-head calculator below to compare both options side-by-side, determine your peak weekly cashflow requirements, and see which path actually leaves you better off.
Head-to-Head Calculator
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Understanding New Build Mortgages
What is the main difference between a turnkey and a construction loan?
A turnkey property is purchased as a fully completed package; you pay a deposit upfront and the remaining balance only upon settlement when the house is finished. A construction loan requires you to purchase the land first and then make progressive "drawdown" payments to a builder as they hit specific construction milestones.
What is the "Overlap Penalty" when building a house?
The overlap penalty occurs during a construction loan when you must pay your normal living rent at the same time as paying mortgage interest on the land and the progressive build stages. Because the house isn't finished yet, you are paying for two places to live simultaneously. Turnkey homes avoid this penalty because you do not pay the mortgage until you move in.
Why do turnkey homes cost more upfront?
Turnkey homes have a higher sticker price because the property developer bears all the financial risk and holding costs. The developer pays the interest on the construction loan, manages council delays, and absorbs the risk of material price increases. They bake these holding costs, along with their profit margin, into the final sale price.
What deposit is required for a turnkey vs. construction loan in NZ?
In New Zealand, banks generally require a 10% deposit for a turnkey property (or 5% if using the Kāinga Ora First Home Loan scheme). Construction loans outside of Kainga Ora First Home Loan are considered higher risk and typically require a 20% deposit against the land purchase, and an overall deposit equating to at least 10% of the total project cost.
Ready to run your exact numbers?
The choice between Turnkey and Construction dictates exactly how your cashflow will look for the next 12 months. We specialise in structuring new build finance so you can focus on moving in, rather than stressing over progress payments.