Best construction loans in New Zealand: Which lenders should you consider?

Since you already own the land, I'd focus on lenders that offer construction loans for an owner-built home, with staged payments, flexible drawdowns and competitive interest rates during the build.

My initial shortlist would be ANZ, ASB, BNZ, Westpac and Kiwibank. I'd also consider NBS for its specialist build-loan offering.

The key is that you're financing the construction of a house on land you already own, rather than buying a completed home or purchasing a house-and-land package. The equity in your existing land may help support your application, depending on its value, your existing debts and the lender's assessment of your completed home.

I've compared the lenders' published construction-loan features and outlined what makes each worth considering.

1. My recommended lenders

1. ANZ — Best for dedicated construction support

Why I'd consider it: ANZ offers a dedicated Construction Coach who can help you understand your borrowing capacity, deposit requirements and financing options throughout the build.

Key features include:

• Progressive drawdowns: Access the loan as building work progresses rather than borrowing the full amount upfront.
• Interest savings: You pay interest on the amount you've drawn, not the entire approved facility.
• Flexible interest rates: Construction lending starts on a floating rate, with drawn amounts eligible to be switched to fixed rates.
• Blueprint to Build: Eligible customers may receive discounted home-loan rates and fee savings through ANZ's new-build package.

ANZ generally assesses borrowing against the property's estimated value when construction is complete, known as its Tentative on Completion Value.

One important consideration is that ANZ states you have a maximum of 12 months to draw down the full loan amount.

Best for: People who want structured guidance through the financing process and would value having a dedicated construction specialist.

Official details: ANZ — Financing your building project【turn0search4】

2. ASB — Best for a flexible construction timeline

Why I'd consider it: ASB gives you a relatively generous window to start drawing down your approved construction facility.

Key features include:

• 12 months to make the first drawdown.
• The ability to continue drawing down as construction progresses.
• Home-lending specialists available seven days a week.
• Financing options for building from scratch, as well as house-and-land packages and renovations.

ASB's first-drawdown window could be useful if you're still finalising architectural plans, obtaining consents or coordinating the start of construction.

However, the initial 12-month window isn't the same as a guarantee that you can take as long as you like to complete the build. Confirm the overall facility expiry date and any drawdown conditions before committing.

Best for: People who want time to organise their project before construction begins, particularly if the build won't start immediately.

Official details: ASB — Building or renovating your home【turn0search3】

3. BNZ — Best for staged borrowing and managing interest costs

Why I'd consider it: BNZ's construction-loan structure is straightforward and designed around the way building costs accumulate over time.

Key features include:

• Progressive drawdowns: The loan is released in stages as the builder or contractors need payment.
• Interest-only payments during construction: Available options allow you to manage repayments while the house is being built.
• Floating or fixed rates: BNZ offers options to suit different preferences, subject to its lending terms.
• Potentially lower deposit requirements: A 20% deposit isn't always required for construction lending.

BNZ also explains the distinction between different build arrangements, including fixed-price and labour-only contracts.

That matters if you're building a genuinely custom home rather than buying a standard house-and-land package.

BNZ states that the first drawdown must occur within 90 days of the loan agreement, and its published construction-loan terms specify a 12-month window for the final drawdown from the date of the first borrowing. Check whether these timelines suit your project.

Best for: People who want a conventional construction loan with staged payments and the flexibility to manage interest costs during the build.

Official details: BNZ — Buying land and building a house【turn0search0】

4. Westpac — Best if you want to minimise repayments during construction

Why I'd consider it: Westpac's New Build Loan offers several features specifically designed to help manage cash flow while your house is being built.

Key features include:

• Progress payments: Funds are drawn down as the builder invoices you.
• Interest-only repayments: You generally pay interest on the funds already drawn during construction.
• Potentially reduced repayments: Westpac advertises options for no repayments during the construction period, subject to eligibility and conditions.
• Low-deposit options: Depending on the contract and eligibility, Westpac may lend up to 90% of the construction contract price.

Westpac also allows you to fix drawn-down portions of the loan during construction, subject to its conditions. This could help if you're concerned about floating interest rates changing while the project is underway.

One important qualification: Westpac's 90% lending option has specific eligibility requirements, including restrictions on the types of building contracts that qualify. Don't assume the same deposit requirement applies to every owner-managed build.

Best for: People who want to keep their cash flow manageable while construction is underway, particularly if they need to meet rent or other housing costs at the same time.

Official details: Westpac — New Build Loan【turn0search1】

5. Kiwibank — Best for a straightforward build-loan process

Why I'd consider it: Kiwibank clearly outlines the documentation, valuation and payment requirements involved in financing a new home.

Key features include:

• Staged drawdowns: Borrow only as building work progresses.
• Interest savings: Because you don't draw down the full loan immediately, you avoid paying interest on the undrawn balance.
• Payments aligned with the build: Your loan can be structured around the payment schedule in your building contract.
• Clear documentation requirements: Kiwibank explains what you'll need to provide at application, during construction and at completion.

For example, Kiwibank may require a registered valuation of the estimated completed property, your building contract, relevant consents and evidence of the work completed before releasing progress payments.

This is worth considering if you want to understand the practical requirements before construction starts.

Best for: People who value a clearly documented process and want to align their borrowing with the builder's payment schedule.

Official details: Kiwibank — Borrowing to build【turn0search6】

6. NBS — Worth investigating for its specialist build-loan offer

NBS is another option worth adding to your shortlist, particularly if its construction-loan structure suits your project.

Its published Build Loan features include:

• No interest for the first 18 weeks from the first drawdown.
• No application fee for its build loans.
• Progress payments based on inspections of the building work, without requiring interim registered valuations for those payments.
• The ability to restructure the facility into a fixed-rate home loan after the build is complete and the required Code Compliance Certificate is provided.

The 18-week interest-free period is particularly interesting because it could reduce financing costs during the early stages of construction.

However, there are conditions. NBS states that borrowers must remain NBS customers for at least two years or risk having to repay the interest foregone, along with an administration fee. Its eligibility criteria and assessment process will also determine whether the offer is suitable for your build.

Best for: People who are open to using a smaller lender and want to investigate whether an interest-free introductory period could make their construction financing cheaper.

Official details: NBS — Build Loans【turn0search8】

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2. How I'd compare these lenders for your situation

Here's how I'd approach the shortlist.

Lender	Main reason to consider it	What I'd investigate first
ANZ	Dedicated Construction Coach and build-financing support	Interest rates, package benefits and drawdown deadlines
ASB	12 months to make the first drawdown	Total facility duration and flexibility if construction is delayed
BNZ	Staged borrowing and interest-only options	Contract requirements, fees and drawdown deadlines
Westpac	Interest-only or potentially no repayments during construction	Eligibility for low-deposit lending and repayment-relief options
Kiwibank	Clear staged-payment and documentation process	Valuation costs, progress-payment requirements and rates
NBS	Interest-free introductory period and no application fee	Eligibility, conditions and the cost after the introductory period

These are comparisons of published product features, not a ranking of the lenders' current interest rates or a guarantee that any particular lender will approve your application.

My starting point would be ANZ, ASB and BNZ, alongside Westpac. I'd add Kiwibank and NBS to ensure you're not overlooking a better fit.

I wouldn't choose a lender based on its advertised fixed mortgage rate alone. During construction, the floating rate, progress-payment process and any fees can have a significant impact on your overall costs.

3. The most important factor: You already own the land

This could put you in a useful position when applying for a construction loan.

The lender will generally consider the value of the land, any existing mortgage against it, the construction cost and the expected value of the completed property.

For example, imagine your situation looks like this:

Item	Example
Current value of your land	$400,000
Cost to build your home	$600,000
Estimated value of completed property	$1,100,000
Existing mortgage on the land	$0
Total project cost	$1,000,000

In this example, you already own a $400,000 asset and need to finance the $600,000 construction cost.

Your land equity could help support the loan application, potentially reducing the amount of additional cash you need to contribute.

However, owning the land outright doesn't automatically mean the bank will lend you the full construction cost. It will also assess your income, expenses, ability to service the loan, construction contract, valuation and other lending criteria.

If you still have a mortgage on the land, the lender will need to account for that debt.

Kiwibank explains how lenders assess the land's value, building costs and estimated completed-property value in its guide to borrowing to build.【turn0search6】

4. Are you using a building company or managing the build yourself?

This is a crucial distinction, and I'd establish it before approaching lenders.

Option A: You're using a builder under a fixed-price contract

This is generally the more straightforward arrangement for construction lending.

The lender can assess the agreed building price, payment schedule, plans and expected completed value.

I'd approach ANZ, ASB, BNZ and Westpac for comparable offers.

Ask each lender:

• How much will you lend against the completed property's value?
• What deposit or equity contribution is required?
• Can I make interest-only payments during construction?
• When must construction begin, and when must the loan be fully drawn down?
• What fees apply to valuations and progress payments?

Option B: You're managing the build yourself

Perhaps you're hiring individual tradespeople, sourcing materials yourself or acting as an owner-builder.

In this situation, don't assume every lender's standard construction loan will be available to you.

Some lenders have different requirements for labour-only contracts, owner-builders and projects without a single fixed-price contract.

For example, BNZ distinguishes between fixed-price and labour-only building arrangements. Westpac also places specific conditions on its higher loan-to-value construction lending.

I'd contact ANZ, BNZ and Kiwibank first, explain your exact building arrangement and ask whether they will finance it. I'd also approach ASB and Westpac to see whether they can accommodate the project.

Be prepared to provide detailed costings, plans, consents and information about who will manage the work.

5. Five things I'd negotiate before choosing a lender

Regardless of which bank you choose, these are the areas I'd focus on.

1. The construction interest rate

Construction loans commonly use a floating rate while funds are progressively drawn down. This can make the cost of borrowing more expensive than you might expect if you look only at advertised fixed mortgage rates.

Ask whether you can fix portions of the loan as they're drawn down, and compare the available rates and any associated fees.

2. Interest-only repayments

Ask whether you can make interest-only repayments throughout the build.

This can help preserve cash flow, particularly if you're paying rent or servicing another mortgage while construction is underway.

3. Progress-payment requirements

Ask exactly what the lender needs before releasing each payment.

Depending on the lender and project, this could include invoices, inspection reports, certification or interim valuations.

You don't want a situation where your builder requires payment but the bank hasn't released the funds.

4. Contingency funding

I'd aim to have a separate contingency reserve for unexpected costs rather than committing every available dollar to the initial budget.

The appropriate reserve depends on the complexity of the project, how complete your plans are and whether the contract is fixed-price.

Ask the lender how cost overruns would be handled and whether you could obtain additional funding if necessary. Don't assume a bank will approve an increase later.

5. The transition to a standard mortgage

Ask what happens when the house is finished.

Can you fix the loan at that point? Are there any fees to restructure the facility? What documentation will you need to provide?

Also, check whether the bank requires a Code Compliance Certificate and evidence of full replacement insurance before finalising the loan.

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6. My final recommendation

If I were comparing construction loans for a home being built on land I already owned, I'd take the following approach:

1. ANZ: Investigate its Construction Coach service and Blueprint to Build benefits.
2. ASB: Compare its construction financing and flexibility around the start of the project.
3. BNZ: Obtain a quote for staged drawdowns and interest-only repayments.
4. Westpac: Ask whether you qualify for its most favourable New Build Loan terms.
5. Kiwibank and NBS: Use these as additional comparisons, particularly if their lending structures or fees are more favourable.

Get comparable written offers from at least three lenders. Where possible, compare the total estimated financing cost over the construction period rather than focusing on a single interest rate.

A mortgage adviser who regularly handles construction loans can also compare lenders and help establish which ones are willing to finance your particular building arrangement.

Let me narrow this down to the best options for you

There are two details that would make a substantial difference to my recommendations.

First, are you building under a fixed-price contract with a building company, or are you managing the build yourself and hiring individual tradespeople?

And roughly how much is your land worth, and do you own it outright or still have a mortgage on it?

With those details, I can give you a more targeted shortlist of lenders and explain which ones are most worth approaching first.