# HL-Q060: Borrower journey Our builder is ready for us to sign the contract for our home, but the construction finance is only conditionally approved. What should we have confirmed first? Borrower: Household financing a staged home build [Study](https://nzbrands.ai/research/banking/home-lending/) · Collected 11 October 2026 ## chatgpt Answer ID: 0b80b8b9-83f5-485f-af0d-92b5fa60898d In New Zealand, the key thing to confirm before signing your new-build contract is whether your construction finance can be fully approved on terms that will actually let you proceed with the build. Conditional approval is not the same as unconditional approval. Your lender may still need to verify the final building contract, fixed-price quote, consent documents, valuation, your contribution or deposit, and other lending conditions before releasing funds. The risk is that you sign a binding building contract, become committed to the builder, and then discover your lender will not fund the project as agreed — or will only lend less than you expected. Here’s what I would have confirmed first. ## Your pre-signing checklist ## Before you sign 0 of 6 checked 1. Full finance approval requirementsAsk your bank or mortgage adviser to list every outstanding condition in writing, and confirm whether it will approve the loan for this specific build. Find out whether the signed contract is itself required before final approval. 2. The exact building contract and priceHave the lender check the actual contract, plans, specifications and payment schedule. Confirm the price includes GST and clarify exclusions, provisional sums, site works, service connections and potential variations. 3. Your total budget and cash contributionConfirm the approved loan amount covers the required progress payments, and calculate how much cash you must contribute, including the deposit, legal fees, insurance, council costs and any items outside the contract. 4. Valuation, consents and insuranceAsk which documents remain outstanding. Depending on the lender, these may include an acceptable valuation or on-completion valuation, building consent, resource consent if applicable, and contract works insurance. 5. How the construction loan will be paidGet written confirmation of the progress-payment process, drawdown conditions and timing. Make sure the lender can release funds when the builder's invoices fall due, rather than assuming approval means the money is immediately available. 6. What happens if finance is declined or delayedAsk your solicitor to review the contract's deposit, commencement, cancellation, default and delay provisions. If you need finance protection, discuss whether an appropriate finance condition or other contractual protection can be negotiated before signing. These checks reflect the kinds of conditions lenders may require before full approval and the first drawdown. See [ANZ's construction finance guidance](https://www.anz.co.nz/personal/home-loans-mortgages/building-renovating/planning/) and [BNZ's guide to building a house](https://www.bnz.co.nz/personal-banking/home-loans/building-house). ## What to ask your bank or mortgage adviser I would send this question before committing: Email Subject : Confirmation of construction finance before signing builder contract Hi, Our builder is ready for us to sign the building contract, but our construction finance is currently only conditionally approved. Before we sign, could you please confirm in writing: - All outstanding conditions for full loan approval. - Whether the proposed building contract, plans, specifications and total price meet your lending requirements. - The final loan amount and the cash contribution required from us. - Any outstanding valuation, consent, insurance or other documentation requirements. - How progress payments will be funded and when the first drawdown can occur. - Whether there are any remaining matters that could prevent the loan from being fully approved. We want to make sure we can meet our contractual obligations to the builder before committing to the build. Please let us know whether we should wait for full approval or whether you recommend any specific contractual protections before signing. Kind regards ## One important distinction You do not necessarily have to wait for unconditional approval before signing in every case. Some New Zealand lenders require a signed building contract as part of their final approval process. The important thing is to understand the sequence your lender requires and avoid accepting obligations you cannot meet if finance does not proceed. [Planning your building or renovation project](https://www.anz.co.nz/personal/home-loans-mortgages/building-renovating/planning/)[Construction loans - Buying land and building a house](https://www.bnz.co.nz/personal-banking/home-loans/building-house) For residential building work costing $30,000 or more (including GST), the builder must generally provide a written contract, a disclosure statement and the consumer protection checklist before signing. Your solicitor should review the contract and advise on your particular risks. See the [MBIE homeowner guidance](https://www.building.govt.nz/getting-started/your-rights-and-obligations/homeowner-rights-and-obligations). [Before building work starts](https://www.building.govt.nz/getting-started/your-rights-and-obligations/homeowner-rights-and-obligations/know-your-rights-consumers/before-building-work-starts)[Homeowner rights and obligations](https://www.building.govt.nz/getting-started/your-rights-and-obligations/homeowner-rights-and-obligations) My recommendation: Before signing, get your mortgage adviser to confirm the outstanding finance conditions and have your solicitor review the contract, particularly what happens if finance is not finalised. If the builder is pressuring you to sign now, ask for time to complete those checks. One detail would help me tailor this to your situation: is your build a house-and-land package with a developer, or are you buying the section separately and contracting directly with a builder? The finance and contract risks can differ quite a bit. --- ## gemini Answer ID: 24116e7a-88f5-48d1-b84b-7ec9d3abb65e Under New Zealand property and contract law, signing a building contract or going unconditional on a property purchase before your finance is fully approved carries severe legal and financial risks. Once a contract goes unconditional, there is no cooling-off period, and you are legally bound to complete the purchase. If your finance falls through later, you risk losing your deposit and facing legal action from the builder or developer for breach of contract or any shortfall on a resale. Before you sign or waive any conditions, you should have the following elements explicitly confirmed: 1. **Formal, Unconditional Loan Offer:** Ensure your bank or lender has issued a formal, written loan contract (not just a verbal indication or general pre-approval) that explicitly approves the final loan amount required for this specific build. 2. **Lender Approval of the Build Plans and Specifications:** Banks in New Zealand closely scrutinize construction contracts. Your lender must formally approve the specific architectural plans, council consents, fixed-price or rise-and-fall contract terms, and the registered builder or Halo/Master Build guarantees. 3. **Registered Valuation (if requested by the lender):** Lenders typically require an independent registered valuation based on the completed plans to confirm the property's value meets their required loan-to-value ratio (LVR). 4. **Fixed-Price vs. Variation Risk Buffer:** Construction finance is usually drawn down in stages (progress payments). Confirm that your approved loan limit includes a sufficient contingency buffer (typically 10% to 15%) to cover potential cost overruns, material price fluctuations, or council variations during the build. 5. **Builder Insolvency Protection and Guarantees:** Ensure your contract includes independent master builder guarantees (such as Master Builders or Halo guarantees) and that your lawyer has reviewed the deposit provisions to ensure your progress payments are properly protected under the Building Act 2004. **Next Step:** Have your property lawyer review the builder's contract and ensure that your agreement remains explicitly **conditional on finance** (with an appropriate timeframe, usually 10 to 15 working days) until your bank issues its formal, written loan documents. Do not sign away your finance condition or let the deadline lapse until your broker or lender confirms everything is completely in place. --- ## ai-mode Answer ID: 7874c4a7-8f4f-474c-bdbc-0a8c241b88a9 You **must have unconditional finance approval and formal solicitor sign-off on the building contract** before you sign any binding agreement with your builder. Signing a construction contract while your finance is only conditionally approved exposes you to the severe risk that your lender may decline the final loan drawdown, leaving you legally tied to a costly build contract you cannot fund. What to Confirm Before Signing * * **Unconditional Finance Approval:** Ensure your lender has reviewed the specific building contract, fixed-price specifications, council-approved plans (if applicable), and registered valuation, and has issued a formal unconditional loan offer. * **Solicitor Review and Approval:** Have an independent New Zealand property lawyer or solicitor review the builder’s contract (such as a Registered Master Builders or Certified Builders contract) to ensure clauses around price variations, timeframes, and dispute resolution protect you. * **Fixed-Price vs. Rise-and-Fall Clause:** Confirm whether the contract is a fixed-price agreement or a rise-and-fall contract, and make sure your lender accepts the pricing structure. * **Code Compliance and Council Consents:** Verify that the building consent status aligns with your lender's requirements and that the contract clearly states who handles council interactions and code compliance certificate (CCC) issuance. * **KiwiSaver and Homestart/First Home Grants:** If you are using [Kainga Ora First Home Grants](https://kaingaora.govt.nz/) or KiwiSaver withdrawals for the build, confirm that the funds will be available and unfrozen in time for the initial deposit and first progress payment. * If you'd like, let me know: * Is your build a **turnkey** or a **progress payment** structure? * What specific **conditions** are still attached to your finance approval? I can help you outline the exact next steps with your bank or mortgage adviser. --- ## ai-overviews Answer ID: 58945f11-cc98-47a2-a24d-ae5942f0c819 Before you sign a residential building contract in New Zealand, you must have **unconditional finance approval** or a **finance condition clause explicitly drafted into the contract** by your lawyer. Signing a building contract with only conditional finance approval exposes you to massive financial risk. If the lender ultimately declines the loan or alters the terms, you will still be legally bound to pay the builder, which can lead to default, loss of your deposit, or legal action. * * * Key Items to Confirm Before Signing To satisfy the bank's requirements and protect yourself, you need to ensure the following elements are fully confirmed: * **Bank-Approved Valuation:** Lenders do not approve construction finance based on the build cost alone. They require a "as-if-complete" valuation from a registered valuer to prove the property’s final market value covers the total loan amount. * **A "Subject to Finance" Clause:** If you must sign now, your solicitor must include a clear, specific finance condition (e.g., _“This agreement is conditional upon the Purchaser securing unconditional finance approval within X working days”_). This allows you to walk away without penalty if the bank says no. * **The Nature of the Contract (Fixed-Price vs. Cost-Plus):** New Zealand retail banks heavily prefer a **Fixed-Price Master Builders (or Certified Builders) Contract**. If the contract has "provisional sums" or "prime cost sums" (allowances for things like earthworks or fittings), the bank will often add a hefty contingency buffer (usually 10%–20%) to your required deposit, which can break your conditional approval. * **The Progress Payment Schedule:** Construction finance is paid out in stages (e.g., Foundations, Framing, Enclosed, Council Code Compliance Certificate). The bank must review and agree to the builder's specific schedule _before_ you sign to ensure they are not overpaying for work ahead of schedule. * * * Recommended Action Plan [ Solicitor Review ] ➔ [ Bank Verification ] ➔ [ Unconditional Approval ] ➔ [ Sign Contract ] 1. **Send the draft contract to your lawyer immediately.** Do not rely on verbal assurances from the builder. 2. **Forward the complete, unexecuted contract and final plans to your mortgage broker or bank manager.** Ask them to issue a specific list of the remaining conditions required to convert your approval from conditional to unconditional. 3. **Obtain the "As-If-Complete" valuation** if the bank requires it to formalize the lending limits. * * * To help tailor the next steps, let me know: * Are you buying the **land and build together (Turnkey)** or do you **already own the section**? * Does the contract contain **provisional sums/variations** , or is it a **strict fixed price**? * What specific **conditions** did the lender list on your current pre-approval?