Building the Dream House, Life Stuff

Build update – the finance drama

Build update – the finance drama

OK – so now that this story has a happy ending, I can talk about this. Because I think it DOES have a happy ending. Our construction loan papers are winging their way from the bank to our NZ solicitor to prepare for us to sign.

This pretty much means that the bank is happy and our solicitor just has to prepare the mortgage for them and us to sign. Then after we’ve paid our required input into the build, the bank will pay our builder’s invoices as they get presented. Well, we present the invoice, the bank releases the money to us, then we pay. When the build is complete we convert the construction loan to a ‘regular’ mortgage and negotiate our payments and interest rate at that point.

As a life decision, this has been easy for us. Financially, it has not been as easy. And I’ll admit it’s a HUGE decision for us. We gave my in-laws what amounts to a reverse mortgage on the property a few years ago. This meant that we effectively took on a second mortgage since we were paying a mortgage on our home in Colorado at the time.

When we made the decision, we figured we’d need about 500,000 NZD to tear down the existing bach and build a home we’d love on the property. We basically pulled this amount out of our armpit, but we were confident. Now, at the time, beachfront ‘nice’ places at the same beach were never selling for less than one million dollars. We had promised my in-laws a separate unit they could use for their life time. And we notoriously do not have inexpensive tastes.

We have been adamant the whole time that this is where we want to live ‘forever’. I am never happier than when I’m at the beach. The same goes for John, although he is also never happy when not working. So he is not ready to go fulltime beach bum. When we decided to go ahead and build we knew that I’d be spending the bulk of my time at the beach and he would be coming as often as he could. I was probably expecting the ‘often as he could’ to be more than it will be now that we know how much we’re really spending, but it is OK.

Most people who know us know that we have a strong relationship. Building has it’s stresses, but we’re feeling confident. I hope not over confident LOL.

When we met with our chosen builder he didn’t mess around with words. He said about 3k-5k NZD per square meter if you want ‘nice’; up to $15k per square meter if you want architectural.

As our plans, which we absolutely LOVED and were everything we wanted, started coming in, they were coming in at a total living area of approximately 210 square meters, and about 400 square meters including deck. Still we figured about 500-600 K — LOL do the math.  Talk about not wanting to actually check. Neither one of us actually remembers consciously putting our head in the sand, but there you go. Here is pretty much exactly what our builder told us:

  • As a very rough starting point, $1500 m2 is very cheap, $2-2500 m2 is more usual and then anything from $3000 m2 and up is more consistent with bespoke designed houses. Source

We figured we’d have 300-400K NZ after the sale of our house in Colorado. This turned out to be pretty much spot on. Luckily. We knew we’d have to ask a NZ bank for SOME money.

Then the initial estimate came in at 1.2 million. More after this lovely pic of the back of our design.

Our house back

The thing is: this whole time we were watching Grand Designs and Grand Designs Australia religiously. We KNEW, once we woke up and thought about it, that our estimate was ridiculous.

We were never going to go the cheapest materials. We’ve deliberately chosen pretty much ALL no- to low-maintenance building materials. Our cladding is a special aluminium cladding that ‘moves’ with coastal winds, doesn’t need painting, and won’t rust in the coastal climate. We’ve done the same with the roof, windows, and soffits (they’re a thing!). Inside, we have chosen seriously hard wood floors to deal with the inevitable tracking of sand from beach walks. If anything, we should have been amazed it wasn’t MORE expensive. – I’ll comment on why we decided to go ahead with the way for expensive build later or in another post.

In our favor have been the levelness of our section, the relative simple design we’ve fallen in love with, and the genius of our architect. She’s known exactly when another inch of deck would mean more steel beams and all that sort of thing.

So when we went to the bank, we knew we were asking for rather a lot. Luckily, the numbers with regards to total value of beach property in New Zealand, my husband’s average monthly salary, the value of the NZ dollar compared to the US dollar and the fact that on paper we own the section out-right were in our favor. The numbers crunch out right. And the bank’s policy is to encourage NZ’ers planning to move back to NZ permanently. We fit that bill.

Still, the logistics of proving income, proving US tax rate, and valuation of our current property has been hard on the stress levels. I tend to be more prone to stress, so I’ve been the ‘The world is ending’ person at every turn, while my husband has been calmly trying to put up with my hysteria. We’ve submitted Social Security statements, W2’s, letters from my husband’s company, deposited the required deposit amount in the bank, provided estimates, contracts, proof of builder’s insurance and probably promised my gay son’s first born as well.

It has NOT helped that our bank liaison person has been relatively inexperienced when it comes to overseas income. I don’t think she was very experienced in professional communication in general. At one stage, she told us that we HAD to have life insurance. Both of us. Despite the fact that currently I don’t have a personal income. The lawyer in me wants to sue her for unprofessional practices at the very least. Perhaps undue sales pressure – she wanted to sell us the bank’s life insurance. But in the end, we think she’s just not that bright, not malicious.

We got our pre-approval letter and offer of lending about a month ago – subject to professional valuation. Our valuation took its sweet time coming, and I was dying.

But it’s now through, our solicitor is preparing the loan documents for us to sign, and the bank is ‘giving’ us $5000 cash as a ‘thank you’. LOL 5000. I don’t blink an eye for less than 10K these days.

Why we went ahead with it, how we’re paying for it, etc will have to wait. On paper we can afford it, and if that’s good enough for the bank it’s good enough for me. My husband must be feeling the pressure, but he will not be alone in paying for it if things work out the way we hope.

There’s no more NYU tuition coming from us though.

One thought on “Build update – the finance drama

  1. Congratulations on making it this far! It looks worth to wait for, I hope you get a chance to “breathe” now you can see the road ahead and that it is possible:)

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