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Now is a great time for first-home buyers in NZ to enter the property market and take advantage of current opportunities. Before committing to a purchase, we strongly advise obtaining an independent builder’s report to gain a clear understanding of the property’s condition.
If you’re considering an older home or a property from a specific era, be aware that certain issues uncovered in a builder’s report may affect your ability to secure insurance and, by extension, your mortgage approval.
In this two-part series, Velocity Financial Adviser Manisha Raman and Caveo General Insurance Adviser Alice Kauri share their insights on how common findings in building inspections can impact both your lending options and insurance choices. Their practical guidance will help you make well-informed decisions throughout your home-buying journey.
Last month in Part 1 of our series, we covered insurance tips from General Insurance Adviser, Alice Kauri, at Caveo.
This month, Velocity Financial Adviser Manisha Raman talks us through how builder's report findings can influence a bank’s decision to lend on your chosen property, and what you can do about it.
Spring is here, and with it comes a surge in property activity across Aotearoa. First-home buyers are out in force, and while the market offers great opportunities, it’s also a time to tread carefully, especially when it comes to building inspections.
As a Mortgage Adviser, I often see clients fall in love with a home only to hit a wall when the builder’s report comes back with red flags. Banks don’t just assess you, they assess the property too. And certain findings can seriously affect your ability to secure lending.
Here’s what I look for in a builder’s report, and how each issue can impact your mortgage approval:
• Bank Risk: Moisture = Potential structural issues.
• Impact: You may need to provide a specialist report or moisture readings. If damage is confirmed, the bank might decline the mortgage or require repair funds upfront. Especially risky in homes with monolithic cladding.
• Bank Risk: Could indicate structural risk or future leaks.
• Impact: Minor issues might be okay, but major repairs could mean a lower loan-to-value ratio (LVR) or needing to set aside funds for repairs.
• Bank Risk: Structural integrity is non-negotiable.
• Impact: Banks may request a geotechnical report or decline lending altogether if the property is in a flood-prone zone.
• Bank Risk: Mould risk and poor energy efficiency.
• Impact: You might need to budget for remediation, especially if the home is damp or poorly ventilated.
• Bank Risk: Structural timber damage.
• Impact: If the infestation is significant, banks may require pest treatment or decline lending until the issue is resolved.
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• Bank Risk: Usually not a deal-breaker unless it’s hiding something worse.
• Impact: May affect valuation, and if deeper issues are suspected, further investigation might be needed.
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If your builder’s report reveals any of these issues, don’t panic. The key is to show the bank that you’re proactive. Here’s what I recommend.
· Get quotes for repairs and include them in your application.
· Provide specialist reports if requested (e.g., moisture, structural, electrical).
· Show your plan of action, whether it’s immediate remediation or budgeting for future work.
· You need to be able to show you can afford the remediations required yourself as the bank will not lend you more money for the remediations.
· To meet bank lending conditions, it’s essential that the property is fully insurable with no exclusions. This means the home must be structurally sound, watertight, and free from unresolved issues that could limit insurance coverage.
· Work with your mortgage adviser (that’s me!) and Alice your General Insurance Adviser from Caveo to present your case clearly and confidently.
Remember, banks want to lend, but they also want to protect their investment. If you can demonstrate that you understand the risks and have a plan, you’re far more likely to get that “yes.”
Manisha.
About Manisha
Kia Ora, my name is Manisha. My inspiration to start a career in financial services came from my personal experience of working with an adviser, Lance, who helped me realize how I could leverage my house to buy a second property. It was an awesome feeling to successfully get onto the property ladder at a young age, and that inspired me to help others do the same. My work as an adviser involves guiding clients towards financial freedom. Seeing them achieve their goals gives me so much satisfaction; it is incredibly rewarding to make a difference in someone’s life in that way. Outside of work, I love the outdoors and enjoy a good hike. My favourite pastime is working in my garden.
Disclaimer: Manisha Raman (FSP954660) is a Financial Adviser with Velocity Financial (FSP95466). No financial decision should be taken based on the information in this blog alone. Please see our disclosure statement on our website.
Always get professional advice
The information shared in this post is meant to be general guide to support you on your journey. When making important decisions about your finances, we encourage you to seek independent financial advice first, tailored to your unique situation. As well as talking with a financial adviser, make sure you talk to your lawyer and accountant too – together they'll help you find the best solution for your specific situation. Our knowledgeable financial advisers are here to help. Check out our website for the details about our financial advisory services in our disclosures https://www.velocityfinancial.co.nz/disclosure-statement.