How can advisers help manage building costs?

An increasing number of mortgage advisers are helping clients struggling to complete construction projects due to ongoing supply chain issues and rising costs.

April Hastilow (pictured above), head of lending at Auckland and Christchurch brokerage Become Wealth, said the higher costs affected her clients who had existing loan approvals. 

“If a client has a six-month approval for a progressive build, then the build time changes due to supply chain issues and pricing increases, then we have to reassess the loan for the client for a higher amount,” Hastilow said. “If we look back over what's happened in the last year, things do not look the same at all. We are assessing people not only on their new life position, but they might have changed jobs or had a baby.”

Hastilow said some of her clients’ loan pre-approvals had expired throughout the build time, mainly due to ongoing supply issues.

“This creates a whole lot of angst for people,” she said. “The media are heavily focusing on interest rates rising at the moment, despite property prices coming down. My clients are seeing the cost of building a home rising, which is a really stressful situation for a lot of people.”

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Hastilow said as a mortgage adviser it was important to be there every step of the way for clients who were building homes.

“I am currently working with over 100 turnkey approvals,” she said. “We are working closely with the banks and advocating with them for our clients. If you are in a situation with a client that has passed the 12-month mark and the policy changes where your client might not fit as well, you need to speak with the banks to help facilitate this.”

Hastilow said explaining the intricacies of a progressive build to a client was important.

“I always tell my clients to look up the builder’s company register and ask them all of your questions,” she said. “I encourage my clients to ask questions big or small. Some clients might not be thinking past the colours selection or what fixtures they would like, but there is so much more involved with building a home.”

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Hastilow said advisers could offer a suite of lenders to a client to help them on their way to achieving their new home dream.

“As advisers, this is where we can add a huge amount of volume,” she said. “We are talking to banks and BDMs daily, workshopping ideas as things within this industry change so quickly. We are always questioning if it can be done better.”

Hastilow’s advice to advisers working with clients on new home builds is to keep in regular communication with them, as well as banks and BDMs.

“Check your knowledge and be kind to yourselves as it’s a stressful area at the moment,” she said. “By being the conductor in the middle of this process, it means there are lots of emotions involved. Remember, everyone is aiming for the same goal.”