Financing A Tiny Home In NZ? Here’s What You Need To Know
Many first-home buyers look to tiny homes to get a foot on the property ladder, so today we’re providing clarity on the often confusing task of obtaining finance, a home loan, or a mortgage for a tiny home.
For many Kiwis, tiny homes offer an affordable pathway to homeownership.
Unfortunately, getting the finance to make these dreams a reality can prove tricky.
Most tiny homes are considered transportable vehicles. This means they don’t always meet the criteria for a home loan. Combine this with a lack of clear lending criteria from many financial providers, and those wanting to live a big life in a tiny home are often left jumping through increasingly difficult hoops.
Are you able to get a home loan for a tiny home? A mortgage? Can you use your Kiwisaver? What financing options are available? Without clear answers, Kiwis are often left in the dark when it comes to financing a tiny home.
Fortunately, there is light at the end of the tunnel. Whatever questions you might have, today we’re sharing all the answers and information you need to know to help you make financing your tiny home that much easier.
Did You Know? You can get a home loan for a Podlife Pod. View our range or keep reading to find out more.
Is a tiny home a building or vehicle?
The definition of a tiny home differs from council to council. Some view tiny homes as buildings. Others view them as vehicles. There’s currently no legislation to define a tiny home, making the decision subjective to regulatory bodies.
We understand that this is one of the biggest hoops you’ll have to jump through. That’s why our Pods, for example, can be fixed or transportable. This gives you the freedom to choose how you want to use your Pod.
Can I get a mortgage?
While it may be challenging to secure a mortgage for a tiny home, it isn’t impossible.
To obtain bank approval to build, you will first need to prove that your tiny home will rest on solid foundations with no moveability. Lenders want to know you’re building a long-term, immovable dwelling that may increase in value.
Banks take a risk every time they offer a home loan, so it’s important they know the recipient’s intentions. Your bank might also ask you to provide a guarantor to minimise the lending risk.
Financing options for tiny homes in New Zealand
Mortgages aside, there are still many ways to own a tiny home. You just need to know your options.
Secure a home loan with a Podlife Pod
Securing finance for your dream (tiny) home can be complicated. Thankfully, it doesn’t need to be. Here at Podlife we take care of the council approval and compliance process for you, which means you can secure a Podlife Pod with a home loan. It’s that simple!
Click here to browse our range or keep reading for other financing options.
Use an existing home loan as leverage
If you’re lucky enough to already be on the property ladder, you can add to your existing home loan to fund your tiny home. As mortgage interest rates are significantly lower than other options, the loan will cost you less in the long term.
When it comes to purchasing a home, timing is everything. You may have missed the opportunity to purchase a home at a reasonable price and, therefore, don’t have a home loan to use as leverage. In this case, you may have the option to ask for help from a family member.
The bank of Mum and Dad has long been a way for Kiwis to get onto the property ladder. You can set up a legal arrangement to cover repayment costs, so Mum and Dad have peace of mind knowing they’re not going to be lumped with new, unexpected debt.
Find an alternative lender
Some New Zealand lenders offer finance specifically for tiny homes.
If your tiny home is transportable, you may meet the criteria for a loan from Credit One. Credit One finances recreational vehicles such as RVs, caravans, motorhomes and trailer homes.
Use the equity from your plot of land
If you already have land, you may have enough equity to finance your tiny home. Property prices are increasing weekly, so there’s a high chance your equity has grown, even if you’ve only owned the land for a short time.
Have your land valued by a registered property valuer to show the bank your level of equity. Depending on how much you have, you can use equity to boost your loan or cover the build completely.
Take out a personal loan
A personal loan is much easier to come by than a mortgage.
Generally, all a bank needs to see is a steady flow of income and a good credit history. Personal loan interest rates are significantly higher than mortgage interest rates, but the loan term is much shorter. Depending on your bank’s terms and personal circumstances, you may be able to borrow up to $80,000.
Can I use Kiwisaver to buy a tiny home?
You can use your Kiwisaver towards your tiny home project, but only to fund the land to build it on.
There are strict terms regarding using your Kiwisaver to purchase a home, similar to the terms of your bank. If your tiny home is attached to a trailer, it will be considered a vehicle. You can’t draw down your Kiwisaver funds to purchase a vehicle.
However, you may be eligible to use your Kiwisaver towards your build if you can prove that your tiny home:
- Is a permanent, immovable dwelling
- Is fixed to solid foundations
- Meets relevant building codes
- Won’t become transportable in future
Financing a tiny home doesn’t need to be difficult
While there may be a lack of financial providers in New Zealand offering dedicated (tiny) home loans, we hope today’s article was able to make your journey to tiny home ownership a little easier. With the base cost of a Podlife Tiny Home starting at just $22,995, it’s well worth it.
Are you ready to begin your tiny home project? Take a look at our previous blog posts for more inspiration and be sure to check back later as we continue to explore the spaces where everyday Kiwis live, work, and play!