ASB backs new builds with lowest floating rate on the market

ASB Bank made a splash recently with the launch of their special mortgage rate for customers that are buying new builds or building their new home or investment property.

The initiative called Back my Build has a floating rate of 1.79% which is the lowest on the market, all in the name of encouraging buyers to buy new and help tackle the housing supply issues we have in New Zealand. Here’s what you need to know.

Who’s eligible for Back my Build?

First home buyers, next home buyers and investors are all eligible for the rate if they’re buying a new build or house and land package. ASB claims that Property investors have been intentionally included as a way of helping them provide quality new homes to renters around the country.

Because the offer is all about boosting the construction of brand new homes, existing loans for new builds can’t be switched over to the Back my Build rate after having drawn down elsewhere.

Keeping it green

ASB has also partnered up with the New Zealand Green Building Council. To encourage green and sustainable building, customers who are working through the Homestar process and get a Homestar rating of 6 or higher are eligible for a $2,000 cash contribution.

Like with any bank cash contribution, the cash can be clawed back if the customer switches their loan from ASB to another lender or sells within three years. If they repay the loan within that timeframe, there will be a pro-rata approach where the amount that gets clawed back is based on how many months remain.

Important things to know:

• The rate of 1.79% is a floating rate, which means ASB can change the interest rate at any time. But with that comes the flexibility of being able to make lump sum payments any time, at no cost.
• The 1.79% rate only applies for up to three years from the date of your first drawdown. After that the loan gets fixed, at which point we can step in to negotiate a hot rate on your behalf and help with working out a good mortgage structure.
• Customers can also switch to a fixed rate any time, but after that it can’t be reverted back to the floating rate.
• The cash contribution is only given to those who are going through the Homestar process and get a rating of 6 or higher.

So, is Back my Build all it's cracked up to be? 

All in all, we think this is a pretty good initiative. It should help lighten the load for our first home buyers going through the building process, with the interest rate keeping their payments as low as possible while they continue to rent during the build.

It’s good news for investors too, with the opportunity to access such a low rate while buying a new build with 20%, as opposed to their 30% deposit requirement for existing properties.

Have a chat with one of our advisers to see if ASB's Back my Build is right for you.

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