TurnKey vs House and Land Finance: What Builders Need to Know
When it comes to financing new builds, not all lending is created equal. At Colab Mortgages, we have spent years working with builders and developers across New Zealand, helping structure finance for both TurnKey and house and land contracts. Each approach has its place, and the right one depends on the client, the project, and what everyone is trying to achieve.
So, what is the difference?
House and Land Finance (Progress Payment Lending)
This is the more traditional route, where the buyer purchases the land and then funds the construction through progress payments. The bank releases funds in stages (foundation, framing, roofing, etc), and the client pays interest as the loan is drawn down.
While most banks will allow the loan to remain on interest only during the construction period, buyers may still find themselves paying rent and interest costs at the same time. Alternatively, if they already own a home, they might be paying interest on that loan while also servicing the new one during the build.
This structure works well for many buyers, particularly those with strong servicing ability or those who have already sold their existing property. We are well experienced in guiding buyers through these types of contracts and making sure the finance side runs smoothly from start to finish.
TurnKey Finance (One Payment on Completion)
TurnKey contracts offer a different pathway. In this setup, the builder carries the cost of the build, and the buyer pays a fixed price at settlement. That means:
No progress payments from the buyer during construction
The loan is drawn down only when the build is complete
Ideal for buyers who are paying rent or who want to keep their current home until the new one is ready
From a finance perspective, TurnKey is simpler for the buyer, especially in tight servicing scenarios. They are not juggling rent and loan repayments, and they have time to continue saving while the home is being built.
That said, TurnKey contracts can be a little more expensive overall. Builders are typically using commercial funding to cover construction, often at higher interest rates than residential lending. Understandably, those costs are usually factored into the final price. In contrast, with a house and land contract, the buyer is generally accessing lower rate residential lending through a main bank, and covering those costs as the build progresses.
For many clients, though, the convenience and cash flow flexibility of TurnKey outweigh the extra cost, especially when it means they can move straight in without having to bridge the gap financially.
At Colab, we’ve recently introduced TurnKey Pro, a game changing non-bank construction product designed specifically for builders and developers.
With fast approvals, no line fees, and great rates, TurnKey Pro gives builders more flexibility and more control, whether it’s a standalone spec build or a multi lot project.
How Colab Helps
We work closely with builders to provide clear, practical options for their buyers — whether that is through progress payment lending or TurnKey solutions. And with our TurnKey Pro product, we also help builders access flexible, non-bank construction funding to support spec builds or TurnKey contracts for their clients.
In some cases, TurnKey can be the difference between getting a deal across the line or losing a sale. We are here to support both sides and help make things easier.
Want to learn more?
Check out Colab’s Guide to Building New for a helpful breakdown of build types, lending structures, and what buyers need to know.
Or reach out to us directly - We’re always up for a chat!
Email: info@colab.kiwi
Call Sam: 021 648 310
Call Dan: 021 913 663