Buying A Beach Home? Things To Consider Including Finance

Beach houses along beach side.

21 Dec Buying A Beach Home? Things To Consider Including Finance

Buying a beach home is a dream many Kiwis share. Before diving into beachfront home ownership though, it’s important to approach the decision with careful consideration and a strategic plan. Here’s a closer look at some of the key factors to think about when buying a beach home in New Zealand, from choosing the right location to getting advice about home loans NZ.

Location, location, location

One of the first decisions that goes into buying a beach home is deciding on the right location, and choosing between a beachfront property and an off-beach property is a key consideration.

Beachfront properties offer unparalleled views and immediate access to the beach, making them an ideal investment for resale. However, beachfront properties tend to be more expensive, potentially requiring a higher mortgage, and may be more susceptible to natural elements like storms and erosion in their beachfront position.

Off-beach homes, while not directly on the water, can still offer stunning views and usually a more budget-friendly price tag. They may also be less exposed to harsh weather conditions, potentially leading to lower maintenance costs. When it comes to rental yields, beachfront properties often command higher rental prices and may be more sought after by holidaymakers and tenants. But off-beach properties are just as viable, offering a solid return on investment without the hefty price tag.

When deciding on the location of a beach home:

  • Spend some time getting to know the neighbourhood, and explore the beach access from the home, and any paths or walkways that might get you to the beach faster. Some streets or suburbs may give you easy access to the beach without having to buy right on it.
  • Consider proximity to essential amenities and infrastructure. Access to grocery stores, medical facilities, restaurants, and recreational activities can greatly enhance the appeal of a property, while good road connectivity and public transport options make it more accessible for you and potential renters.
  • Research local zoning laws and future developments planned for the suburb. No one wants to pay for a million-dollar view only to have it obstructed by a new high-rise building!

Durability and maintenance

In a coastal environment where the sea salt and winds can be harsh, the materials used to construct beach homes can significantly impact its maintenance and durability, while the position in which it’s sited can impact how well the home weathers over time.

  • Consider the property’s proximity to beachfront, beach erosion trends, and the potential for flooding. Is the home built high enough away from the high tide mark?
  • Check the prevailing wind conditions. Does the property have any wind protection such as trees or hedges that can act as a natural windbreak?
  • Choose homes built using materials that are resistant to saltwater corrosion, humidity, and strong winds. Concrete, stainless steel, and cedar are popular choices for beachfront properties due to their durability and low maintenance requirements.
  • Double-glazed windows and doors can help keep inclement weather at bay and ensure the home stays warm and dry, even if the property is uninhabited for a length of time.
  • Remember to factor in potential maintenance or renovation costs when budgeting for mortgages NZ.

Insuring your investment

Rising sea levels, flooding and erosion are potential hazards that can impact coastal properties, devastating homeowners and costing hundreds of thousands of dollars in damages. With increasing awareness and concern about climate change, homeowners who are considering buying beach homes must weigh up any future impact that potential risks could have on beachfront properties.

  • Rising sea levels can damage roads and driveways and flood homes, cutting off access and leaving homes uninhabitable.
  • Soil erosion can wash away part of the section and leave homeowners with no choice but to demolish the home.
  • A higher risk of natural disasters could cost in higher insurance premiums or leave some beachfront properties uninsurable.
  • Consider landlord insurance if you’re planning to rent out your beach home, to protect against risks associated with seasonal rental arrangements.

It’s worthwhile engaging with an experienced Insurance Adviser who could provide house insurance solutions for coastal properties, to ensure you get adequate coverage against potential risks.

Financing for beach homes

Whether you plan to rent out your beach home or keep it for yourself, an important consideration in relation to getting property finance is the deposit amount that lenders require. Typically, a 20 per cent deposit is required by lenders if you plan to use the property yourself, while usually a 35 to 40 per cent deposit may be required if you’re buying a beach house as an investment property.

By using the equity in your existing home as a deposit to buy a beach home, you may be able to access up to 80 per cent of your current home’s value, less what you owe on your mortgage. And if you’re buying and selling at the same time, bridging finance or short-term finance may be a solution to help cover the costs of buying a new home and moving house while you sell your existing home.

A significant investment

Buying a beach home is a significant investment, both financially and emotionally. By carefully considering factors like location, building materials, NZ Insurance and financing options, you can help ensure your dream of beachfront living becomes a reality without any unforeseen financial setbacks.

Work with a trusted Mortgage Adviser to navigate the complex world of financing for beach homes and make your journey to beach home ownership a smooth one. Contact a Max Mortgages’ Adviser today to find out more about home loans NZ for beach homes.

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