How much can I borrow?

This will depend on a number of things like your income, what industry you are in, plus all of the below;

  • Your credit history
  • What debts you may have- car loans, loans for sofas, PCS, Student loan etc
  • Credit card limit
  • Deposit size

Basically there is no one size fits all, but what the bank is looking for is;

  • A borrower with a good credit history
  • Solid employment history
  • Good account conduct i.e. money in the bank account every month and no dishonours
  • Evidence of savings and
  • Personal loans of less than $8,000

How much of a deposit do I need?

Banks will go up to 90% of the property’s value if you are going to live in the property you are buying and it is already built. If you intend to build your own home, the bank will lend you up to 85%.

The deposit can come from a number of sources, with the main one being KiwiSaver, which you have to have been in for 3 years minimum before you can use the monies for your first home deposit.

How much do I need for legal fees, valuation, building inspection etc.

Budget for $4-5,000 as per below

Valuation at $700- $1,000 and Legal fees $1,500 to $1,750 are the two significant costs, followed by Building Inspections at around $600-800. You should then allow some monies for removal costs, small bits and pieces for the house and prepaid rates at settlement.

Please note this is a rough guide and shouldn’t be relied on. Always make sure you check out all of these costs before proceeding and always ask the question what other costs might I incur that I haven’t been told about.

Are there mortgage options for Freelance workers?

In short, Yes.

Banks like to see two years of full self-employment before making a loan offer.

What role do mortgage brokers play versus going to the bank?

First Home Buyers tend to have a lot of questions and a good mortgage broker will sit down and answer all your questions and will then explain the process to you in detail, which may bring up further questions you hadn’t thought about.

A mortgage broker can;

  • Source finance from a number of banks
  • Usually, get you the best deal which might be the interest rate, but could also be the cash contribution and repayment term.
  • Show you the best loan structure to help you pay off the loan early
  • Give you a plan if you can’t get a loan right now
  • Help with the presentation of your application to give you a better chance of getting a Yes
  • A good mortgage broker should give you the time you need as he/she relies on referrals to grow his/her business. So no Contact Centre for you or suddenly finding your contact at your bank has moved on and you have to start a new relationship.

What are the different ways of paying off a mortgage?

This is a great question to receive as most people focus purely on getting the loan and the interest rate without even questioning what a mortgage will cost them over the lifetime of the loan, usually 30 years. If they asked it would probably frighten them.

So here are the repayment options;

  1. The Standard option of fixing say every two years and paying off your mortgage every month from your cheque account. Long term this is the most expensive option.
  2. The next best option is to follow route 1 above, but in addition, overpay on your fixed payment if you can afford to do so and
  3. Get rid of your cheque and savings accounts and combine both of these into the floating portion of your mortgage alongside the fixed part of your mortgage. This is the best way to repay your mortgage.

Should I buy an existing house or build?

There is no right or wrong answer for this, but buying your first home can be a stressful business if not done correctly and building a new home is another level again. You must ensure you have the plans, specification, Council consents etc sorted, not to mention understanding how progress payments work during the actual construction period.

From my experience, the majority of first home buyers will buy an existing property that may require some cosmetic renovation or property off the plan.

Note that if you intend to build your own home you will need a 15% deposit, whereas buying an existing home you can get a bank loan with 10%.

Can I get a loan with residency or do I need permanent residency?

No, you don’t need Permanent Residency to get a loan, but any lender will want to see the wording of the Visa before making a loan offer.

Residency with travel restrictions will enable you to get a mortgage up to 80% of the property’s value.

Should I take on debt to get a track record?

In short, No

The thing banks DO NOT like is a lot of personal debt. Currently, banks will not consider an application if your total debt is over $8,000.

Keep your credit card limits low