Following on from our last blog...
Even though it IS becoming slightly easier to purchase your first home, there are still pesky things in place which can make it seem too hard to get there for first home buyers: loan to value restrictions - needing a 20% deposit for owner occupied property and 40% required for an investment property can pretty much rule out budding young couples from buying any sort of property in Auckland. Even in my home town of Tauranga it’s looking likely to become a mini Auckland as prices here are also getting up there. You could move out of the main centres and buy in a more reasonably priced area but what about employment, family and leisure? My brother recently moved to Bulls from Auckland and works in Palmerston North, this is ok but have you driven down to Bulls from Auckland or Tauranga? It's a bit of a hike...
So, what to do if you only have a low deposit, earn $85k (before tax) or under for an individual or $130k (before tax) or under for a couple and your looking to purchase that kiwi dream of owning your own home?
Well you could look at the Welcome Home Loan product, the Welcome Home Loan is gaining traction more so now than ever before as it’s a way to get into your first home and in a way “bypass” the Reserve Banks restrictions…if you meet the criteria.
Not all banks offer Welcome Home Loans but the process is the same, applications are assessed by one of the banks that offer Welcome Home Loans then the application is passed to Housing New Zealand, they then offer the banks Lenders Mortgage Insurance or LMI, the LMI covers the bank to take on the higher risk, so clients having less than 20% deposit. The LMI is usually a one-off lump sum premium of 1-2% of the loan amount, unfortunately the client pays for this. I know what you’re thinking…. and yes, we can add the LMI premium to the loan.
I won’t delve too much in the eligibility of Welcome Home Loan, follow the below link to check it out.
W E L C O M E
I did want to touch on what to expect in regards to the info the bank and housing NZ require, typically when a government department gets involved in the home loan approval process extra info is required when we go to submit your application to the bank & Housing NZ. Here is a list of things that you will need to provide before we send off for approval. Note that additional stuff may be required depending on your situation
• Photo ID
• 6 Months transactional bank statements
• 6 Months credit cards statements (if you have one)
• 6 Months hire purchase or any other personal loans or store cards
• 3 consecutive payslips
• Employment contract (yep as well as payslips)
Why so many statements?
The bank and Housing NZ is looking for good account conduct, what is good account conduct? Basic good account conduct look like this:
• Account does not keep going into unauthorised overdraft.
• No honour or dishonour fees.
• No concerning spending habits, for example the most common concerning spending habit is regular lump sum withdrawals that could indicate a gambling problem.
• No late payment or over limit fees on credit cards, hire purchases or personal loans.
• You have minimal debt to repay.
To sum up, if you have 10% plus deposit and have good account then call us to talk further, you never know what we may be able to get approved. You may be closer that you think when Kiwisaver first home withdrawal & home start grant amounts come into play!