Putting together a deposit is often the hardest part about buying a property. There are several things to consider, from what size deposit you’ll need to how you’ll save for your deposit and how to pay ongoing home loan payments. An experienced Auckland mortgage company like Mortgage Masters can help you understand the ins and outs of different home loan options and the deposit required. Here are our tips.
What Deposit Do I Need?
Home loan requirements NZ buyers must meet, in most cases, include having a deposit that is 20% of the property value. This means that for a home worth $600,000, you will likely need a deposit of $120,000. If you have a deposit less than 20% of the home’s value, you may still be able to get a home loan.
A 10% deposit is possible in certain cases, however, due to Reserve Bank of New Zealand Loan to Value (LVR) restrictions, any home loan application with less than 20% deposit will have to undergo a review. A low equity fee may also apply. Consult a mortgage broker for tailored advice to see if you’re an eligible low equity borrower.
Loan Pre-Approval Before House Hunting
Rather than starting with the type of house you want, aim to determine the type of home loan you’ll be able to afford. From there, you can search for property within your budget. Keep in mind the type of home loan Auckland buyers can get will vary depending on the lender.
Lenders will look at your income, assets, expenses, credit history, debts, and deposit amount to assess your ability to service a loan. Getting together the initial deposit is the biggest hurdle for many first home buyers. There are a variety of programs and loan options that may be able to help.
Why Mortgage Applications Get Turned Down
Aside from not having a sufficient deposit, lenders can also decline a home loan application for a variety of reasons based on their own criteria, such as:
- Insufficient income to service the home loan: A lender may reject an applicant if their income doesn’t seem sufficient to meet both regular expenses and mortgage repayments, should interest rate rises.
- Bad credit history: Lenders can easily find out if you have a history of not paying back debt. If they find out, there’s a good chance the application will be rejected.
- Unacceptable property: Some lenders are cautious and can reject a home loan application if they feel the property is too high risk, for example if it’s particularly old.
- Any signs of instability: Any unsteady or irregular income, e.g. if you’re newly self-employed or recently left a job can result in rejection.
By consulting an independent mortgage broker Auckland home buyers who are worried about loan approval can get specific advice on improving their eligibility, e.g., by consolidating debts.
Get Advice from a Mortgage Broker Auckland Buyers Can Trust
At Mortgage Masters, advisors from our Auckland mortgage company can help you access the best home loan Auckland property buyers can get, ensuring we assess your unique situation and financial health. To find out about home loan requirements NZ clients should get in touch today for a free consultation.
