Surprise for first-home buyers

An Auckland couple looking to buy their first home together - a million dollar house in Howick - thought the $130,000 they had saved towards a deposit would be well short of the mark.

But, after initially being hesitant to call the bank, BNZ mobile mortgage manager Shilane Shirkey was able to give the couple some good news.

“The Wilson's deposit is, at 13 per cent, very healthy for a first home buyer”, says Shirkey. “They initially had some concerns it might be a barrier as it was under the 20 per cent threshold they thought they needed.

“However the Reserve Bank’s easing of loan-to-value (LVR) restrictions has made it easier for banks like BNZ to approve lending for customers like the Wilsons and to assist them into their first home faster than they originally thought.”

The Reserve bank’s decision means banks are now able to allow up to 20 per cent of new loans to be given to applicants who have less than a 20 per cent deposit, a step that could mean around an extra 5000 houses a year will get funding.

The Wilson's have applied for conditional approval and are now moving to the next stage. “We are now working with them to figure out whether a BNZ home loan is affordable for them taking into account income and expenses and what other debt they may have,” says Shirkey.

She says the Wilsons case is an example of an uptake in mortgage inquiries she has noticed since “the LVR restrictions were eased”. It also helps break down “the idea that everyone needs a 20 per cent deposit to get a foot on the property ladder.”

Shirkey says buying a house can be a scary thing and is one of the biggest milestones in life for many.

“Buying a house, especially in large cities like Auckland, can seem out of reach for many people,” she says. “But there are a number of ways it can be achieved and if we can show them the right steps to take, then their property dream may become a reality.”

Shirkey says some of the options available include:

• Have a savings strategy – high interest accounts can help people achieve this option faster.

• KiwiSaver and KiwiSaver Homestart – it may be possible to withdraw your KiwiSaver savings or you may be eligible for a grant from Housing New Zealand.

• Family – parents or family members may be able to help with a purchase either by giving money towards the deposit or guaranteeing a loan.

• Buying a new build (or off the plan) – qualifying new build homes are exempt from the LVR restrictions and banks may lend to those with a deposit as low as five per cent provided the amount they are borrowing is affordable.

• Buying an apartment – these can often be cheaper than a house and a great first step onto the property ladder. However, you may need a larger deposit to purchase an apartment depending on its size.

• Buying a rental property – this can be another more affordable option because you can potentially explore more locations. However, a larger deposit will be required unless you are buying a new build or building it yourself.

• Have a conversation with a banker – share your property goals with a home loan specialist or mobile mortgage manager to brainstorm ideas about how to get into your own home faster.

Shirkey says the process of buying a house takes discipline and is not always a quick journey; another couple she is working with have been discussing their options with her for about eight months.

“They are looking for something up to $600,000 in the Pukekohe area and although their income means they can service a loan okay, they have too much other debt at present. So we helped them set up a budget to help pay off the debts and I check in with them every couple of weeks.

“They’ll get there, as long as they remain committed to their goals.”

The latest Valocity figures show that first-home buyers are still the biggest purchasing group, representing 28.8 per cent of new mortgage registrations.

BNZ has some helpful home buyer guides which can help people digest everything they need to know about buying a home, including working out what deposit they will need.

These include how to save for it and whether the repayments are affordable based on income: “It might seem a bit back to front, but I would advise that rather than starting with the type of house you want, try starting with the level of mortgage payments you’ll be able to afford (https://www.bnz.co.nz/personal-banking/home-loans/calculators)

“My passion is financial literacy, to enable people to help themselves,” she says.

For more information go to: https://www.bnz.co.nz/personal-banking/home-loans/lets-talk-about-home-loans

To talk to a home loan specialist call 0800 085 222 or a mobile mortgage manager can come to you. Book one here: https://www.bnz.co.nz/personal-banking/home-loans/mobile-mortgage-managers or phone 0800 533 363.

# All home loans are subject to our (BNZ’s) lending criteria (including minimum equity requirements), terms and fees.