High property prices increase the wealth of those who already own a home. First home buyers, on the other hand, feel locked out of the NZ property market. This is nothing new and our parents went through similar issues. There are however big changes in type of property being bought, the attitude towards Apartment style living and other drivers are affecting not only how we buy, but where and why.
Recent reports reveal that money borrowed by investors accounted for more than 35% of the total amount borrowed for housing in Auckland. Although the RBNZ put into place new restriction to dampen the heat of the market, the slowdown in price growth was short-lived and prices bounced back, hitting new highs again and it’s all down to lack of supply, not over demand.
Ask yourself questions – Are you buying to live in?
Are you buying to get onto the ladder and maybe rent the property out?
Do you need the 800 sq section or would an Apartment actually more suit your life style?.
Let the experts at iLender show you how.
How much can you borrow and on what basis?
Sounds silly but many people go property hunting not knowing what they can borrow and on what terms. Owner occupied lending has different criteria to Investment borrowing. Do you know the differences? Find out before you go shopping and seek a pre-approval if you can. Pre-approvals are based on you, not the property, so once a suitable property is found, run it past the Lender to make sure it’s OK. An example may be, you are pre-approved for $540,000, but the property you like is a Leasehold Apartment or a Bach by a deserted beach. Neither will be acceptable to a Lender, particularly if you seeking a 90% loan.
Research Your Options
Once you start looking up real estate listings online, attend a few open houses and auctions. This gives you first-hand information about how the market is working. You will get a good idea of the kind of properties that are available for sale and whether they’re really what you are looking for in a home or rental investment. Older homes don’t feature the latest safety systems, energy saving appliances, ducted heating/cooling systems, smoke detectors and fire alarm systems. They need to be maintained periodically, so this will add to the cost of owning a home in the long run. Newer homes come at a higher price, but most have features that contribute to a stress-free lifestyle. You need to weigh the pros and cons of buying old vs. new when doing a bit of research.
Consider How Far You Are Willing to Move
Property prices in Auckland may have sky-rocketed, but the same is not true for homes located out of the Auckland council area. If you’re willing to spend a little more time on your commute every day, you could end up saving thousands of dollars on your mortgage and you’ll be able to find a home that sits well within your budget.
If you don’t want to move because of the schools located in your suburb, make sure you look up school rankings online. You might find comparable schools in cheaper areas bordering the Auckland area. Finding the right home simply boils down to finding the perfect balance between your wants and your wallet.
Consider Renting, owning a rental
Many people in Auckland, Christchurch and Wellington have bought a rental property in another area to build equity over time, with the idea of using this equity to purchase an owner occupied property closer to home in the future. This makes a lot of sense, as generally the property increases in value and the tenant pays most of the mortgage costs. There is no ‘capital gains tax’ in New Zealand, so if in two or three years time you sell and use the money towards your own home, the equity gained is tax free.
Sharing Housing Costs
If you still need to purchase a home in high demand places like Auckland, consider buying a home with a close friend. You could share the expense of owning the home and have enough room for two families to happily co-exist under the same roof. Alternatively, if your parents want to downsize, consider moving into a new home with them. It’s a win-win for both parties, as you’ll be able to afford mortgage payments and your parents will be able to rely on you for help as they grow older.
In either case it’s really important to document everything and seek legal advice on how best to set up the arrangement, always looking to the ‘what happens if’ situation for all parties.
Let iLender Do the Hard Work
If you’re a recent arrival, an expat or a first home buyer in New Zealand, make sure you look up iLender to find out what we can do to help you buy your own home. We offer the best rates on mortgages and only ask you to make a 10% deposit, half of what the Banks ask you to pay. If the Banks are not accepting your loan application because you’re self-employed, have no proof of income or have bad credit history, give us a call and find out what we can do for you.
Lending restrictions placed on Banks don’t apply to all mortgages, so we can help you find the right product for your home loan needs.
So take the stress out of buying in New Zealand by calling us on 0800 536 337 or submit an enquiry online. Overseas callers dial +64 9 428 5338.