Glen McLeod is director of Edge Mortgages. He’s answering readers’ questions about home loans, whether you’re a first-timer just getting into the market or someone who already has a loan and is wondering about the best way to manage it. If you have a query, email email@example.com
Do I really need to save a 20 per cent deposit? What are my options if I have less than that?
To get access to discounted interest rates a 20 per cent deposit is required with mainstream banks. The 20 per cent deposit can come in various ways. For example, it might be from KiwiSaver, First Home Grant, a gift or deed of acknowledgement of debt.
You might be able to get a loan with a deposit of 10 per cent, but they may require you to be an existing customer and have your salary or income credited into an account with them for at least three months. You also usually won’t be able to access the best rates until you have built up 20 per cent equity.
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* Mortgage broker Squirrel offers home loans for buyers with 5 per cent deposit
* Want to save a mortgage deposit? Here’s how to do it
It is also now possible for first-home buyers to have as little as 5 per cent deposit, if they meet certain criteria.
Ninety-five per cent loans are available under the Kainga Ora First Home Loan scheme. This comes with a 1 per cent fee from Kainga Ora which can be added to your loan.
Independent Economist Tony Alexander says mortgage lenders’ willingness to lend has dropped.
The great thing is that there are options for first home buyers now.
How much is too much “fun” spending for a bank to see in my account history?
The reality is that the CCCFA rules have not changed yet. In the meantime the requirements for vetting bank statements is still high. How much money you spent on food, rates, utilities, credit cards Afterpay … are all looked at.
Effectively if you can reduce your fun spend as much as possible for a three-month period you will be in a good place for applying for a home loan. That being said all of this depends on what your income levels and your current liabilities are. Looking to see if current debts can be consolidated to make your lending more cost effective is a good idea too. It’s about understanding your overall situation to ensure that your situation is presented in the best possible way.
At the same time you also need to take care of your mental health by still living life. So maybe instead of going out to a restaurant and buying both food and alcohol it might be a great idea to go to a BYO and take your own bottle. It will surprise you how much cheaper your night out could be.