Glen McLeod is director of Edge Mortgages. He will answer 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 firstname.lastname@example.org
Does it make a difference to the banks whether I have saved my deposit in KiwiSaver or somewhere else? Should I try to save some of my deposit outside the KiwiSaver system?
Lenders in most transactions are looking for a minimum of 5% proven savings. Whether that be via KiwiSaver or actual saving does not really matter. The rest of it can be made up with a gift form family.
What does matter is that if you have saved via KiwiSaver and then get a mortgage and are not in a position to demonstrate your ability to repay the mortgage.
Lenders will look at your expenses and see that you have been paying rent of say $400 a week and saving $200 per week (or paying off debt at $200 per week and clear the loan) and your mortgage payments going forward will be $600 per week. They can clearly see that you are able to make the payment.
The lenders will look at your income and expenses and work out if you can afford to pay the loan based on your current spending history. This is a CCCFA requirement.
If you are saving and contributing to KiwiSaver it is certainly helpful when you loan application is being assessed. Be mindful of your spending and staying within your agreed credit limits (bank accounts or credit cards). They are some of the fundamentals the lenders will be looking at application time.