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Is it still possible to buy a home with a 10% deposit?

  It would be very easy to listen to the news media and think that because finance has tightened up that it is almost impossible to get into your first home. After all, 20% deposit is a large chunk of money to save especially if the house you would like to buy is in the $500k plus range. In November 2009 I wrote an article that stated “The availability of finance has tightened so much that it’s hard to know what is and what is not possible in the current market.  What are the banks looking for at present, what are some of the other available finance options available through the ‘very’ few non bank lenders that are still around. Is 90% lending is it still available?”  Here we are in 2014 and the same article could be written. The lending landscape in between these 2 dates had gradually improved where 90% + loans were once again available only to be suddenly taken off the table. The mainstream banks are under pressure from the Reserve Bank to reduce the amount of lending over 80% to a smaller percentage of their overall exposure. They aren’t  allowed to let borrowers have a 2nd mortgage to cover the shortfall, although there are some lenders not affected by this policy They are not the only lenders around at good rates, please contact me if you’d like to know more Mainstream banks These banks have had a monopoly but there are some very strong non bank lenders who have survived, and thrived  during the GFC and who have money to lend at competitive rates....

80% loan to value lending restrictions

  80% lending restrictions December 2013 News The introduction of the loan to value ratio limits on mortgages (LVR’s) by the Reserve Bank on the 1st October 2013 has been a very controversial introduction to policy. There was a surge in house sales from the time that the new policy was made public as coming into effect in October . Purchasers urgently found homes they could purchase using loans up to 90% before the lending became reduced to 80%. It seems likely that there will be a decline in house sales in December as a result. March 2014 Update 80% lending is now the norm but there is still finance available at 90%. This is a more expensive option since 10% will generally be as a 2nd mortgage at higher rates and to be repaid over a shorter period of time. Those with equity in their home can still purchase investment property as long as the overall lending ratio (LVR) isn’t more than 80% over the properties held as security by the funder Wanting to refinance? if you currently have a loan between 80% and 90% and want to refinance then the banks can go over the 80% limit but will not advance any extra cash. Construction loans can be up to 90% by most major banks. This change came about a little way down the track from the initial introduction of restricted LVR limits. Learn from history Bear in mind that, just like past fashions becomes fashionable again at some stage so there will inevitably be changes to policy. If you don’t have sufficient deposit at the moment...

Qualify for finance using Benefit Income

One of the banks has just changed their lending policy to include the following types of income; Sickness benefit, Unemployment benefit, DPB, Solo parents, NZ super, living alone payments Surviving spouse or partner pension, Veterans pension, War disablement pension Working for families tax credit. The following will not be accepted as Gross Reliable Income- ACC Bonuses Non regular overtime This will help quite a number of potential borrowers, along with the lower interest rates to qualify for a home loan. Qualify for finance using Benefit...

Buying property with no money down

There are several ways to purchase property with little, or No Money Down. Here are some ways to make it happen. REFINANCE – put down a 20% deposit when you purchase the property. Several months (around 6 mths at present- depending on the bank), later you can top up the borrowings of the property to 80% of the registered valuation and take out your initial deposit to purchase another property. EXISTING EQUITY – use existing equity from your home to put down a 20% deposit, and borrow 80% against the investment property. REVOLVING CREDIT – pay cash from a revolving credit facility to settle. Once the title has gone through, borrow 80% of valuation. You then repay the revolving credit facility. The banks will see when the property went into your ownership and may revert back to the S&P price rather than the registered valuation. However, if you have done improvements on the property since purchase, and get that verified by the valuer then there would be a better chance of borrowing against the new RV (Registered Valuation) EQUITY PARTNER – approach an equity partner (family or friends) and use their money – someone who may wish to invest but lacks the skill or confidence to do so. It may be that the equity partner has the income while the investor has the deposit. This could be a win/win for both parties. ADD VALUE – to the property. Revalue the property and present the bank with this valuation in order to borrow 80% of the new valuation. This enables you to access further funds for other deposits more quickly....

Buy that property now using Lo Doc finance

Lo Doc Loans are loans that do not require proof of income. They have been available by lending institutions for a number of years, although less so recently. Often people think its an expensive option but when you calculate the tax savings on paying a lower income then the higher interest rate works to the borrowers advantage plus giving them the opportunity to purchase at today’s prices. Here is an example of the numbers Self Certified Income   – $80,000 (a) Taxable Income            – $15,000 (b) Difference                       – $65,000 (a-b) x 33% = $21,450 Tax payable (e) NOVA Rate (AA 75%)  – 13.25% (c) Prime Rate                     – 6.70% (d) Difference                       – 6.55% (c-d) x $250,000 Loan Interest Rate Prem      = $16,375.00 (f) Tax – Interest              = $5,075.00 (e-f) (Fees and charges to be netted off) As you can see the borrower is actually $5075 better off plus if the interest is paid on behalf of an investment property then the interest is an expensive which will be offset against rental income- another win !! For further information regarding the type of property that can be lent against etc please email  [email protected] Credit issues are not an obstacle but will increase the interest rate payable. These loans are targeted at the self-employed applicants, who have the assets and income needed to support a loan, but who are unable to provide the necessary documentation at the time of application. You are generally not required to provide proof of your income via the normal methods of providing full Financial Statements and Tax Returns. This funder...