I find it wild how many apologies I get from new clients.
“I’m not good with money, I don’t understand this”.
No worries, I am. And I can teach you.
“My bank statements look bad, because I went on holiday last month”
Me too, how exciting is that? I hope you had fun!
“Sorry, we don’t have much of a deposit”
I bought my first home with $3K in my KiwiSaver.
Believe me, mortgage advisers are not the fun police. Or the judgement police either.
We all took years to learn money, finance and lending, we also go on holiday, and most of us scraped together the deposits for our first homes.
We get you.
So let me bust a few myths here so we can all feel a bit better about some lingering worries!
The CCCFA still has a lot to answer for
From the end of 2021, after some legislative changes, lenders in New Zealand were working under a pretty strict set of affordability rules which had changed overnight.
Banks were required them to go through applicants’ bank statements in genuine detail, line by line.
So lending applications shifted a bit, from being a general sense of whether you could afford the loan, and more about specific inquiries into what you’d actually spent
You’ll remember the stories about this, because they were everywhere.
The new Act even got nicknames like “the coffee and Netflix rules”
There was a lot of stress around, people started talking about being “declined” and it taught a lot of people that spending is wrong.
Let’s be clear.
We all have things we perhaps should rein in.
I personally have a fairly obsessive relationship with LSKD and colourful blazers and packages sometimes show up a bit too often at my house.
But the CCCFA rules were largely rolled back to normal levels in 2024 and while lenders need to be satisfied a loan is affordable (which is important, of course) the eleven pages of tick boxes and 20 questions are all but gone.
When a loan application is submitted in our office, we’re looking for a mix of what we call discretionary (spending that is largely for fun or could be managed differently) and non-discretionary (costs that keep the lights on, people fed and a roof over your head).
And if we’re ever not sure - we’ll just ask whether you’re planning to make changes.
Simple. Easy!
There are now a range of options with less than a 20% deposit
For years, the 20% deposit myth has been out and about having parties in people’s heads.
But now, more than ever, having a lower deposit isn’t a reason to stay out of the property market.
It breaks my heart when I hear people who think that is the case and have held off taking action, or if they’ve waited to save more and the market has moved.
There are plenty of lending options with KiwiSaver, the Kainga Ora First Home Loan, and bank lending policies with lower deposits.
Yes, there are some things to be mindful of. Often slightly higher interest rates, valuations, sometimes different criteria.
But that’s what we’re here for, to explain those options and make them possible again.
Today, at least 1 in 2 of our first home buyers have less than a 20% deposit.
And plenty of them also buy on their own with less than 20%, too.
Having a lower deposit is a perfectly acceptable way to get into a first home, and while 20% does have it’s benefits, it’s definitely not the only way forward.
Being sorry for not being good with money is like apologising for not knowing how to fix your own car
I hear this every week.
People who assume that financial management is something we are born with.
Or that when you haven’t bought a house before you should somehow know how it all works.
But nobody teaches this. It wasn’t a subject at school, your parents may not have known either, and unless you work in a bank or an accounting firm you’re unlikely to have learned it in the world of work, either.
Spoiler - I didn’t, until I spent over 10 years making it my thing.
So, think of us as coaches. Someone who is on your Team, here to answer the questions you might think are silly, which really aren’t…
Does my KiwiSaver actually count as my deposit?
Will asking the bank a question show up against me somewhere?
What does pre-approved really mean?
Is it bad that I changed jobs last year?
All of this is actually the reason I wrote a book called Smashed Avo to Smashed Goals, as a complete guide to buying your first home, something I couldn’t find anywhere else on the internet.
I wanted a resource that was a one stop shop, which you could read on the couch in one sitting and finish it feeling excited to get started.
So, if you turn up knowing nothing, that’s a completely normal place to start.
Most of us do!
Arrive messy!
You don’t need to have perfect spending, a big deposit, or any idea how lending and money before you can have a chat about about your next property purchase.
Funnily enough, that’s the whole point of having someone in your corner who does this every day.
Come with the bank statements you think might be a bit messy, a smaller deposit and allll the questions.
We’ve got you covered on all fronts.
You just have to start, that’s the first step.
