An excellent solution to the deposit restrictions
With the Reserve Bank imposing restrictions on borrowers with less than 20% deposit, in October last year, I have been working hard to find ways that people in these situations can still buy a house.
Some borrowers can still get a home loan with less than 20% deposit but the amount that a bank can lend with this LVR has been limited. Making it much more difficult.
But this is where the exception for a brand new house comes in....
Earlier this year the Reserve Bank decided to make brand new houses exempt from the requirement of a 20% deposit, meaning that someone with as little as 5% deposit could in fact buy a brand new house without restriction providing they met the normal criteria for borrowing.
The banks have kept this policy change relatively quiet but I can confirm that most major trading banks will allow people to borrow like this. So the next question is... how do you get 95% lending on a brand new home?
The first thing you need to do is to get in touch so that we can arrange for a Home Loan Pre Approval. This is to ensure you meet the lending criteria and we can then set your budget for the new purchase.
Secondly you need to find a good builder or developer who is willing to sell you a "House and Land Package" or what is sometimes called a "Turn Key Build". If you already own a section of have enough deposit for 20% of a section but not the construction cost, then a "Turn Key Build" will be perfect for you.
Under either of the above situations you pay your deposit and the builder essentially finances the cost of the house and/or land until the house is completed. This is when you take ownership of the new house and your new mortgage is put in place.
It's important to know that you may also be able to use your Kiwisaver as a deposit and be eligible for the Housing NZ first home buyers Subsidy. I can help you with the advice required to find out whether you can access these funds.As always, I am available to discuss your situation further and to make sure you get the best options, advice, service and price for your home loan
Adam and the My Mortgage team