New Zealand Mortgages
What am I allowed to buy?
- There are no restrictions on the property you are allowed to buy if you are a Permanent Resident
- If you are on a work permit or temporary visa you are restricted to buying properties less than 5 hectares in size. However, the this is reduced to less than 0.4 hectares in size for properties next to or on a sensitive area (e.g. nature reserve).
New Zealand Mortgages - How much can I borrow
There are a large number of banks and other mortgage lenders in New Zealand that you should consider if you are resident. Have a look at some of the banks advertising on this site.
The banks will generally lend up to 4.5 times your annual gross household income (if you have no other significant debts or outgoings). So if a couple have a combined household income of NZ$100,000 per annum based on both their salaries, they may be able to lend up to NZ$450,000 for a house.
However, you need to consider what is realistic in terms of how much mortgage you can afford to pay each month given your lifestyle and other outgoings.
The banks assess people applying for home loans by splitting them into three categories:
- Permanent Residents. Banks and other financial institutions will treat you the same as any other NZ citizen which means that loans upto 95% of the value of the property are available. This doesn’t mean that you shouldn’t shop around for the lender with the best interest rate or cost of borrowing.
- People on a Work Permit. The banks will want more of a financial commitment from you as you are not a permanent resident. In practical terms this means that you will normally have to pay a minimum of 20% to 50% of the purchase price.
- Temporary Visitors. If you are only in New Zealand temporarily or are looking to invest in a holiday home, some banks will treat you in a similar way to the Work Permit applicants others may be stricter or not be interested at all. So again shop around to see what rules and deals individual lenders have. Have a look at some of the banks advertising on this site.
The Different types of mortgages available
- A Table mortgage - the repayments are fixed over the term of the loan. For the first few years you will only be paying off the interest, and eventually you will start to pay off the principal.
- A Reducing mortgage - here you pay off a fixed amount of the principal each month, which means that the interest charges will fall as will your repayments
- Fixed or Variable mortgage - whether you choose between a table or a reducing mortgage you will need to choose whether the interest rate is fixed for a period of time or whether it is variable and can change when the central base rate changes.
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