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How Much Deposit Do I Need To Buy a Property In NZ? Exact Figures | Ep. 1031

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In this episode, we discuss how much deposit Kiwi property investors and first home buyers need in order to purchase different types of properties.     This includes a look at the general guidelines, but also ways to borrow and buy outside of those guidelines too.   Looking to calculate and compare your mortgage repayment options? Use our mortgage calculator to find out your potential monthly payments

In this episode, we discuss how much deposit Kiwi property investors and first home buyers need in order to purchase different types of properties. 
 
This includes a look at the general guidelines, but also ways to borrow and buy outside of those guidelines too.

Looking to calculate and compare your mortgage repayment options? <a href="https://www.opespartners.co.nz/mortgage/calculator">Use our mortgage calculator to find out your potential monthly payments</a>

speaker-1

Hello, welcome to the property, can be podcast. I'll be hosting tonight's internet, how much deposit to I need. If I want to buy a property with her as a first-time buyer and Vista or and owner occupier and do, you know what the Travelers with this question answer is? Well, it depends. I said, answer as well but the trouble is is it does depend. Now we are going to take you through the exact numbers were going to share some. Yeah. And we're going to tell you about what it all. Depends on in those situations. Now, why does it depend while? It's because of those loveable Rogues. At The Reserve Bank, who enforce on us or implemented the lvr, restrictions the loan-to-value ratio restrictions. And what those restrictions do is they put a minimum requirement on how much deposit people need for most of each Banks lending. So, there is only a small amount of lending that, for instance, Bank, Can give to investors at least a 40 percent deposit. Let's go through the general rules. Andrew starting with owner-occupiers how much deposit to those guys need okay. Minimum deposit, normally, 20%. But remember that some get away with having less than that. But really interesting here last year list the one and 50 owner-occupiers borrowed with less than a 20% deposit. That's excluding first home buyers for time buyer. So I've sold my house, I'm going to buy another house. For me to live in less than 1 and 50 with able to do that with a less than a 20% deposit. Very few next up, we've got investors and it's a 40 percent minimum deposit for an existing property one that's already built. But of course, if you're buying a new built, those are exempt from these alvear restrictions. So it's only 20% deposit for a new belt. Again, there are some limited exceptions, but look, when you run the data that very rarely used in practice so 40% for existing Percent for new belt and what about those first-time buyers? Andrew, first-time, buyers 20% for an existing property generally speaking or ten to twenty percent effort. So new belt and again this is where the banks have a little bit more discretion, but very little. So it's interesting. We're talking about first home buyers getting access to the lowest deposit loan so we seed for a new build for a first-time buyer somewhere between 10 and 20 percent as a bare minimum. Now here's the thing while the banks do have Some discretion about how many low deposit loans, they can give. And basically a lot of positives anything less than 20%, but first-time buyers in the past, have really had the run of the mill of the bank's ability to lend at lower deposits. So for example since 2014 between 20 and 40 percent of first home buyers have been borrowing with these lower deposits and fact at its high point about 38 39 percent of first home buyers and this is a couple of years ago now kind of 20, 20, 19, a large proportion, just under 40% were using low deposits. Now, something has changed relatively recently. You might recall back in November, the Reserve Bank change, those alvear restrictions again, and the amount of low deposit lending IE less than 20% deposit. Lending that was going to first. Home buyers went from about 36 37 percent down to just under 20% and that's because they tightened up what those were but even still 1 & 5 first home, Buyers today are buying property with less than 20% deposit. But what's interesting is the amount of deposit you need, doesn't just depend on who you are This Time by this isn't bisa. It could also change based on the property type and a drink. Do you know specifically talk to us about what an investor would need for some things like hotel rooms and things like that? Okay? So things like hotel rooms, you normally have to have at least a 50% deposit for something like that. Particularly, if it's under a management agreement, also the size of the apartment. If you buy an apartment, or Laughs. It's a studio or really small apartment often. These can require a 50% deposit as well and again if it's a specialist product. So dual key apartments for example. So it combined the combination of a dual key and an apartment. It might need a 40 percent deposit. And so even if you were to buy a new build tool key property, 40 percent deposit, something like a safari group one year, normally speaking. So what I want to do is play a little game. A we pop quiz. That's right. I love writing a we pop quiz to see well. How much deposit would you need for For a property that you could actually buy in today's market. So one that I've been looking at is an eight hundred and sixty thousand dollar, new bill townhouse. So this is based out and West Auckland is being developed by actually fix some of the losses of the show. Probably bought some of these actually injury. So it's 860 k and a new built, how much deposit would an owner-occupied made my buzzing or you put a, you're playing this with me or you playing with yourself, play, with the losses of the show. Okay? A debate. I 20% deposit, you need 172k, if it's an investor. How much would you need again? Is that 860 K, new, bill, townhouse 20% again. Well done 172k. If it was a first home buyer, 10% deposit. Generally speaking to pity on Bank criteria, about 86 que entra, you do the existing property, give us an example. Okay, so let's take a 600k existing Standalone house and Christchurch. If you're an owner occupier, what do you need lock in your answers? 20% deposit, 120k if you're an investor Again by an existing Standalone House of 600k, what do you need? You need a 40% deposits. Let's 240k way. More than the more expensive new build. Now, if you're a first time buyer, what do you need? Again, you're going to need a 20% deposit, 120k, well, done. If you got some of the host, right? But it is important to note as well, that you can always break the rules. And this is sometimes a really confusing thing, both in property investment or when you're discussing mortgages, because well, we've just given you some pretty strong guidelines. There are ways to break these. Actually Andrew will trade these back and forth. Number one way to break these rules as to borrow outside the lvr restrictions. So what I mean by that is Banks can lend up to 10% of their owner. Occupier lending to people with less than a 20% deposit and they can lend up to 5% of their investment lending to investors with less than 40 percent deposit. If they're buying is assisting property. New builds. Don't come into that because they are exempt from all of the restrictions. So there is some leeway. For the bank's where they can lend outside of those. The key thing is to become one of the lucky ones who get within that ten percent. If you're at an owner occupier or 5% of here in Vista, next is the Bank of mum and dad. So if you need to top up your deposit, then you can go to mum and dad borrow against their house. Or it could just be a friend or an uncle Lord to however, someone that's willing to give you a little bit more money and this is probably more appropriate if you're buying your own house. And owner-occupied, you probably less likely to capitalize off mum and Dad's Equity to buy first investment, but we do see. And although that technically in the bank sighs, does it count as buying with a low deposit? It's still a way that most people would rather say, hey, that's one way to get started, without having saved it myself. The next one is really for first-time buyers and this is the first home partner program. Now this was quite similarly to the bank of mum and dad, but this is where the government will bypass of your house with you. So they might give you tipsy to the money to purchase the property as a deposit, they then own 10% of that house, which you then buy them out of later, down the track. Now, this Only available for some first home buyers because there are some criteria around but that can be a great way if you don't have the full deposit that we've just discussed number for us, not make lender so people like crazy mac have an 80 80 product so you can borrow 80% against sure, owner-occupied house and 80% against an existing investment property because they're not held to the same regulation as the bank's because they're not a bank. And also there's lots of other products on the market for other types of buyers. So, for example, squirrel money will do five. Deposit loans for first-time buyers. So long as you've got a really strong income and you have got bad credit and all those kind of things. There are so many products that can help you get outside of the lvr, restrictions borrow more than you. Otherwise would be. If you went to a main bank, you've just got to work with a mortgage advisor to get the right product for you. And the last one that I have had really this is for your first home buyers out there is what they call the first home loan. Now this is a government-backed scheme where you can borrow with as little as a 5% deposit to P dig. En banc criteria, usually it's 10% by minimum but perhaps some people scrape through and 5% depending on the situation that is one way that again, you first home buyers. Could get access to a loan with a lower deposit but Andrew, there really are so many options it. How do people work their way through these? Yeah, I think I think the key thing to remember is these are kind of the rolls but rules are made to be broken up. They did what. So I think the best thing you can do is use a mortgage broker and they'll tell you what's possible with the banks but also what's possible with non-bank lenders. Lenders. And by thinking outside the box if you want to recommendation, contact, Catalyst Financial but there's heaps of good mortgage brokers out there as well. In fact, I think we've got the top 10 Brokers on our website. And in fact, if you just Google the word mortgage brokers, it's one of the first things that comes up on that first page of Google. And right, let's wrap it up there, but please don't forget to rate review And subscribe to the property can be podcast. It really does help us get the message out to more people. It's hey if you thinking about grow your portfolio and 2022, your next step is to come in for a portfolio planning session. Tell you what would your ear off about it? Today, just text the word plan to 5522 will give you a buzz. See, if it's the right fit for you. Thanks for the seats. The property Academy podcast. I'm your host if it diets are. What could be back in tomorrow with even more daily? Strategies text that size, help you. It's most until next time,

How Much Deposit Do I Need To Buy a Property In NZ? Exact Figures | Ep. 1031

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How Much Deposit Do I Need To Buy a Property In NZ? Exact Figures | Ep. 1031

About this episode

Read transcript

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Are EV chargers a good investment Pros and cons revealed ⎥ Ep. 1902

7 Reasons You Should NOT Invest In Property Right Now ⎥ Ep. 1901

I Bought My First Home for $290,000 (2024) ⎥ Ep. 1900