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Getting A Mortage In New Zealand

Can I Get A Mortgage?
If you are eligible to work or live in New Zealand and have a regular income, you will almost certainly be able to get a mortgage. Banks in New Zealand are very efficient and your mortgage funds will be made available quickly.

For lending purposes, banks split people from overseas into three groups, each of which is offered different terms:

Permanent Residents
Banks will treat as if you were a New Zealand citizen. This includes lending you up to 95% (or more) of the value of the property you are buying.

Work Permit
Banks will require more financial commitment from you than they would from a permanent resident. This varies from the most lenient lenders who require you fund at least 20% of the purchase price to lenders with stricter rules who will require you fund at least 50% of the purchase price. The message is that if you shop around, you should be able to find a loan to fund 80% of the price of your dream home.

Holiday Homes
Most banks will apply very similar rules to overseas people on holiday to the lending rules applied to people in Category 2. Some may be a little stricter.

Are There Restrictions
Provided you are a permanent resident there are no legal restrictions on the type of property you can buy in New Zealand.

Without permanent residence you are limited to buying a home with land (or a building site) of less than 5 hectares (12.5 acres).

If the land is on or next to a sensitive area, such as an island or reserve, non-permanent residents are are not allowed to buy more than 0.4 hectares (1 acre) of land.

How Much Can I Borrow?
This varies from lender to lender. A general rule of thumb is that, provided you have no other significant debts, lenders will finance mortgages of around four and a half times your gross household income. Some lenders will finance mortgages of five times gross joint income for couples, provided both of you are in employment.

How Can I Get the Best Deal from a Lender?
The easiest way to get movement on a better deal is to remind the bank that there are other lenders out there - this can be achieved by pointing to a lower interest rates offered by another lender and asking the bank to beat their competitor's rate. Certainly you should try to get the establishment / application fee waived by pointing out that a competitor has already agreed to waive this fee for you. (An establishment fee is a one-off fee charged by banks at the beginning of the mortgage term to cover their costs in establishing the mortgage.)