With New Zealand’s borders open once again to Kiwis from all over the world without the need for MIQ, it’s likely many will be returning to our shores to buy a home or investment property. Over the last two years, the COVID-19 pandemic has had a significant impact on New Zealand’s property market, with rising house prices, stricter lending requirements, and LVR’s (loan to value restrictions) just a few of the challenges facing returning Kiwis. Here are two things to think about when applying for a mortgage as a returning Kiwi.
The power of your deposit
As an expat returning to New Zealand to buy property, your deposit is one of the most important factors in your mortgage application. Most lenders require at least a 20 per cent deposit, although there are lenders that will consider lending to borrowers with less than this, provided they meet certain conditions.
Having worked overseas for a number of years, you may already have saved up a healthy deposit. Or you could be looking to take advantage of exchange rate gains when you return. Or perhaps you have a family member who is willing to be a guarantor or help with a cash gift to kickstart your home buying journey.
Whichever option fits your situation, it’s important you understand the deposit requirements for first home buyers in New Zealand, and how loan to value restrictions could impact your ability to buy a property. And if you need to spend a little time saving up a bigger deposit, here are two articles that might help: How to save a first home deposit and Top tips for first home buyers saving a deposit.
Proving your income
Another vital part of your mortgage application is your ability to service a mortgage. Lenders want to see evidence of a stable and consistent income being paid into a New Zealand bank account.
Recent changes to lending policies mean banks are required to adhere to responsible lending practices, which means they must:
- Make reasonable inquiries about a consumer's financial situation, and their requirements and objectives.
- Take reasonable steps to verify a consumer's financial situation.
All of this means borrowers have to prove they can afford a mortgage. Once you’re earning an income, lenders will want to see proof of your income in the form of bank statements, and most will require at least 3 months’ worth.
If you’ve got a job lined up that hasn’t yet started, you may be able to use a signed contract as proof of income in your application. The contract will need to state:
- Your start date
- What you’re going to get paid
- Any other conditions included in your employment
Some lenders may also require details of your overseas earnings and employment history as well as your overseas credit record, so check with your mortgage adviser if this is required.
Set yourself up for success
The best place to start your home buying journey is a meeting or phone call with a Mortgage Express branded mortgage adviser. Not only will you get expert advice that is pertinent to the current economic climate and property market, but your adviser can also provide guidance around what’s possible based on your situation, and match you up with the right lender when you’re ready to apply for a home loan.