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First home buyers – quit feeling sorry for yourselves!

First home buyers seem to have it in their heads that without a 20% deposit they cannot enter the housing market. This is untrue but for some reason everyone seems to be saying it!

Here’s what the RBNZ really said, more or less:

‘Of all the loans a bank does 1/10 can be for people with deposits under 20%’.

That means low deposit loans can be done. So I’m not sure why all of the FHB I talk to think they need to stump up with 20% or give up their home ownership dreams altogether.

There are also two instances where the Reserve Bank rules simply don’t apply:

• If you want to build a brand new home then a 5% deposit is doable (yes, 5%!).
• Welcome Home Loans will get you onto the property ladder with just a 10% deposit, subject to income and house price thresholds.

I acknowledge that it has become harder to get a low deposit loan and, because the supply of low deposit loans is limited, the ‘better’ applicants are getting them. What I don’t accept is that all hope is lost if you’re trying to get into your first home with less than the lofty 20%.

Rather than despairing of your situation, it’s time to take action and become one of the 1/10.

How do you do that?

Hallam Jones understands how the banks think and what your loan application needs to look like in order to convince them you’re worthy of one of the lucky low deposit golden tickets.

What we’ve found is that a fair percentage of people who go through the application process with us will actually be successful. But you won’t know until you’ve given it a go.

In terms of the lending criteria not much has really changed. You still need a steady income, a saved deposit (can include Kiwisaver), good spending habits and not much consumer debt. You also need to show a chunky income surplus after paying your living costs and the mortgage.

More to the point, you need to show you’ve got that surplus happening right now (in other words you should be saving, not buying shoes or going skiing in Queenstown).

For FHB in Auckland that probably means having a combined income around $100,000+ simply because house prices start in the high $400,000’s. In other parts of the country you don’t need as big an income because house prices aren’t the same, but the other rules still apply.

Why so many people seem to have resigned themselves to paying their landlord’s mortgage instead of their own is a mystery.

Contact the team at Hallam Jones today to find out if you are in a situation to buy!

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