How easy is it to get a first mortgage? Rachel Grunwell goes undercover.
I'm pretending to be a teacher, hubby is an accountant and we're in our early 30s. No, this isn't some banal internet dating fantasy.
This is what I'm telling the banks as we discover whether it's really as easy to get a first mortgage as the glitzy advertising campaigns claim.
Mr Accountant and Ms Teacher have a combined annual pulling power of $100,000 before tax. The prize we are chasing? A $450,000 (or more) villa in trendy Onehunga, Auckland.
We've saved $40,000 and our parents will gift $50,000. We have no dependants, but $5000 in student loan debt. We're both signed up to the voluntary savings scheme KiwiSaver - which snatches 4 per cent of our income. So how high will the banks go?
First up I call the ASB and am quickly told they will require a 20 per cent deposit. The man says ASB "wouldn't have a problem [lending] around the $360,000 mark".
The ANZ bank worker I speak to next is very excited. "Fantastic!" he says, on being told of our $90,000 deposit. They will do the same as ASB, but, if pushed, might just be willing to bend the rules on the 20 per cent deposit.
I'm told they can "look at" a 15 per cent deposit and even, in some cases, 10 per cent - but "it's very rare". You might want to be earning $250,000 with no outgoings.
The BNZ call-taker, too, says that bank prefers a 20 per cent deposit but will deal with each case on its merits. I ask for more, and he buckles.
They might lend a maximum of $450,000, the call-taker says. They could live with a relatively meagre 16 per cent deposit but there could be more "conditions" like a full registration on the property, a higher interest rate or a $400 establishment fee.
A National bank staffer says: "Everything has got to be perfect to get over 80 per cent lending." But I was welcome to talk to a lending specialist at the bank.
Westpac starts to break the mould. Quite quickly I'm told "we can lend up to 90 per cent". They give an indication of a potential $470,000 loan. They say the key is meeting the servicing requirements.
Finally, I inquire with Kiwibank. They cut straight to the hard questions faster than any of the other banks.
I'm asked what limits I have on my credit cards, and where exactly I got my $90,000 deposit from. With $7000 available on a credit card, I'm told I could borrow as much as $465,000. They can loan more than 80 per cent of the cost of the house but there will be extra insurance costs.
Most banks, it seems, prefer a 20 per cent deposit. There may be some room for movement - but it comes at a cost.
Banking on it
Getting a home loan was tough, says Aucklander Phil Stewart. But he and partner Rebecca Lakeman secured one and are moving into their first home on Wednesday.
In February, they paid more than $500,000 for a refurbished two-bedroom bungalow in Ellerslie.
But it was no easy feat.
They thought their profile was good: He's a 33-year-old engineer, she's a 31-year-old English teacher, and they have a combined annual income of over $100,000. They have no dependants and had a $30,000 deposit.
However, they had $7000 borrowed on credit cards and $40,000 of student loan debt.
They met with Kiwibank and Stewart said there "was some difficulty" that automatic payments had caused them to go slightly beyond their overdraft a couple of times.
While Kiwibank was processing the application, the couple went to mortgage brokers - "just in case".
Most of the banks turned them down, but Squirrel broker John Bolton's approach to National Bank elicited a compromise - if the couple could increase their deposit.
Fortunately, Stewart's parents agreed to loan them money, topping up the couple's deposit to $80,000.
"We didn't want to do that. But it was the only way we could get the deposit we needed," he said.
rachel.grunwell@hos.co.nz
