PHOTO: Home Loan
New Zealand banks have tightened up their home loan lending criteria considering the Covid-19 pandemic.
If you are looking to buy a property in New Zealand, how can you improve your chances of getting approved for a mortgage?
Do you know the reasons why a home loan is denied? In the last video, we discussed the first 5 tips to improve your chances of getting approved for a mortgage.
If you missed it, here is the link: https://youtu.be/wdsVCXRm49w In this video, here are the remaining 5 tips on getting approved for a mortgage:
6. Review your credit card limit – 01:17 Very few people realise the increased credit limit will lower your borrowing capacity because at the end of the day, it is a kind of financial commitment.
7. 20% deposit is preferred when buying a house – 02:28 Generally speaking, most New Zealand banks accept 10% deposit (or 5% for First Home Loan) when purchasing your family home and 20% deposit for purchasing investment property. Post COVID-19 lockdown, it is getting hard to borrow when you only have 10% deposit as banks have tighten up policy for lending over 80% (High LVR lending). If you do not provide 20% deposit, it’s not only make interest rates less competitive, but more importantly you will borrow much less compare to before COVID with the same income.
8. Use property equity to buy another – Is your equity in the “right” bank? – 03:50 Lenders may allow you to borrow money against the equity you have in your current property and use it as deposit for your next property purchase. Before you can leverage the equity in your existing property to buy another one, make sure your property equity is in the right bank.