Real estate, post level 4

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#2620379 12-Dec-2020 08:17

quickymart:

I would be, at those prices people's budgets become quite stretched. Mind you, just because 400 people went through an open home doesn't mean they received 400 offers.

True but you'd have to say they got many more offers than usual. In this case its probably cashed up existing owners who bought. If a Govt managed to do something that checked prices, they dropped say 5 or 10%, maybe interest rates doubled to 5% which is still low, its hard to have much sympathy for anyone who got caught out. End of the boom is likely one day as is interest rates going back to normal.

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#2620425 12-Dec-2020 10:38

When will returning Kiwis taper off? A video article on Neighbourly at a recent Harcourts auction saw all houses up, including one that sold for 50% above expected, they say its due to low interest rates and returning Kiwis. Maybe the latter is the chief cause of 2020 increases, as unlike traditional immigrants, the MIQ people are likely to be many instant home buyers

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#2623101 17-Dec-2020 08:35

A quick mortgage question - how much does one person need to be earning these days to get a mortgage on their own? I saw someone earlier in the thread saying $64k is the minimum. Is that a hard rule, or does it depend on the size of your deposit as well as your income?

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#2623110 17-Dec-2020 08:50

quickymart:

A quick mortgage question - how much does one person need to be earning these days to get a mortgage on their own? I saw someone earlier in the thread saying $64k is the minimum. Is that a hard rule, or does it depend on the size of your deposit as well as your income?

I would have thought the same serviceability criteria would apply regardless of your income and equity level.

Last I heard banks were still testing serviceability at about 7.5%. So, take your existing budget, remove your rent, add mortgage payments based on that 7.5% figure, add a bit for insurance, rates and maintenance, and then you'll get a good idea of what you can service.

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#2623111 17-Dec-2020 08:50

quickymart:

A quick mortgage question - how much does one person need to be earning these days to get a mortgage on their own? I saw someone earlier in the thread saying $64k is the minimum. Is that a hard rule, or does it depend on the size of your deposit as well as your income?

I think they have a formula based on net income, debt and regular payments power etc), and a probably standard allowance for living expenses. High income with high expenses is ok, lower income with lower expenses is ok too, if it fits within their formula. Depends how the numbers crunch

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#2623168 17-Dec-2020 11:08

Ah crap. I'd need a pretty hefty deposit then - even with a flatmate contributing to the cost.

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#2623185 17-Dec-2020 11:48

quickymart:

Ah crap. I'd need a pretty hefty deposit then - even with a flatmate contributing to the cost.

I don't think a flatmate can be used as a fill in the form addition, as it may be false. And its not stable. A bit like overtime

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#2623232 17-Dec-2020 12:07

One of my friends applied for a mortgage last year and the bank considered it to be serviceable on the condition of her having a flatmate. She was consequently asked to get her prospective flatmate to sign a declaration to confirm she was intending to live there.

This could be problematic if you consider that most people would look for a flatmate after they have taken possession of the property.

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#2623247 17-Dec-2020 12:42

Yes having flatmates in can be considered a factor.

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#2623433 17-Dec-2020 20:41

quickymart:
A quick mortgage question - how much does one person need to be earning these days to get a mortgage on their own? I saw someone earlier in the thread saying $64k is the minimum. Is that a hard rule, or does it depend on the size of your deposit as well as your income?

The value of mortgage that you can service doesn't depend on your deposit,
It does depend on how many kids you have etc.

As at Nov 2020
As a rule of thumb take your (basic) gross income minus 20k for 1 adult
Minus 20k if you have a partner
and then minus 10k for each kid you are supporting
Whatever remains, time by 6 and this will give you extremely close to what you can get for a mortgage.

I say 'basic income' as allowances & bonuses are 'scaled down' as these are seen as 'at risk incomes' & are scaled back to 75%-50% (depending on what they are)

Flatmate income and other forms of income are taken into account (but on a scaled basis again) and you will need to provide evidence of 6mo of payment and potentially a copy of signed flatmate agreement.
Times these other forms of income(their annual gross) by 0.89 to get a close estimate as to how much servicability they add.

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#2623440 17-Dec-2020 20:58

Oh well then, going on that formula, I'm completely screwed...

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#2623441 17-Dec-2020 21:00

Let's give you some solid numbers.

E.G. 64000 gross with one wife & one kid.
In stable 5yr+ job with a letter from employer stating your job is not at risk with Covid.

Calc =
64000 Gross income. $388500 serviceability
-20,000 Living costs Person 1 = - 121,500
-20,000 Living costs Person 2 = - 121,500
-10,000 Dependant child 1 = - 60,500
Gives you a 'serviceability capacity of $85,000 mortg.

A single individual with 64000 gross, gives a
267,000 mortg serviceability
(388500 - 121500 = 267,000)

These numbers are based on banks expected 'average living expences' - if your living expenses are higher than their system 'averages' this will reduce your servicability further. (that is why you have to give them all this info)

These above calculations don't allow for ANY other debt obligations. (they will reduce your borrowing / servicability ability further)
Credit cards (higher limits impact majorly as a negative)
Existing hire purchase (household goods&phones etc)
Existing vehicle loans

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#2623445 17-Dec-2020 21:06

concordnz:
quickymart:

A quick mortgage question - how much does one person need to be earning these days to get a mortgage on their own? I saw someone earlier in the thread saying $64k is the minimum. Is that a hard rule, or does it depend on the size of your deposit as well as your income?

The value of mortgage that you can service doesn't depend on your deposit,
It does depend on how many kids you have etc.

As at Nov 2020
As a rule of thumb take your (basic) gross income minus 20k for 1 adult
Minus 20k if you have a partner
and then minus 10k for each kid you are supporting
Whatever remains, time by 6 and this will give you extremely close to what you can get for a mortgage.

I say 'basic income' as allowances & bonuses are 'scaled down' as these are seen as 'at risk incomes' & are scaled back to 75%-50% (depending on what they are)

Flatmate income and other forms of income are taken into account (but on a scaled basis again) and you will need to provide evidence of 6mo of payment and potentially a copy of signed flatmate agreement.
Times these other forms of income(their annual gross) by 0.89 to get a close estimate as to how much servicability they add.

What a great answer, 11/10

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#2623447 17-Dec-2020 21:07

Deposits come in to play when looking at a specific property.
Minimum 20%deposit for owner occupier

E. G. If the above single individual is looking at a 800k property the bank will do numbers as follows.

800k property
267k mortgage serviceability
Purchaser needs a $543k deposit

(single individuals are pretty screwed at the moment - you need two incomes to make the numbers work with current house prices)

concordnz

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#2623491 17-Dec-2020 21:17

Here's the same calc with a 2 income couple, no kids.

64k income person 1 = 388,500 serviceability
64k income person 2 = 388,500 serviceability
Living costs 2 X adults minus $242,797 serviceability.

Resulting serviceability = $534,000

House looking at = 800k
Mortgage serviceability = 534k
Deposit required = 268k

And last check
Is 268k more than the minimum 20% equity(160k) = yes.

Or if they are looking at a small house worth 500k
Serviceability 534k
Deposit required = min 20% (100k)
Bank will only lend 400k in this instance (as you need min 20% deposit)

Edit: corrected numbers in last line

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