Getting a mortgage with over 50% deposit headache (but Approved by BNZ!)

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Forums › Finance and wealth management › Getting a mortgage with over 50% deposit headache (but Approved by BNZ!)

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Smpl Mnmlst
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#2160007 13-Jan-2019 10:42

gzt: There is no maximum deposit. Someone at the bank is going to look very silly.

This is correct. In fact it’s ridiculous - there’s no such thing as a deposit that’s too big. If that was the case, the bank could be guilty of trying to lend you more than you need which is unethical and against banks’ codes of conduct. I suspect you have spoken to someone at the bank who doesn’t know what they’re doing - or there’s been a misunderstanding.

Having a high deposit is very much to the borrower’s and the bank’s advantage. It puts the borrower in a lower risk category and gives the bank more opportunity to offer you a discounted home loan rate because their bad debt provisioning is much lower. Banks actually like people with high deposits.

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Linux

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#2160008 13-Jan-2019 10:42

mudguard: What are these new rules? From my hazy days of doing mortgages the only problem I can think of is where the deposit came from. IE gifted.

@mudguard What difference would it make if the deposit was gifted and why should it matter?

John

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#2160009 13-Jan-2019 10:43

eracode:
gzt: There is no maximum deposit. Someone at the bank is going to look very silly.

This is correct. In fact it’s ridiculous - there’s no such thing as a deposit that’s too big. If that was the case, the bank could be guilty of trying to lend you more than you need which is unethical and against banks’ codes of conduct. I suspect you have spoken to someone at the bank who doesn’t know what they’re doing - or there’s been a misunderstanding.

As already advised it's not the bank it's the reserve bank

John

mudguard

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#2160011 13-Jan-2019 10:48

Linux:
mudguard: What are these new rules? From my hazy days of doing mortgages the only problem I can think of is where the deposit came from. IE gifted.

What difference would it make if the deposit was gifted and why should it matter?

John

It was called 'hurt' money. The bank viewed borrowers who had saved more favourably than those who were gifted deposits. As the gifted deposits were more likely to result in defaults, as they hadn't saved the money in the first place, so in theory were more likely to walk away.
I'm not saying this is your case, but I do recall turning down two applications with similar deposits (NB this is over five years ago).
You can argue whether it's fair or not but the bottom line is you still subject to their criteria. I used to have to pore over transactions seeing where money went and how it was saved.

eracode

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#2160013 13-Jan-2019 10:51

Linux:
eracode:
gzt: There is no maximum deposit. Someone at the bank is going to look very silly.

This is correct. In fact it’s ridiculous - there’s no such thing as a deposit that’s too big. If that was the case, the bank could be guilty of trying to lend you more than you need which is unethical and against banks’ codes of conduct. I suspect you have spoken to someone at the bank who doesn’t know what they’re doing - or there’s been a misunderstanding.

As already advised it's not the bank it's the reserve bank

John

Are you saying the RBNZ restricts banks from lending to people who have a 50% deposit?

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Linux

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#2160014 13-Jan-2019 10:51

mudguard:
Linux:

mudguard: What are these new rules? From my hazy days of doing mortgages the only problem I can think of is where the deposit came from. IE gifted.

What difference would it make if the deposit was gifted and why should it matter?

John

It was called 'hurt' money. The bank viewed borrowers who had saved more favourably than those who were gifted deposits. As the gifted deposits were more likely to result in defaults, as they hadn't saved the money in the first place, so in theory were more likely to walk away.
I'm not saying this is your case, but I do recall turning down two applications with similar deposits (NB this is over five years ago).
You can argue whether it's fair or not but the bottom line is you still subject to their criteria. I used to have to pore over transactions seeing where money went and how it was saved.

@mudguard The bank has zero issue with my application and happy I can service the small mortgage, I have zero debt and also my own money in the bank and my income could service a much bigger home loan

John

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#2160016 13-Jan-2019 10:53

eracode:
Linux:

eracode:
gzt: There is no maximum deposit. Someone at the bank is going to look very silly.

This is correct. In fact it’s ridiculous - there’s no such thing as a deposit that’s too big. If that was the case, the bank could be guilty of trying to lend you more than you need which is unethical and against banks’ codes of conduct. I suspect you have spoken to someone at the bank who doesn’t know what they’re doing - or there’s been a misunderstanding.

As already advised it's not the bank it's the reserve bank

John

Are you saying the RBNZ restricts banks from lending to people who have a 50% deposit?

@eracode Yes 110% cause I ticked investment property as I was going to rent it out for a while 12 months maybe

If I ticked ' own home ' loan would of been approved

John

Edit: I don't own any other property I am currently renting on Auckland, North Shore

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mudguard

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#2160017 13-Jan-2019 10:53

Linux:
The bank has zero issue with my application and happy I can service the small mortgage, I have zero debt and also my own money in the bank and my income could service a much bigger home loan

John

Then you need to ask them what you can do in the future to reapply. What percent of the deposit is your own money?

Linux

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#2160019 13-Jan-2019 10:56

mudguard:
Linux:

The bank has zero issue with my application and happy I can service the small mortgage, I have zero debt and also my own money in the bank and my income could service a much bigger home loan

John

Then you need to ask them what you can do in the future to reapply. What percent of the deposit is your own money?

In theory 100% of the deposit is my own money if I wanted to I could spend it on Coke and hookers and can prove where the money came from

Just cause it was a gift should not matter

John

mudguard

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#2160020 13-Jan-2019 10:58

Unfortunately that's not how the bank may see it.

eracode

Smpl Mnmlst
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#2160021 13-Jan-2019 10:59

Linux:
eracode:
Linux:

eracode:
gzt: There is no maximum deposit. Someone at the bank is going to look very silly.

This is correct. In fact it’s ridiculous - there’s no such thing as a deposit that’s too big. If that was the case, the bank could be guilty of trying to lend you more than you need which is unethical and against banks’ codes of conduct. I suspect you have spoken to someone at the bank who doesn’t know what they’re doing - or there’s been a misunderstanding.

As already advised it's not the bank it's the reserve bank

John

Are you saying the RBNZ restricts banks from lending to people who have a 50% deposit?

@eracode Yes 110% cause I ticked investment property as I was going to rent it out for a while 12 months maybe

If I ticked ' own home ' loan would of been approved

John

Edit: I don't own any other property I am currently renting on Auckland, North Shore

So it’s not nearly as simple as you made out in your OP - which turns out to have been misleading. There is a lot more to the story than you implied.

Again: The RBNZ does not restrict banks from lending to people who have a 50% deposit - which is what you implied in your OP.

Sometimes I just sit and think. Other times I just sit.

Linux

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#2160022 13-Jan-2019 11:00

mudguard: Unfortunately that's not how the bank may see it.

The issue is not the bank

John

Linux

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#2160030 13-Jan-2019 11:05

eracode:
Linux:

eracode:
Linux:

eracode:
gzt: There is no maximum deposit. Someone at the bank is going to look very silly.

This is correct. In fact it’s ridiculous - there’s no such thing as a deposit that’s too big. If that was the case, the bank could be guilty of trying to lend you more than you need which is unethical and against banks’ codes of conduct. I suspect you have spoken to someone at the bank who doesn’t know what they’re doing - or there’s been a misunderstanding.

As already advised it's not the bank it's the reserve bank

John

Are you saying the RBNZ restricts banks from lending to people who have a 50% deposit?

@eracode Yes 110% cause I ticked investment property as I was going to rent it out for a while 12 months maybe

If I ticked ' own home ' loan would of been approved

John

Edit: I don't own any other property I am currently renting on Auckland, North Shore

So it’s not nearly as simple as you made out in your OP - which turns out to have been misleading. There is a lot more to the story than you implied.

Again: The RBNZ does not restrict banks from lending to people who have a 50% deposit - which is what you implied in your OP.

@eracode Yes it is the RBNZ stopping it as already stated!

How I earn or obtain money (As long as it's legal and can prove where it came from) it should not matter to the RBNZ but it does

John

mudguard

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#2160031 13-Jan-2019 11:08

Linux:
mudguard: Unfortunately that's not how the bank may see it.

The issue is not the bank

John

I don't recall the LVR for investment properties if there isn't an existing owner occupied home. There will be an answer somewhere. But the bank is the one making the decision. LVR restrictions are set by the Reserve Bank but are not usually a problem if aren't anywhere near it.

Linux

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#2160032 13-Jan-2019 11:09

mudguard:
Linux:

mudguard: Unfortunately that's not how the bank may see it.

The issue is not the bank

John

I don't recall the LVR for investment properties if there isn't an existing owner occupied home. There will be an answer somewhere. But the bank is the one making the decision. LVR restrictions are set by the Reserve Bank but are not usually a problem if aren't anywhere near it.

It's all new had the regional manager of a certain big bank scratching his / her going WTF

John

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