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Topic # 180881 24-Sep-2015 20:09
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Anyone recently taken up (or tried to) a low equity home loan?

Trying to find some suggestions of good places to try.

I'm trying to buy a house of equal value to my annual income, with 8% savings, 6% kiwisaver. I thought I knew/understood all there was to know, and on my income I should be a shoo in, but there are all these things tripping me up.

I've been turned away from 2 banks today. It certainly seems that in my small town, 20% deposit is going to be mandatory. While that wont be far away, I'm not concerned about interest rates/fees - more that I secure the house before it sells.


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gzt

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  Reply # 1393826 24-Sep-2015 20:15
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Do you have a lawyer? I think you need to place a conditional offer meantime.

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  Reply # 1393838 24-Sep-2015 20:27
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Goto a mortgage broker. As you will probably need a mortgage from a finance company. You will only need to be with the finance company until you have enough equity to refinance to a bank.

Try contacting Jeff from the company ilender. They advertise on trademe services. And no I'm not related to them.





 
 
 
 




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  Reply # 1393839 24-Sep-2015 20:28
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gzt: Do you have a lawyer? I think you need to place a conditional offer meantime.


I do have a lawyer, what would the legal cost to this be?

I'm going into 2 other banks thursday next week, but I predict I won't have much luck with traditional main banks.


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  Reply # 1393843 24-Sep-2015 20:31
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I'm trying at the moment myself but hitting brick walls, soon as you say you are under 20% deposit they get rather nervous.
Tried my own bank (Kiwibank) first and they said go for a Broker.

There is the Welcome Home Loan Scheme but there seems a few gotchas not noted on their website like:
* If you and a partner live in the loan then you have to both be the owners, can't do it in a single name. I'm assuming that means you can't have boarders 
* Personal Debt has to be under $10,000 so if you have a car loan that is over that amount they don't want to know.
* Need to be in the same job for 12 months or supply proof you have moved within the same industry
* Veda score of at least 500

This info came from TSB.

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  Reply # 1393844 24-Sep-2015 20:32
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Beware that kiwisaver can take quite a while to draw down, and some places don't tell you that until the day you ask - then they tell you it's two weeks. Not sure if the details, but check it out.




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  Reply # 1393846 24-Sep-2015 20:33
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  Reply # 1393870 24-Sep-2015 20:47
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Aredwood: Goto a mortgage broker. As you will probably need a mortgage from a finance company. You will only need to be with the finance company until you have enough equity to refinance to a bank.

Try contacting Jeff from the company ilender. They advertise on trademe services. And no I'm not related to them.


Thanks, I just sent them an email. Thats good advice about using finance company until I can refinance. I'm not concerned how high their interest rates are because I'll be able to lump sum pay it off if I don't refinance to a bank before then.



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  Reply # 1393919 24-Sep-2015 21:07
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DjShadow: I'm trying at the moment myself but hitting brick walls, soon as you say you are under 20% deposit they get rather nervous.
Tried my own bank (Kiwibank) first and they said go for a Broker.

There is the Welcome Home Loan Scheme but there seems a few gotchas not noted on their website like:
* If you and a partner live in the loan then you have to both be the owners, can't do it in a single name. I'm assuming that means you can't have boarders 
* Personal Debt has to be under $10,000 so if you have a car loan that is over that amount they don't want to know.
* Need to be in the same job for 12 months or supply proof you have moved within the same industry
* Veda score of at least 500

This info came from TSB.


The Welcome Home Loan is aimed at people like me, yet its almost too hard to get it. Also I and many others I've spoken to completely misunderstood how it works. I thought it was a Housing NZ loan offered through select banks. But all it is quite simply is mortgage repayment insurance! That if I screw up and don't pay, then HNZ pays the banks loss.

In my case snag #1 was "Must have been with same employer 12 months", yes I have been I can prove that, "but you were working somewhere else 6 months ago, how can this be?", well I've worked there 12 months, 6 months a few years ago and 6 months now, "oh no, it must be continuous for the LAST 12 months", hmmm well thats not the wording on the small print.It just says with same employer 12 months - thats quite different.

Then I was informed about "within same industry last 24 months", but I don't meet that criteria. I was then turned away. But subsequently found out its "Industry OR OCCUPATION", and I've been in same occupation for over 3 years in last 3 jobs.

Then I get snag #2 "You have to commute too far to work". OK, well whats too far? Has someone come up with a figure like no more than 2 hours or 200km?? No? Then how can you say its too far when there is no guidelines on what too far is?

Snag #3 "Its not your primary place of residence". So If I live there, all my mail goes there, all my stuff goes there, its not rented out, and I have no flatmates, and I stay there every night except (up to) 50% of the time when I'm travelling for work. When does it cease being primary place of residence? 2 hours away from home? 20 Hours away from home? 2 nights away from home? >1/2 a week away from home? I have no other houses, don't rent, or pay board, if its not my primary residence, then please do tell me what it because I don't know where it is?

End of the day, if someone just wants to make an excuse to say no, not much I can do about it, but certainly seems like the excuses are pretty far fetched.



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  Reply # 1393924 24-Sep-2015 21:12
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kiwitrc: Try NZ Home Loans

http://www.nzhomeloans.co.nz/


Thanks, Just sent them an email.



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  Reply # 1394782 26-Sep-2015 11:22
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Simple question... only asking as different people I've spoken to (homeowners), have opposing view on this, and I simply have no experience/knowledge in the area.

Some say, once a bank "pre-approves" a mortgage, I become a cash buyer, and thus assuming I don't want building report or LIM, at that point I can put "unconditional" offer in on the house.

And one uses "subject to finance" as an offer made when actually you haven't been to a bank, and are not preapproved yet.

I always thought cash meant just that, 100% of house price in the bank. And that preapproved would be considered still "subject to finance".

I've found in the car/motorcycle industry, they use "your finance is "approved"" incorrectly, they really mean "preapproved", because they say "your finance is approved, you need to provide document A,B,C", and I have had them withdraw their offer when they saw document B even though the dealer had WOF/REG and transferred into my name and I paid for insurance. So makes me wonder if same is true with banking... that they could preapprove, you make offer, then bank says no, and your absolutely toast.

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  Reply # 1394810 26-Sep-2015 12:18
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If you are borrowing the bank will likely need you to get a building report, Lim and valuation. Ianal but I don't think you can put in a cash offer if borrowing, ash the bank may choose to not to lend on a particular house. E.g. You may find out from the Lim that it doesn't have a consent or a code of compliance

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  Reply # 1395045 26-Sep-2015 20:43
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Geese: Simple question... only asking as different people I've spoken to (homeowners), have opposing view on this, and I simply have no experience/knowledge in the area.

Some say, once a bank "pre-approves" a mortgage, I become a cash buyer, and thus assuming I don't want building report or LIM, at that point I can put "unconditional" offer in on the house.

And one uses "subject to finance" as an offer made when actually you haven't been to a bank, and are not preapproved yet.

I always thought cash meant just that, 100% of house price in the bank. And that preapproved would be considered still "subject to finance".

I've found in the car/motorcycle industry, they use "your finance is "approved"" incorrectly, they really mean "preapproved", because they say "your finance is approved, you need to provide document A,B,C", and I have had them withdraw their offer when they saw document B even though the dealer had WOF/REG and transferred into my name and I paid for insurance. So makes me wonder if same is true with banking... that they could preapprove, you make offer, then bank says no, and your absolutely toast.


You are right. Definitely still make your offer subject to finance. As often the bank will require a registered valuation of the property. And they will lend based on the lower of the valuation or the sale price.





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  Reply # 1395052 26-Sep-2015 21:23
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Geese: Anyone recently taken up (or tried to) a low equity home loan?

Trying to find some suggestions of good places to try.

I'm trying to buy a house of equal value to my annual income, with 8% savings, 6% kiwisaver. I thought I knew/understood all there was to know, and on my income I should be a shoo in, but there are all these things tripping me up.

I've been turned away from 2 banks today. It certainly seems that in my small town, 20% deposit is going to be mandatory. While that wont be far away, I'm not concerned about interest rates/fees - more that I secure the house before it sells.



This is amazing, they won't let you buy a house you can pay back in 1 yr? (ok ok exaggerated, assuming you don't pay tax, and live on stream water and lawn grass)



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  Reply # 1395092 27-Sep-2015 03:28
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joker97:This is amazing, they won't let you buy a house you can pay back in 1 yr? (ok ok exaggerated, assuming you don't pay tax, and live on stream water and lawn grass)


That was in reference to something I guess I left out which takes it out of context, 3 days ago on the news they said the average Auckland home is 10 times average income, my mortgage will be 0.9 of my income.

My income is quite high, obviously I have expenses as you are alluding to, but as I live a modest lifestyle, my disposable income is 85% of my total income. As I have 14% deposit, then yes its going to be 1:1 for me after expenses.

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  Reply # 1395100 27-Sep-2015 07:42
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You should be fine. Put an offer subject to finance on the mean time if you wish. I will try every bank. Each bank has different limits to quota (the law defines how much of each bank's loan must not be low equity) and tolerance

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