Don’t have 20% Deposit?
In October 2013, The Reserve Bank of New Zealand introduced a policy that had an impact on how much deposit you need to get into a home. They were trying to control the price inflation in the housing market.
The actual policy is that Banks and Lenders must limit their low equity lending to 10% of their overall new lending in Auckland, and 15% in other regions. This means that for every 100 new home loans that a bank approves, only 10 of these loans can be low deposit. (At this stage the low deposit restrictions are temporary, rather than permanent – they may change again.)
However this does not mean that a bank will turn down a low deposit refinance request. Refinancing is exempt from the new policy, as they are existing loans that are simply switching providers, thus not affecting house price inflation.
Banks may charge a Low Deposit Fee for these types of loans, or they may add a premium to your interest rate because you have a low equity loan. If you meet the Welcome Home Loan Criteria, and use an approved lender, then this Fee is waived.
Have you been declined for finance by one bank? That doesn’t necessarily mean that you can’t get finance at all, it might just mean that bank has already maxed out its limit for that period. You can go and approach any other lender who may have space for more low deposit loans, or you can try again in the next period.