Reserve Bank restrictions and legislation have seen a significant change in lending options (from Banks) for NZ Citizens living or earning income from Overseas.
Previously if you were a NZ Citizen living overseas you could easily purchase a property using a 20% deposit – even if you were not living in the property. However in the last couple of years the Reserve bank restrictions and legislation have changed what the banks are able to offer. Your options will depend on citizenship, where the income is sourced from, the use of the property and how much deposit you had to put towards the purchase.
If the income is from Salary and Wages from offshore AND the client returns to NZ (eg weeks on and weeks off at work) and will be living in the property when they return to NZ on their break then generally a lender would lend up to 70% meaning the client would need a 30% deposit. However if there is also NZ income – eg from a partner – and less reliance on that overseas income and the partner would be living in the property then sometimes you can push a lender up to 80% but the lenders review this on a case by case basis.
If the client does not return to NZ on a regular basis and is not living in the property then the Loan to Value (LVR) restrictions revert to the current “rental property” restrictions and it’s likely that they could only lend up to 60% on that property. Meaning you’d have to come up with a 40% deposit.
If a client is living overseas and their primary source of income is from investments overseas then often you can’t get any lending for them from the banks.
If you are not a NZ Citizen and living overseas then again – there banks are unable to advance anything.
It is for these reasons such as these that we have seen a shift from using just banks for mortgage lending to Non-banks. Non-Banks are not under the same Reserve Bank restrictions. Previously Non-Banks would often be disregarded as an option as banks were usually cheaper and easier to obtain funds from. Now with the Reserve Bank restrictions in place, the Non-banks are picking up clients that are offering a lot less risk meaning that they are able to price their lending accordingly. So non-banks are able to offer lower priced home loans (than previously – but not lower than banks generally) and have more lenient lending criteria giving clients more options.
Banks are the most financially secure lenders and the ones we are most familiar with it is important not to restrict our options. Only dealing with banks will mean that
-
You are unable to do what you want to do
-
You have to wait until your situation changes so that you can fit within the restrictions that are banks are now bound by OR
-
You have to wait until the rules change.
