First-home buyers are firmly in the sights of the big banks, with KiwiBuild starting the eligibility process for interested buyers.
Kiwibank has made a strong play for first-home buyers, saying it will pre-approve customers up to 90 percent of the value of a KiwiBuild home. Kiwibank believes as the largest NZ-owned bank there’s an expectation they will help as many first-time buyers as possible, particularly around KiwiBuild.
What’s important to know is that all banks can issue 90 percent loans on new builds (sometimes even to 95 percent), because the Reserve Bank excluded new homes from the LVR restrictions. What really matters is if you can afford the repayments and how much the bank will lend to you based on your income.
MBIE, the government agency behind KiwiBuild, has started making contact with people who’ve registered their interest in the scheme. The next step for the more than 7,000 interested Wellingtonians is to make it past the eligibility stage, including obtaining a pre-approval from the bank for a KiwiBuild mortgage.
There are two important questions we recommend asking:
1. Timeframe—how long will your pre-approval last for? We don’t know (yet) where or when the 13,000 homes for Wellington will be built. Is your bank prepared to wait? What do you do need to do to keep the approval current? Your mortgage broker can help you with the fine print!
2. Additional fees—what fees could you be liable for? Low equity loans (lending that is over 80 percent of a house’s value) will attract additional fees. Fees on low equity loans can range between 0.25 to 1.5 percent of the loan size. For a $500,000 loan and a $50,000 deposit, the fee could range between $1,125 and $6,750, charged as a one-off fee, or added as a margin to the interest rate.
If you’re after pre-approved finance, talk to a registered mortgage adviser for impartial advice. We can help answer the tricky questions about approval timeframes and fees, all important factors to consider when deciding on your first home. Call us now on 0800 000 517.