First-home buyers have struggled for some time with loan restrictions, but now other lending institutions are going where most banks can’t—offering loans of up to $600,000 with just a 5% deposit.
Credit unions aren’t subject to the same Loan to Value Ratios (LVR) that banks are—meaning the New Zealand Credit Union has been able to increase its LVR to 95% while pushing its lending cap from $400,000 to $600,000.
At a glance, it appears you could secure a loan of $600,000 with a deposit of $30,000. But this is where it can get complicated—because the criteria between banks and ‘non-banks’ can be very different and much stricter.
What’s the difference between banks and ‘non-banks?’
- Interest rates through a credit union are likely to be more than 6%—the floating rate across most banks is currently under 6%, and most one-year rates are less than 5%. Interest rates are an important cost to consider as it affects your long-term financial position.
- Credit unions are very strict on your credit history—the bar is set very high, they’ll also closely consider your banking history and the stability of your employment
- A $30K deposit doesn’t automatically give you a $600,000 budget—there’s a lot of fine print and lending criteria to consider.
It’s encouraging to see more options are available—particularly to first-home buyers—but we strongly advise you work with a registered mortgage broker if you’re considering a non-bank loan.
We can walk you through the process step-by-step, consider all the options on the table and help you make the best financial decisions for now and the future. Give our team a call today on 0800 000 517.