Loans for NZ property

Ben

As far as I understand, Aussie lenders don’t lend to IPs purchased in NZ.

However, NZ lenders do lend to Aussies investors for 20% deposit and regular income. Likes of BNZ, ANZ, all lend in NZ.

MMajor

I attended Steve’s seminar in Auckland yesterday and he said that he and Dave have used NZ lenders for NZ properties to avoid the exchange rate risk. Because they are not NZ residents he said that the banks will only lend on 70% LVR.

Hi all,
Questions regarding NZ finance arises on this forum from time to time, I hope the following information helps to clarify and clear up a few inaccuracies.

Security for NZ finance.
Australian credit providers/banks will not take an NZ property/title as security over a loan,
However, if you have equity in Australian based assets you could theoretically use those funds to purchase NZ property outright, (i.e. the NZ property would be unencumbered) I am not suggesting anyone should do this, as this method of financing NZ investments would diminish Australian based equity at a faster rate and possibly hinder acquisitions of any further investments.
(In short, you may run out of funds for deposits on future IP’s)

The vast majority of my Australian clients use available equity in Australian held assets to fund the 20% or 30% deposit on there NZ investments, with an NZ based credit provider/bank funding the remaining 80% to 90% with the NZ property/title held as security over the mortgage.
(Basically, borrow 80% or 90% from NZ credit provider/bank and the remaining 20% or 30% sourced from either savings or equity via an Australian credit provider/bank)

Servicing/qualifying for NZ finance.
The qualifying criteria for NZ finance is pretty much the same as qualifying for Australian finance, you will be assessed on income and liabilities, Income may include return on investments, i.e. rental income both Australian and foreign,
Most NZ lenders will also include any proposed rental income from a proposed NZ purchase, a rental assessment from an estate agent or property valuer will be required for this,
Any current or proposed rental income will be assessed at approx. 70% or 80% of gross depending on the NZ credit provider/bank,
All liabilities debt, current loans including credit card limits etc will be taken into account when assessing an applicant’s borrowing capacity.

Arranging NZ finance.
These days there are more Australian based mortgage brokers with access to NZ products/credit providers for non NZ residents, or you can apply direct with an NZ credit provider/bank or an NZ based mortgage broker, I would suggest a conditional pre approval be the first step.

Loan to Value Ratio.
The majority of NZ credit providers/banks will lend to 80% LVR for non NZ residents, some will lend 90% subject to the mortgage insurers criteria, this is usually defined by location etc, keep in mind LMI applies over 80% LVR.

NZ Power of attorney.
It is a requirement of most NZ credit providers/banks for non-NZ residents to appoint a power of attorney; most NZ solicitors are prepared to do this.

Regards
Steven Crane
Mortgage Broker

Mobile Mortgage Market
Ph: 0402 483 216
[email protected]
http://www.mobilemortgagemarket.com.au

PLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.