Looking at buying in NZ post Covid-19? Will the banks lend to you?
We often get asked by non resident kiwis or people living offshore if they can get a loan from a New Zealand bank to purchase a property here.
When it comes to borrowing money in New Zealand, there are two points to consider here:
1. Are you legally able to buy a property in New Zealand?
2. If you are, who will a New Zealand bank lend money to?
It’s important to understand there is a difference between these two points, as each bank has its own lending policies and preferences regardless of the law. Many lenders work in the sense that just because it’s legal, certainly does not mean they are willing to lend in that situation.
Who can legally purchase a property in New Zealand:
- Anyone with NZ citizenship or permanent residency to live in NZ.
- Australian or Singaporean citizens.
- If a NZ citizen is married to a non-resident abroad who has no rights to live in NZ, then they can both purchase in NZ
- If a NZ citizen or resident is living with a person with a work visa in NZ then they can both purchase the property together in NZ.
- Any international investor if they have Overseas Investment Office consent to purchase a particular property.
- Any international investor purchasing commercial property or a property with visitor accommodation consent for more than 183 days.
Now we know who can legally purchase in NZ, who will lend to you?
Loan Market works with the panel of lenders who all have different lending criteria.
Often when it comes to overseas investors the major banks are not interested for one reason or another, so luckily we have a panel of lenders which can offer alternatives for our clients. It often depends on your circumstances and we cover some of them off below.
Australians: Major banks range in policies such as not being prepared to work with self-employed borrowers, high minimum income standards ($250,000 per year income for example), or not willing to lend at all. So there is a huge range of differing policies between banks. Combine this with various lenders scaling your net income back between 10-30%, so at the minimum a very strong household income is required with the major banks. We do however have a range of non bank alternatives we look at for you at competitive rates.
Singaporeans: Currently, there is only an slim chance a major bank will consider lending to Singaporean citizens, but we also have another very good option with rates just over 3% currently**.
Ex-pats: Most major banks are interested in lending to Kiwis living abroad, but depending on the currency you earn, there is some scaling down of net income by up to 40%. We do have another option where scaling is only 10% and the rates available are just over 3% currently**.
Ex-pat with an overseas partner: Some major banks may consider this type of borrower, as would many of the other lending options we have.
Commercial property: Often a sticking point. If it’s a managed apartment then no one is interested in lending against them. Commercial property is strictly a case by case basis at the current time.
Standard residential with visitor accommodation consent for overseas investors: The major banks are not interested, but we do have other options with our wider panel of lenders.
As you can see there are a few things happening and to be honest, the situation is consistently changing at the moment, so at any point policies can change.
If you are considering investing in NZ, then reach out to us and we can have a real time conversation on where the landscape is at and provide you with crucial information to make that next step.
Make sure you register for our upcoming webinar on Friday, July 10th. Our expert panel will be covering everything from overseas investment rules relating to residential and commercial property, lending and legal as well accounting and taxation. Register for this webinar here
Click here to contact us, or contact one of our advisors directly on their contact details below.
- Stewart Mitchell - +64 021 762 606 | firstname.lastname@example.org
- Cara Light - +64 0212 465 879 | email@example.com
Wanaka & Central Otago
- Pete Eastwood - +64 021 812 300 | firstname.lastname@example.org