Mortgages

Old Feb 28th 2017, 9:43 pm
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Default Mortgages

Hi

I wonder if I can pick some brains with what is hopefully a simple question. I live in the U.K. but over the past 2 years I have been seriously contemplating a move to New Zealand. I have a job that is on the long-term shortage occupation list and looking at potential average wages, with my 10 years experience I could potentially be looking at approximately $69000 to $95000 wage. For the time being I will assume I'll be starting at bottom level. In the U.K. I earn £32,000.

I have a question about mortgages. Here in the U.K. generally you can get anywhere between 3 to 4.5 times salary from a mortgage lender (so I could get approx £104,000 to £144,000). Is it the equivalent approximate"calculation" in NZ? The reason I ask is, on a wage of $69,000 that would mean a potential mortgage of $207,000 to $310,000. Looking at NZ real estate websites some of the houses for those figures are houses I could only dream of being able to afford in the U.K. (apart from London obviously). It just seems too good to be true (which means it probably is! ).

Any advice or useful websites you could point me in the direction of would be great. Thank you in advance for your help and advice.

Last edited by Snow_Angel; Feb 28th 2017 at 10:03 pm.
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Old Feb 28th 2017, 10:53 pm
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Default Re: Mortgages

Originally Posted by Snow_Angel
Hi

I wonder if I can pick some brains with what is hopefully a simple question. I live in the U.K. but over the past 2 years I have been seriously contemplating a move to New Zealand. I have a job that is on the long-term shortage occupation list and looking at potential average wages, with my 10 years experience I could potentially be looking at approximately $69000 to $95000 wage. For the time being I will assume I'll be starting at bottom level. In the U.K. I earn £32,000.

I have a question about mortgages. Here in the U.K. generally you can get anywhere between 3 to 4.5 times salary from a mortgage lender (so I could get approx £104,000 to £144,000). Is it the equivalent approximate"calculation" in NZ? The reason I ask is, on a wage of $69,000 that would mean a potential mortgage of $207,000 to $310,000. Looking at NZ real estate websites some of the houses for those figures are houses I could only dream of being able to afford in the U.K. (apart from London obviously). It just seems too good to be true (which means it probably is! ).

Any advice or useful websites you could point me in the direction of would be great. Thank you in advance for your help and advice.
Okay, it appears that you will need a deposit of 20%. 10% in some cases if you are an NZ 1st time buyer. The multiple thing does not really apply. What they do over here is they ask your pay, after tax, they then ask you all your outgoings and bills etc per month. So long as you can comfortably make the payments (and have that deposit) they are cool with it. Seems like a fairer way to do it than use an arbitrary 4.5 x your annual salary. Have a look at what I have pasted below re payments.

Mortgage Repayment Calculator - Westpac NZ

Then have a look at this, you can work out EXACTLY what you will take home from the NZ tax rate table. You are charged from the 1st CENT here in NZ.

https://www.google.co.nz/search?q=nz...hrome&ie=UTF-8


www.trademe.co.nz for everything you will ever need. Its our e bay!!

www.interest.co.nz for all things fiscal and mortgage rates. Please note mortgage rates here are quite high compared to the rest of the world and the trend does appear to be continuing upwards, but very slowly indeed.

Last edited by Genesis; Feb 28th 2017 at 10:58 pm.
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Old Feb 28th 2017, 11:48 pm
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Default Re: Mortgages

Originally Posted by Genesis
Okay, it appears that you will need a deposit of 20%. 10% in some cases if you are an NZ 1st time buyer. The multiple thing does not really apply. What they do over here is they ask your pay, after tax, they then ask you all your outgoings and bills etc per month. So long as you can comfortably make the payments (and have that deposit) they are cool with it. Seems like a fairer way to do it than use an arbitrary 4.5 x your annual salary. Have a look at what I have pasted below re payments.

Mortgage Repayment Calculator - Westpac NZ

Then have a look at this, you can work out EXACTLY what you will take home from the NZ tax rate table. You are charged from the 1st CENT here in NZ.

https://www.google.co.nz/search?q=nz...hrome&ie=UTF-8


Buy online and sell with NZ's #1 auction & classifieds site | Trade Me for everything you will ever need. Its our e bay!!

interest.co.nz | Helping you make financial decisions for all things fiscal and mortgage rates. Please note mortgage rates here are quite high compared to the rest of the world and the trend does appear to be continuing upwards, but very slowly indeed.
Wow - thank you so much. That's amazingly helpful.
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Old Mar 1st 2017, 7:38 am
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Default Re: Mortgages

Originally Posted by Snow_Angel
The reason I ask is, on a wage of $69,000 that would mean a potential mortgage of $207,000 to $310,000. Looking at NZ real estate websites some of the houses for those figures are houses I could only dream of being able to afford in the U.K. (apart from London obviously). It just seems too good to be true (which means it probably is! ).

Oh yeah, been there done that looking at real estate from afar and thinking it all looks A-mazing. LOL

I think you'd have to look very closely at where those places are and whether (a) you would want to live there; (b) whether you could actually find a job there and (c) achieve the salary you have indicated.

Almost any house that is sub-$300k is going to be either an out of the way place with no jobs; or maybe Dunedin, Invercargill, Northland where weather may not be to your liking; a broken gaff in Christchurch or some other arse end of some other city or town such as outskirts of Hamilton that you probably would not want to live in.

Last edited by Bo-Jangles; Mar 1st 2017 at 7:40 am.
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Old Mar 1st 2017, 9:30 am
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Default Re: Mortgages

Worth getting other people's input too but I believe the banks won't lend to you during your initial 90 day work trial period so make sure you check that out too (either party can walk away during that period).
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Old Mar 1st 2017, 11:03 am
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Default Re: Mortgages

Where on earth are you seeing houses for under $310k?!?
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Old Mar 1st 2017, 3:47 pm
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Default Re: Mortgages

Youd get a reasonable house for that price in Invercargil? Or perhaps Hawera or somewhere like that. Also maybe the OP has more to spend than 300k but is just talking of a mortgage of that size?
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Old Mar 1st 2017, 5:32 pm
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Default Re: Mortgages

Originally Posted by Bo-Jangles
Oh yeah, been there done that looking at real estate from afar and thinking it all looks A-mazing. LOL

I think you'd have to look very closely at where those places are and whether (a) you would want to live there; (b) whether you could actually find a job there and (c) achieve the salary you have indicated.

Almost any house that is sub-$300k is going to be either an out of the way place with no jobs; or maybe Dunedin, Invercargill, Northland where weather may not be to your liking; a broken gaff in Christchurch or some other arse end of some other city or town such as outskirts of Hamilton that you probably would not want to live in.
Yeah....that's what I was worried about. Bit like in the U.K. where if you're single and on a single wage you can only afford one bedroom apartments or houses in "rougher" areas of nice places!

Dunedin was an option I looked at as I'm definitely thinking South Island. I'm not really moving for the sun....more the outdoor sports, driving distance to skiing and less populous than UK (my other option is move to Scotland!). My job (healthcare) generally easier to find work in more rural areas or less desirable areas to other people (in most countries it seems to be that way round, even here in the U.K).

Where did you end up as a matter of interest?
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Old Mar 1st 2017, 5:37 pm
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Default Re: Mortgages

Originally Posted by Timmy Chch
Worth getting other people's input too but I believe the banks won't lend to you during your initial 90 day work trial period so make sure you check that out too (either party can walk away during that period).
I would definitely be looking at renting initially anyway. I think regardless of where you live or move to it makes sense to get to know areas before committing to something so huge as buying a place. I've moved around the UK and Europe a lot in the last 15 years so know not to make that mistake!
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Old Mar 1st 2017, 5:42 pm
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Default Re: Mortgages

Originally Posted by bourbon-biscuit
Where on earth are you seeing houses for under $310k?!?
Mainly South Island. I've looked at where most jobs in my field have been advertised (both North and South) and looked at those areas (other than Auckland - I certainly couldn't afford to live in London here so I know I certainly wouldn't be able to afford to live in Auckland either). Mainly 1-2 bedroom places as there's only me! The reason I'm thinking is it too good to be true is in "real life" they could be total dumps!
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Old Mar 1st 2017, 5:45 pm
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Default Re: Mortgages

Originally Posted by garethwm
Youd get a reasonable house for that price in Invercargil? Or perhaps Hawera or somewhere like that. Also maybe the OP has more to spend than 300k but is just talking of a mortgage of that size?
I do have a 15% deposit (but could be 20% by time I'm thinking of "taking the plunge") but I'd rather keep my house price sub $300,000 for security of savings/unexpected expenses etc. I've not looked into Invercargill - I'll have a read about it. Thank you.
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Old Mar 1st 2017, 10:19 pm
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Default Re: Mortgages

Finding "prices" for properties is very different to the UK. In UK you get a price and then you try and negotiate (usually lower) around asking price.

Here it depends on the area, but usually you'll see an RV which is not especially linked to the price the vendor wants for it. In fact trying to even find an asking price can sometimes be challenging. You are expected to do the research and come up with your own valuation. For instance, here in the Wellington region some properties are going for 50% + above RV. I should think it's even more in Auckland. In the SI however things might be a little more relaxed with regards to price??
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Old Mar 2nd 2017, 1:03 am
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Default Re: Mortgages

Originally Posted by bourbon-biscuit
Where on earth are you seeing houses for under $310k?!?
My guess.......Stewart Island
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Old Mar 2nd 2017, 1:11 am
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Default Re: Mortgages

Some new UK migrants just arrived here in Tauranga on a 3 year temporary work visa and they attempted to buy a section within a few weeks of landing here, even before he'd started in the job he'd been offered and the bank more than happy to lend them money for a mortgage straight away.
Another couple we know have also just gone down the mortgage application track on a new property out Omokoroa way and were offered a 95% mortgage but with a higher % interest rate due to the additional risk for the lender.
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Old Mar 2nd 2017, 5:48 am
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Smile Re: Mortgages

There are two basic affordability criteria:
- LVR: Banks must do only 5% of their lending at over 80% LVR so its unlikely you'll get approved if you don't have a 20% deposit.
- Income: Banks use two main approaches and vary by bank (which is why one bank may say no and another yes) which they either calculate using previous expenses or estimate your living expenses (which can be wildly different depending on your penchant for luxury or frugality). They will then ask "If interest rates rise to X (X being 7-9% right now, called a "testing rate") how much could this person afford repayments on given their income and normal expenses?

Generally for first time buyers LVR is a tougher hurdle but for older buyers the income side will limit lending.
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