Hummingbird Loans Mortgages For An Apartment - A New Bank Attitude?
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Description | In New Zealand, apartments have been amongst the least preferred of any residential property in terms of bank's willingness to lend. In addition, the various banking organisations have different rules on the value of apartments as security. To make matters more confusing for the potential apartment buyer, the criteria for lending varies between banks more widely when dealing with apartments than almost any other type of security. The rest of the world embraced apartments as a normal and accessible living option some time ago. But in New Zealand both the property buyer and the banks have been less accepting. Problems with leaky buildings and losses on loans to overseas apartment buyers have not helped. Up until recently banks have considered apartments "normal" only when they are 50 square metres or greater. Even then, the most enthusiastic lender would only go to a maximum of 80% of the value of the property whereas they regularly lend to 90 or 95% with 'standard' properties. For smaller units, sometimes the hummingbird loans no credit check direct lender payday loan-to-valuation level could be as low as 50%. Fortunately times are changing with some banks extending the lending on apartments to the same 90 - 95% level, without putting the old restrictions on the size. Borrowing up to this level is a risk for both the lender and the borrower, however, so banks are still naturally cautious. If you are thinking about buying an apartment, here are some of the questions you will be asked when looking to arrange finance to purchase the property: 1. Location, Location, Location City fringe and the suburbs are more attractive to lenders as there are fewer apartments outside the inner city. Within the central city area, there are a much greater number of apartments. The potential for over-supply means banks are concerned that if they need to sell the apartment in the event of a default on the loan, they will not get as good a price. 2. Size matters The bigger the better. If there are multiple apartments in a complex this is less attractive to the banks and the more there are, the less they like it. Number of bedrooms compared to the size of the apartment also counts. If two apartments that are the same size, one with three bedrooms will be less desirable than one with two, for example. In saying that, we have recently completed a loan for a client at 90% on a 20 square metre studio apartment. The banks determine how much money they are likely to make if they have to sell the property quickly. So more bedrooms in a small apartments mean the bedrooms are smaller and the property harder to sell. 3. Free or leasehold Freehold is preferred because it means there will not be unexpected and unpleasant increases in ground rent sometime in the future. Even though times are changing, when looking to buy an apartment start with the expectation that you may only be able to borrow 80% of the value of the property, and plan accordingly. 4. Conversion or purpose-built Was the property specifically built as an apartment complex or was it converted from a previous type of building. There are conversions found in New Zealand because it is easier to convert say an office block into apartments, than build from scratch. These will become a thing of the past as they are less likely to comply with new building standards. A house split into two is still considered a residential property. 5. Who is borrowing the money Banks will also do an individual assessment of the person(s) borrowing circumstances. They will take into account the borrowers ability to repay or service the hummingbird loans direct lenders installment loans online, the size of their deposit (and whether they saved it themselves). 6. Construction Quality Apartment lending criteria is still affected by the same issues in regard to the exterior cladding type. There are a number of apartment complexes in Auckland which have been blacklisted by the banks due to leaking issues in the past. When purchasing an apartment in a complex, it is very important to check body corporate minutes for any history of leaking issues. 7. Earthquake standards compliance After the Christchurch earthquakes 2010/2011, the banks have become a lot more aware of earthquake standards and any property built before 1976 are subject to a more restrictive building code. We will see banks ask for proof that buildings comply with earthquate standards. Apartments that are part of a complex are considered a commercial building for the purposes of earthquake standards and as such fall into the first wave of investigation by the building authority. If you are looking for a home hummingbird loans payday loan no credit check direct lender or have just started thinking about a property purchase, talk to an experienced Mortgage Broker. They will be able to find the best mortgage arrangement for your particular circumstances with the banking institution most suited to your needs. Edge Mortgages are a New Zealand based mortgage and insurance solution provider making it easy to get home loans and finance solutions. |
Created | 26 Aug 2018 |
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