Home truths: 'Ditch the Sky and start saving'

[Nick G]

I phoned up 2 banks today to discuss a home loan for an affordable property in this area. The first banker sounded rather disinterested and the 2nd one was nice about it but said I would need 50% deposit.

I have no debts, live frugally, drive a 20 year old car and can afford the repayments and can put down 20% deposit and it's still not ****ing good enough. All these people trotting out the total nonsense lines about debts, flash cars, Sky TV and "high expectations" can stick it where the sun don't shine because they are totally out of touch with reality outside their narrow world.

My proposal was to borrow 80% of an entry level property I'd have to put some work into - ie: affordable and modest expectations.

The reality is the bankers have thrown so much money into the property speculation pit which is Auckland (and other major cities) they are now a**holing everyone else.

Are they under $100K in value? That's been the rule for years, right through the slump. 50% lending if under $100K in value or under 50sqm.

[Anthonyacat]

Are they under $100K in value? That's been the rule for years, right through the slump. 50% lending if under $100K in value or under 50sqm.

Yep - I'd imagine they are. I encountered this a while ago for a property I eventually pulled out of.

The trick - sad as this is - is to buy a more expensive property elsewhere, wait for (or force) some price appreciation, then top up the mortgage on your expensive place and buy the cheapo outright.

It's a crazy bank rule, but one that most of the banks seem to enforce. I'd imagine it's as much about administration costs as anything else. A tiny loan costs as much to write and maintain as a huge one. They just don't want small mortgages.

[PTWhatAGreatForum]

Are they under $100K in value? That's been the rule for years, right through the slump. 50% lending if under $100K in value or under 50sqm.

Under $100k. I am keeping my expectations modest. What pisses me off is this is yet more proof the previously mentioned lines are just lies to distract. "Look the other way while we continue to rake in the money" demand the landed gentry. Ditto for John Key and his land tax.

[Nick G]

Yeah, them's the brakes and has been so for ages. Can you buy it and increase value to over 100k? Then you'll be able to refinance down to 20% deposit pretty quickly.

[Lovethiscountry]

Michael. Would it work for you if the bank lent you 50% and you got a second mortgage to bring you up to 80%? If so what interest rate would you be willing to pay on the second mortgage? Why not ask on here if someone could help? Where there is a will there is a way.

[PTWhatAGreatForum]

Yeah, them's the brakes and has been so for ages. Can you buy it and increase value to over 100k? Then you'll be able to refinance down to 20% deposit pretty quickly.

That will need more deposit and higher repayments. I prefer to live within my means. Besides, I'm not sure buying in at say $60k (low end of the market) and spending money I don't have (and should be put towards paying it off if I did) is a wise decision.

My plan is to buy, do a bit of work and rent out, with living in it personally a fallback position. I would not rent out a property I would not myself live in!

The numbers work for this. The numbers don't look right for overspending on renovations.

[Wayne]

English is getting worse - breaks (as in broken) not brake (as in stop).

[Wayne]

Moving to the dark side MichaelNZ.

[PTWhatAGreatForum]

Moving to the dark side MichaelNZ.

I suppose it could be seen that way. I like to think I'd be a decent landlord. The issue is can I maintain this?

[Wayne]

I suppose it could be seen that way. I like to think I'd be a decent landlord. The issue is can I maintain this?

A lot of us like to think we are decent LLs - a lot of public (especially the media) don't think they exist.
I'm sure you have tared us all in the past with sweeping statements.

[PTWhatAGreatForum]

I'm sure you have tared us all in the past with sweeping statements.

And you are taking a selective view / interpretation of what I have written. I only report what I see and sometimes it sucks.

[Wayne]

And you are taking a selective view / interpretation of what I have written.

Maybe.
But anyway - welcome to the dark side (when it happens).
It isn't always easy to be a good LL but it is worthwhile (sleep better at night).
One of the commandments comes to mind - treat others as you would have them treat you.

[Sportsvee]

Michael, if you want a good mortgage broker I can suggest one.

I am also looking at a sub 100k property and to be honest, don't see any issues with getting a loan for it. Will be using built up equity, so no money down, but still.

And again, don't worry about anyone else, at the end of the day the only one who will stop you succeeding.....is you.

You really need to drop this negative vibe.

[Keys]

There are two kinds of people in this world.

Both are successfull with their thinking.

Those who think they can't.

Those who think they can.

[Sportsvee]

Well said Keys, I like it.

Hope you don't mind but I'll steal that.