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10% Down Payment vs 20%

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  • 10% Down Payment vs 20%

    As a first home/rental buyer. Which would you do as your first investment?

    10% cash deposit or a 20% cash deposit

    If I was to save up for a 20% deposit it would be 2-3 years down the track where as 10% deposit is 3-6 months away. This assumes houses under $250k

    Also another question. I might be looking to buy out of Auckland, just keeping my options open. What are opinions on the likes of Hamilton, Whangarei, Tauranga, Rotorua, Palmerston North, etc if buying from Auckland.
    Last edited by ENP; 02-09-2010, 07:17 PM.
    "You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right"

  • #2
    you live in AKL, how could you secure 10 % deposit from a bank?

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    • #3
      I'd wait till I had the 10% deposit, then I'd start looking, while saving hard to increase the deposit.

      You're asking whether to buy in 6 months or to wait for 2-3 years. The answer is to buy when you find a place where the numbers work - assuming that you can get finance at that point. Crystal balls are over-rated.

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      • #4
        Originally posted by kakapp View Post
        you live in AKL, how could you secure 10 % deposit from a bank?
        I've gone to Westpac and also a mortgage broker and they both said 10% is fine but the interest rate will be 0.5% higher than if I had 20% also that I needed to be in my job for 1 year (come this December that will be one year in my job) so people are willing to lend me 10% up to $250,000 on my wages.
        "You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right"

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        • #5
          Originally posted by One View Post
          I'd wait till I had the 10% deposit, then I'd start looking, while saving hard to increase the deposit.

          You're asking whether to buy in 6 months or to wait for 2-3 years. The answer is to buy when you find a place where the numbers work - assuming that you can get finance at that point. Crystal balls are over-rated.
          So 10% deposit is where most people started for their first house?
          "You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right"

          Comment


          • #6
            Personally no. 25% deposit. That was in the days of Reserve Bank controls and retail banks had monthly lending limits.

            Also the rule of thumb was to require a minimum 20% deposit and monthly mortgage payments not to exceed 33% of your income.

            The Housing Corporation (and Rural Bank) allowed 10% deposits but you had to be needy to qualify.

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            • #7
              Originally posted by Winston001 View Post
              Personally no. 25% deposit. That was in the days of Reserve Bank controls and retail banks had monthly lending limits.

              Also the rule of thumb was to require a minimum 20% deposit and monthly mortgage payments not to exceed 33% of your income.

              The Housing Corporation (and Rural Bank) allowed 10% deposits but you had to be needy to qualify.
              25% on a place in Auckland would be $75k roughly. That will take me another 5 years of saving...

              5 years!!
              "You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right"

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              • #8
                I bought my first place last September in Auckland (south) with a 10% deposit with BNZ. No dramas at all... Had to pay the low equity fee on the rates for one month until i got a valuation and it valued up about 20% so i got rid of the low equity fee and also my deposit back by way of revolving credit all in the space of one month after i bought it!
                Last edited by FrozenWaves; 03-09-2010, 10:21 AM.

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                • #9
                  I got mine couple of years back with 10%

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                  • #10
                    Originally posted by ENP View Post
                    25% on a place in Auckland would be $75k roughly. That will take me another 5 years of saving...

                    5 years!!
                    You need to get a second job....that's how most of us "oldies" did it

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                    • #11
                      IF you had money would you advise being much lower geared in the current market.
                      I have a lump sum to invest in NZ and was thinking of securing lending at no more than 50%. Should I be putting my money into more properties instead??

                      (Sorry if this is the wrong place to ask, should I start a new thread?)
                      Last edited by Dissindat; 03-09-2010, 12:41 PM.

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                      • #12
                        ENP: Go for 10% and buy something cashflow positive. Not only do you get tax benefits from property, you get student loan benefits. Mainly, the government will offer you some more interest free money

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