That Home Loan Hub
Welcome to That Home Loan Hub, your ultimate guide to mastering the world of home loans and property. I'm Zebunisso Alimova, here to simplify the complexities of real estate and provide you with expert insights and the latest trends.
Whether you're a first-time homebuyer, an experienced investor, or simply curious about the property market, this podcast is for you. Join me each week as we unlock the secrets to property success and help you make informed decisions. Let's dive into the world of property together!
That Home Loan Hub
From Pre-Approval to Property Purchase
Stepping into the mortgage pre-approval process can feel like navigating a maze without a map. What exactly happens after you receive that coveted pre-approval letter from your bank? This episode demystifies the journey between pre-approval and property purchase, breaking down the crucial conditions you'll need to satisfy.
We tackle one of the biggest misconceptions first-home buyers face – how to evidence your deposit. For those relying on KiwiSaver withdrawals, there's good news: you don't need to wait until finding a property to get your withdrawal letter! Simply contact your provider directly to start this process. We also explore the ins and outs of registered valuations, explaining why these should only be ordered after your offer is accepted (saving you unnecessary expenses along the way).
Diving deeper into pre-approval conditions, we unpack income verification requirements for both employed and self-employed buyers, the proper way to close existing debts (hint: cutting up credit cards isn't enough), and the increasingly important role of insurance in the approval process. For single buyers planning to have flatmates help with mortgage payments, we explain the border declaration requirements you'll need to satisfy. We also highlight special considerations for properties with monolithic cladding and those in flood-prone areas – crucial knowledge in today's climate-conscious property market.
Whether you're a first-time buyer or returning to the market after years away, understanding these pre-approval conditions puts you in the driver's seat of your property journey. Armed with this knowledge, you'll be better prepared to meet bank requirements efficiently and move confidently toward making an offer on your dream home. Ready to take the next step? Stay tuned for our upcoming episode where we'll walk through exactly what to do when you find a property and how to structure your offer for success.
Welcome back to the episode of Conch Cares. Hey, conch Kia ora. Hey look. Last time we talked about people getting pre-approvals. Yes, what happens when they do get a pre-approval?
Speaker 2:Well, the pre-approval comes of a few conditions. So the bank will give you a letter of offer addressed to you. It's good to read those conditions carefully. So what's outlined in those conditions Well generic is evidence of your deposit evidence of Wait, wait, wait.
Speaker 1:How do we evidence the deposit?
Speaker 2:Well, you need. Well, if you've got your own savings, then a bank statement's fine to evidence that you've saved that personally Evidence of your KiwiSaver. So how we evidence your KiwiSaver is generally, your KiwiSaver provider will provide you with a letter which tells you what you're eligible to withdraw and the balance and things like that on it.
Speaker 1:And this is where a lot of people get confused because they think they can't get that letter until they actually found the property. Yeah, no, you can get it before. No, yeah, so just contact your KiwiSaver provider and you can get the KiwiSaver pre-approval letter. Correct Of withdrawal. Correct, mm-hmm. So that's a deposit, yes, and then what else do we normally see?
Speaker 2:We normally see if you're a first home buyer with 10% deposit, we normally see a registered valuation is required.
Speaker 1:What is a registered valuation? Do we want to talk about that?
Speaker 2:Yeah, yeah, we can go into what a registered valuation Do we want to talk about that? Yeah, yeah, we can go into what a registered valuation is. So a registered valuation is when we send out a valuer or when the banks actually send out a valuer to the property itself to value it, to ensure that your purchase price and the value of the property matches up and ensure that you're not overpaying or underpaying for a property.
Speaker 1:And can people just contact any valuer?
Speaker 2:No, so it needs to be on the panel. So there is a way where your advisor can order that through a system that we use.
Speaker 1:Yeah, so at the moment we use two different platforms. We use Velocity and the Property Hub Yep, and we only order valuation If your offer has been accepted.
Speaker 2:Perfect, yeah, exactly so. We won't make you spend money on something that you actually don't need.
Speaker 1:Yeah, because that's what we're finding at the moment is a lot of clients worry about unnecessary spending if they haven't got the property yet and they don't want to really be spending money on every single house. Right, yeah, yeah.
Speaker 2:So your offer needs to be accepted first before we go and hit the green light on that registered valuation.
Speaker 1:Perfect, All right. So we've covered deposit, we've covered registered valuation. What else normally do we see as part of the condition? Sometimes there might be things like income. You know, bank would have worked off your approval at a certain level of income. Bank would have worked off your approval at a certain level of income. But sometimes there might be a pay slip missing or confirmation from your employer may be required. So just income may be required.
Speaker 2:Additional income confirmation, like, for example, those who do a bit of overtime or some shift work or something to fully capture your income. They may ask for your IR3 or IR4. To confirm your last 12 months income. Also, if you're self-employed as well, you may have provided your financials, but some lenders do ask for additional supporting documents for that. Again, it's like your IR3 showing that it has been filed.
Speaker 1:Yep, absolutely. We also see sometimes the confirmation of closure of debt. So, for instance, at the time of the application, if you had things like afterpay or credit cards or certain loans and you told us or your advisor or your banker that you're going to be closing, that they might put it on a letter to confirm you actually have shut it down. Yes, and just cutting up a credit card is not shutting it down. I'm just putting it out there because in the past I had clients that would say to me oh, I cut up my card, I don't have it anymore. No, I'm so sorry to say you actually have to physically ring the provider or email them and get confirmation that your account has been closed down and the debt fully repaid. And we need to provide those letters back to the bank to tick off that condition Because, remember, the banks also get audited.
Speaker 1:We get audited for the work we do. So everything we say you will do has to have a proof to it. We can't just take people's words for it, especially when it comes to our vulnerable clients that only have 10% deposit to buy a property. We don't want them to lose the house. Yeah for sure. We want to make sure they are creating good habits, good spending habits, and they're not going above and beyond their living means.
Speaker 2:Yeah.
Speaker 1:Cool. What else would we normally see as a condition?
Speaker 2:Border declaration is another one. So if you're single, buying your first home and you mentioned that you're going to get a flatmate in or border, so banks do require you to get a or to sign a border declaration which can be provided by them so we can send that out to our clients and they get that signed.
Speaker 1:Yeah, Because each bank has its own form as well for the border declarations. And look, sometimes people go into panic mode of oh my God, I don't have a border yet, I don't have flatmate yet, I don't know who's going to live with me. It's okay, you know, because you don't have a house yet, you don't know who you're going to get until you get a house. But you might start talking to some friends. Sometimes people are already flatting with people and these people are happy to move in with them, but sometimes they may not have anyone in mind yet. So just maybe start talking to people and put it out there that you're looking to buy a house and will they come and live with you?
Speaker 1:Yeah, yeah, Awesome, All right, I think we're pretty much covered off the main ones. Every now and then we get a curly one. So one of my favorite ones from one of the banks that always put it as a condition in their pre-approval letters. Something I've been trying to do when I was a baby banker is if the property was built between 1990s, 1989 to 2001, and if it's got a monolithic plastic letting, we may require a building report with a weather tightness. So that means you know to either stay away from those type of properties and we talked about it in the past or the bank will require a full report and that costs quite a bit of money.
Speaker 2:Yeah, actually you going on the insurance side, I have actually noticed that insurance condition has popped up a wee bit more as well as a condition, so you must be able to obtain insurance for that property, because we're seeing a lot of properties now. Well, I guess, with all the natural disasters and things we're having, that ensuring properties first or checking that you're able to insure it with the insurance company.
Speaker 1:Yeah, and I mean us being inenter here. Just in the last week we've seen so many clients coming in to us and going, oh, this property is in the flood zone, can we?
Speaker 1:get cover, and I mean, I've seen half of Carpenter is in the flood zone. Whether it will flood or not, we don't know. And this is why the council is making a lot of us, especially new builds, putting in water tanks to absorb that extra water that's coming through the rain, et cetera. But it's really interesting that you've raised that, because I think insurance is another one that people don't often think until they actually get a property under offer.
Speaker 1:So, now that we've mentioned the property under offer, tune in for our next episode. We're going to talk about what happens when you find a property, how do you put an offer and what to do. Cool, thank you.
Speaker 2:Thanks.
Speaker 1:See ya, bye.