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
Second-Tier Lenders: The Hidden Path to Homeownership
Breaking down barriers to homeownership is what drives our passion as mortgage advisers. In this heartwarming episode, we share a success story that proves there's always hope for aspiring homeowners, even when mainstream banks say "no."
Meet a remarkable family with three young children who faced significant obstacles on their homeownership journey. Despite having a steady occupation, the father had changed employers to support his family's needs, disqualifying them from Kāinga Ora's First Home Loan programme despite meeting income requirements. When traditional banks wouldn't consider their application, we discovered a creative solution through a second-tier lender that allowed them to enter the property market with their 10% KiwiSaver deposit.
We explore the strategy of using non-bank lenders as a stepping stone, revealing how after just three months of proven payment history, clients can often refinance with mainstream banks through dollar-to-dollar refinance options. This approach proves particularly valuable in today's buyer's market, where Wellington property values have decreased by 3%. By entering the market now rather than waiting months to meet conventional lending criteria, buyers can build equity sooner and avoid being priced out by potential future market increases.
The podcast delves into common misconceptions about first home buying programmes, clarifying that income caps are just one of several eligibility factors for Kāinga Ora loans. We emphasize that homeownership remains achievable for many Kiwi families on average incomes through strategic planning and exploring alternative lending pathways.
Have you been turned down by mainstream banks? Don't lose hope – talk to us about finding your unique pathway to homeownership. We're passionate about helping families achieve their property dreams, no matter what obstacles stand in their way.
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Hello and welcome back to that Home Loan Podcast. Today we share some exciting, exciting news with you. We managed to get across our first home buyers and I've got James on the case and he's going to tell us what went on. Hello, james, hey, how's it going?
Speaker 2:We've got super good news, yeah. So we've got some clients that we've been working with. They're a really awesome family this is the greatest people ever and they've got three young children and they don't have a big income, it's pretty average and the mum, you know, she looks after the kids. So they get a bit of working for families. So they've got the working for families and they've got the average sort of income. But we've managed to get them a loan with a second tier or a non-bank lender, when all the other banks, you know, wouldn't go near them. So it's really cool for them. It gets them into the property market.
Speaker 2:They just want a family home you know, and they've been working for it for a little while, and this is great to finally get them across the line.
Speaker 1:Yeah, so let's go back to the beginning. Originally, the mister contacted us and he wanted to see if he even had a chance at all right, because he really wanted to buy a house for his family.
Speaker 1:They've moved around a bit because he had job opportunities in various towns and then they ended up coming back to their hometown to be around their family because, having three little kids, they needed to have some family support around the mum. And when we tried, there were perfect candidates for Kayanga Ora, except he wasn't in the same role with the same employer for 12 months that's right.
Speaker 2:He'd had to move around. He did it for the job, but he also moved around because he was helping various families out in different areas. So he was trying to help his family out. He was doing the right thing, but you know, he just got caught out. He got caught out with that clause that you have to be. Was it 12 months?
Speaker 1:12 months.
Speaker 2:And he's only been in for three months.
Speaker 1:Yeah, even though he was doing the same role. So the same occupation, just different employers. And this is something to be very aware of. If you think that you can apply to Cayangora because your income meets the threshold because a lot of the time people only look at the income you know if you're single, it has to be 95,000 cap, and then if you joined a couple, you know, if you're single, it has to be 95 000 cap, and then if you, uh, joined or coupled you know, with the dependent etc, it's 150 000 dollar income cap and they were under the cap.
Speaker 1:So they thought cool, we're under the cap, we can do this, and we've been contributing to our kiwi saver for three years. We can do this. However, few misconceptions here. You know, um, and one of them is 12 months in solid employment, or two years if you're self-employed. And for this particular family, we managed to find them the solution where we can take them to a second tier lender. They had 10% deposit. They buy a property and then in three months time, after proving that they can afford their payments, they've got good credit history, we can actually refinance them Because a lot of banks what they do is they do dollar-to-dollar refinance and it's exempt within their policies.
Speaker 1:So when you consider it to be high LVR deals, so high loan-to-value ratio, a lot of banks can't take you in because it's outside their quarter or how many people they can have with that position. However, when it comes to refinance dollar to dollar, if we're doing exactly the same amount of refinance, you're not topping up the mortgage at all then in most cases you would be exempt. Okay, so we can refinance them.
Speaker 1:Yeah, which is fantastic news for them. And, to be honest, in the grand scheme of things, I mean, you would be exempt. Okay, so we can refinance them. Yeah, which is fantastic news for them. And, to be honest, in the grand scheme of things, I mean, you know, if they went to a normal bank today, they would be paying around 5.5% interest. Yeah, with the second tier lender, it's.
Speaker 2:It'd be just over seven or something like that.
Speaker 1:Yeah, exactly it's under eight and it's actually not that bad, you know, not that bad and it's not a long-term scenario usually, isn't it Like you're saying?
Speaker 2:it gets you through a sticky period and the key thing is that 10%. If you're going from the client or aura, you only need 5%, but you know, if you're looking at the non-bank lenders, you're needing 10%. So the great thing is that most of these, even though these families are on low incomes, they're still paying into their KiwiSaver. So most of them and because they're at the lower end of the market, you know they only need 40 grand in their KiwiSaver to buy a $400,000 house. Is that?
Speaker 1:right? Where's my math gone? Yeah, 40,000 for a 400K house. And you know the benefit of buying right now, like we are at the lowest with the property market, right, and if they buy in right now, they're already winning, because if they wait longer, let's say Kyangoro tells them you have to come back in 12 months' time because you haven't. Well, nine months' time. In nine months' time the property prices might go up another 5%, so the goalpost would move again. Yes, they might lose 2% now on their payments because the interest rate is higher, but they don't have to come up with another 5% savings in nine months' time.
Speaker 1:So the winnings are there for them in nine months' time.
Speaker 2:So the winnings are there for them, yeah, and you're building equity sooner as those house prices move, you know. So it's really cool. I'm really keeping in very good touch with all these clients about the state of the market, just so that they're still aware that it is in their favour, and so we'll keep watching conditions out there and see if we're going to see any changes, but it doesn't look likely this calendar year in terms of whether the market's going to move very much.
Speaker 1:I don't think, yeah, I think it's going to remain a buyer's market. The recent stats came out and it was the Wellington, I think, went down 3%. Yeah, I saw that I was like whoa. I think we were the lowest region, wasn't it?
Speaker 2:Yeah.
Speaker 1:Got hit the most.
Speaker 2:Poriura is doing okay there. Apparently, All the other ones are not so good.
Speaker 1:Thank you, james. This was very informative. I believe it's a very important subject for those that are on a lower income, that think they don't have any hope or think that, just because you know Kayanga Ora is not an option for them, that there is no other way. There is a way we can make it happen, and we work very closely with our clients and I know you do a lot of work with them and their budgets and you go through their numbers and give them pointers, so I think it's fantastic to have someone like you on the team that has that care and passion.
Speaker 2:Yeah, I really like doing that. Just you know, come and talk to us. We're here to help you and we can point you in the right direction, get you on the right track to getting your first place.
Speaker 1:Awesome. Thank you so much and have a good day.
