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
Equity To Rentals: A Clear Path For First‑Timers
Ready to turn your first home into the springboard for your first rental? We break down a straightforward path from owner‑occupier to investor using simple, real‑world numbers and clear lending rules. No jargon, no hype—just the maths that shows what’s possible when you use your equity well.
We start with a common scenario: a homeowner with 20 to 30 percent equity and solid income who thinks they need 30 to 40 percent across everything to move forward. We show why that’s not the case, how banks view your leave‑in equity, and how to calculate usable equity in minutes. Then we compare investment deposits on existing property versus new builds—30 percent versus 20 percent—and explain how that single difference can shift your buying power from a tight $300k range to a much more workable $500k range. You’ll hear a step‑by‑step example on a $500k home, converting $100k of equity into a viable deposit, plus a clear look at rent coverage and cash flow stress‑tests.
We also zoom out to market context. Rental demand remains strong in several New Zealand pockets, with Kāpiti as one example where well‑presented homes command healthy rents. We unpack why migration flows between New Zealand and Australia matter for vacancies and yields, and how shifting affordability across the Tasman can tilt tenant demand here. You’ll get practical guidance on what banks actually count as a qualifying new build, which documents to confirm before you rely on a 20 percent deposit, and why timing your pre‑approval with build delivery is critical.
If you’re weighing up your first investment step, this conversation gives you a usable framework: map your equity, choose your target price point, pick between new build or existing, and run the cash flow with conservative settings. Subscribe for more practical property strategy, share this with a friend who’s close to buying, and leave a review with your biggest question—we’ll tackle it next.
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If you currently have a house and you want to become an investor, this is an episode for you. Listen up. I've got James in the house. Hello, James.
SPEAKER_01:Maureen.
SPEAKER_00:All right. That's a third different greetings. I love it. James, we laughed a little bit about this subject because you told me it's owner operator. But it's not owner operator, it's owner occupier to a long-term investor. What do you want to tell me?
SPEAKER_01:Well, this uh started, and you I mean you would have these all the time, but and I've got a few clients like this, but I've got a lot of uh first home buyers that are already in a really solid position. So they've got their first home, they've got say 20, 30% equity, they've got very really solid incomes, and I can see that they're gonna be able to pay off their mortgage quite quickly and and build up that equity. And they've already saying to me, like, when can they get their next house?
SPEAKER_00:I love it.
SPEAKER_01:So what I would love to talk to about uh because there's quite a lot of people in this situation now because of the Kiwi Saver situation has really brought a lot of a lot of equity into the d deposits. So you come in you you've got first home buyers with quite big deposits now because of their Kiwi Saver. So it I think it's going to really help people who are financially sorted to actually get that second or that third house quite quickly. So I I think it would be good just to talk about what does a first home buyer need to do to go from having been an owner operator, owner occupier to uh to an investor.
SPEAKER_00:Okay.
SPEAKER_01:Getting that first that first investment property.
SPEAKER_00:Yeah, so what is it gonna take?
SPEAKER_01:Well, I think they're gonna need what about 60% uh sorry, 40% equity.
SPEAKER_00:No wrong. They need at least 30. Oh wow but wait, there's more. If they're buying a new build, they need only 20.
SPEAKER_01:Ooh, okay.
SPEAKER_00:How good is that?
SPEAKER_01:That is pretty awesome. So I was like, so we're so excited.
SPEAKER_00:We're so excited about this. Because what it means is that they only need to leave 20% behind in their own property, and then whatever extra is on top of that equity, they can take to we can take it to another bank or they can stay with the same bank, and all they need is really 30 to 20% deposit for the investment.
SPEAKER_01:Okay, so is that is uh so when we're talking about 30%, we're talking about 30% across the whole more proposed mortgage debt.
SPEAKER_00:The new proposed mortgage. Okay, okay. I love how this turned into a training moment for James.
SPEAKER_01:I did warn you about this topic.
SPEAKER_00:I love it. No, this is great because there will be lots of people that think like you, right? There will be lots of people that thinking, oh, I need all, you know, I need 30 across the whole thing. No. So the way it works, let let me give you simple calculations. So if the house is 500K, right, they need to leave 20% behind in their current home. Yeah, so that's at least 100K that they can't touch. Yep. And let's say the mortgage is now 300k, right? So you take away 500, 20% out of that is 400. So 400 is maximum the bank can lend them.
SPEAKER_01:Yeah.
SPEAKER_00:And the mortgage is only 300. So that means they've got another 100k available equity all of a sudden that they can take out from their current bank. So we take that 100k and we go, all right, what can we do with that 100k? Can we buy another house? If it's an old house, then it's 30%. Yeah. So 100k as a 30% deposit, not really going to get them much unless they're buying, let's say, live in, you know, for 300k. Or can they buy another new build using that 100k as a 20% deposit?
SPEAKER_01:Yeah.
SPEAKER_00:And then that means they can buy something around 500k as a new build, which is still possible. There are lots of new builds in that price range that you can find. Yeah. So it's really getting clever with the money that you have, with the equity that you have. How can you use that equity going forward?
SPEAKER_01:Yeah, and it wouldn't necessarily affect your cash flow that much.
SPEAKER_00:But you're adding Well, you hope not, because if you buy a right and if you rent it out, then at least the rent will cover some of the new mortgage repayments. And I think this is where we're going with this podcast, is that it it's a good time for first home buyers, but it's also a good time if you're actually even though the market hasn't been great in terms of house prices, but if you're looking to buy that second property and there's it's a fantastic time as an investor, it's a fantastic time to buy a rental because we still have pockets of New Zealand where there is a shortage of rentals. And to be honest, in Carpeti, we have been quite blessed. We have really strong demand for rentals, good rentals, and people are prepared to pay quite you know good money for it. So this is the time to be buying.
SPEAKER_01:And uh we're at the trough of the market, basically. Uh your and and your interest rates have just popped up a little bit, but you're still at the trough of the market. You've got good value in the future. Um, from what I can understand, migration is just turning a corner. We are, and that really affects the rental market, obviously. So we've got my it's it's it hasn't changed much, but it's it's has has been in a bit of a low over the last year or year or so, as a lot of people leave for Australia. But as things get tougher in Australia, it's really unaffordable to buy a house in Australia and rent in Australia. Yeah.
SPEAKER_00:So the grass is not greener on the other side.
SPEAKER_01:Yeah, in fact, yeah. I've so you've got here you you've got a you're having a change in circumstance where it's becoming more affordable here and it's getting easier to get a job here. Whereas it's getting harder in Australia. So they've been doing really well for the last few years. Well, we've gone through this really tough patch and we've had 70,000 New Zealanders go there.
SPEAKER_00:So you think they're gonna come back?
SPEAKER_01:They could come back. They could come back, absolutely. And but this is what happens as our economy improves compared to Australia's, people come back, and then people from other countries prefer to come to New Zealand instead of going to Australia. So it it just depends on where our economy is compared to Australia's is, as it's not the main it is probably the main thing that impacts our migration quite a bit.
SPEAKER_00:And why do you need to know about migrations basically because of this whole property situation, right?
SPEAKER_01:The rentals, yeah.
SPEAKER_00:Yeah. So I think the equity lesson is the most important lesson for anyone listening out there to learn and the difference between the new builds versus the existing stock that you're buying. It's really interesting, and I think we need to do a whole episode on new builds, what actually classifies new builds. So we'll do a whole new episode on that. I don't want to go into too much detail because sometimes people are confused when they look at new builds and they think, oh, it's a new build, the bank will accept that. The bank may not accept that, even though it's a new build. So um there are certain Ts and C that apply to that. So we'll do a whole new episode on that. Anything else to add for the owner-occupier to a long-term investor?
SPEAKER_01:No, that's pretty good. But just, I mean, any a good time to do it is to start talking about it now, right? Rather than wait. We we're seeing how quickly interest rates are changing already. So if you look if you're in a strong position and you're keen, come and talk to us. Absolutely see what we can do.
SPEAKER_00:Absolutely. Awesome guys, thank you so much for tuning in. And if there are any topics you want us to cover, please do let us know because we record this for you. And for some learning moments for James, but that's okay.
SPEAKER_01:I'm pretending to not know what I'm talking about just for a podcast, by the way.
SPEAKER_00:Exactly. That's just all role play. Awesome. Thank you so much. See ya.
