LTV:

• 90% Owner Occupier and Investment on residential property - NZ resident (with Lenders Mortgage Insurance)
• 85% Resident Remortgage for capital raising (max lend for studio apartments)
• 80% Non- Resident Investment Mortgage and Resident Self Build Mortgage
• 70% UK bank on residential property, NZ Bank on commercial property

The LTV is the maximum a lender will advance and is the lower of purchase price or valuation.

Rates:

Mortgage Rates are tiered according to LTV. The most competitive rates are from overseas banks for investment properties, except at high LTV's.

• >50% NZD Mortgage (Reserve Bank of New Zealand Rate- currently 3%) + 1.69% margin
• >50% Sterling Mortgage (BoE Base Rate – currently 0.5%) + 1.89% margin
• 50% - 60% NZD Mortgage ( Reserve Bank of New Zealand Rate – currently 3% ) + 1.79% margin
• 50% - 60% Sterling Mortgage (BoE Base Rate – currently 0.5%) + 1.99% margin
• 60% - 70% NZD Mortgage ( Reserve Bank of New Zealand Rate – currently 3% ) +1.99% margin
• 60% - 70% Sterling Mortgage (BoE Base Rate – currently 0.5%) + 2.19% margin
• 70% - 80% 6.45%
• 80% + 6.45% (plus cost of insurance)

Term:

Mortgage terms for Residents are between 5 and 30 years, and must be paid off by age 70. For non- Residents, the choice is better, with some lenders not applying the age restriction.

Fees:

An arrangement or establishment fee of 1% is usually payable for a mortgage. Valuations cost around $400, but are not always required as some lenders just lend a % of the purchase price. Om loans above 80% of the purchase price lenders will either charge for Lenders Mortgage Insurance or self-insure. Between 80-90% this can be 1% of the loan and above 90% can be 1.5% of the loan

Products:

The available product range for non-residents is the same as that available to residents of New Zealand, and  it is possible to obtain the following types of mortgage:

• Fixed rate
• Adjustable rate
• Flexible repayment mortgage
• Multi currency loans
• Interest only investment mortgages
• Offset Mortgages

The New Zealand market has a variety of mortgage providers, from the big multi national and national banks through to small building societies and specialist lenders, just as in the UK. As a broker we have many broker only products available to us.

Affordability:

Typically mortgages can be arranged up to 5x sole or joint income, so long as the committed monthly outgoings do not exceed 50% of net monthly income. Non-Residents looking for mortgages in New Zealand need to prove their income, whereas low-documentation mortgages are available to residents. For the salaried, payslips will be required but if you're self-employed, get your accountant to write a letter confirming your income. In addition, we require business accounts for the last two years (translated into English)

Structure:

• There are a number of advantages to setting up your property investment as a company or trust:
• It enables you to separate your business activities from your personal interests – so your personal assets can be protected if anything happens to your business.
• You may benefit from tax advantages. The current company tax rate is lower than the top individual tax rate.
• It makes it easier to treat your residential investment property like a business.

There are a number of company structures to choose from, including a Loss Attributing Qualifying Company (LAQC) which, unlike some other structures, allows you to offset any losses against your personal income tax.

Structuring your property and other investments is an important part of an overall financial plan. Your accountant and lawyer will help you to decide on the best structure.

Fees and Taxes:

Mortgage Arrangement or Application Fee : 0.5% (UK Lender) 0.5 -1.5% (NZ Lender)

Valuation and Legal Fees as in the UK. New Zealand

• the land is acquired for the specific purpose of resale
• the owner is a builder; or a land developer
• the land has been re-zoned
• the land is under a scheme of subdivision or development.

New Zealand has a Goods & Services Tax (GST) like VAT, which is presently 12.5% and does not apply to letting of residential dwellings. It does apply to commercial lettings, and you are legally obliged to register if your gross turnover is more than $40k per annum. An apartment under a formal lease arrangement or management contract with a management company may fall within the definition of a commercial property.