No deposit ... no mortgage
5:00AM Wednesday April 09, 2008
By Maria Slade
Home buyers with no deposit wanting 100 per cent finance will now find it extremely difficult, if not impossible, to get a mortgage.
The contracting property market and international credit crunch has prompted mortgage lenders to tighten loan criteria, to the point where those with little or no deposit - or the self-employed who can't show a track record of earnings - may not be able to get finance.
Whereas 18 months ago mainstream banks were competing aggressively with non-bank lenders to gain 100 per cent and 'lo-doc' loan business, now all lenders have stepped back from that end of the market.
Lo-doc loans, where self-employed borrowers complete a reduced set of loan documentation because they have difficulty providing proof of regular income, are a feature of the New Zealand mortgage market because of the many Kiwis who work for themselves.
However, Westpac has just reduced its maximum loan to value (LVR) ratio for a lo-doc loan from 85 per cent to 65 per cent. That means a self-employed borrower wanting to take out a mortgage with Westpac may need at least a 35 per cent house deposit.
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