Most of the banks in New Zealand have policies which make it harder to get a mortgage on an apartment (or sometimes anything that’s on a unit title, so terraced homes as well). They restrict lending on small apartments – less than 50 or 60 square metres, say – and require higher deposits.
Those rules are slowly on their way out, as banks start to acknowledge that apartments are now a more developed market than they were in the past – and hopefully, not prone to the same extent of boom-bust that they went through in the mid-2000s.
Kiwibank is officially changing its policies to allow for easier apartment lending:
“Kiwibank is set to reveal a new apartment lending policy in about this month.
It will allow deposits of as little as 15 per cent on owner-occupied apartments in the Auckland CBD with a minimum size of 40 square metres, and deposits of 10 per cent in apartments on CBD fringe and suburban areas. Apartments must cost a minimum $275,000.
That means borrowers will need a $50,000 deposit to get into a $500,000 city fringe apartment.
Most banks require 20 per cent for owner-occupiers and 30 per cent for investors, and will not lend on apartments smaller than 50sqm. Westpac allows some buyers to purchase apartments with a 15 per cent deposit”.
Most banks will be happy with a 10% deposit for a standalone house, so it’s good to see apartments being treated more equally.