What does each bank lend on apartments?
How banks lend money to apartment owners is very different to how they lend to housing owners. For example a bank will lend to a new home buyer currently at 80% of the home’s value.But with apartments, it’s not so simple. Banks will only lend 80% if the apartment is of a specific size. If it is lower than that size, the bank will only lend 50% of the apartment's value.
But what makes it even more complicated is that each bank has different criteria. Here's the 80% threshold 'For the Major 5' (size is not allowed to include the deck area):
Westpac - 50m2
BNZ - 50m2 (was 40m2)
ASB - 40m2
Kiwi Bank - 50m2
ANZ - 45m2 for a one bedroom, 55m2 for a two bedroom
Now this criteria is ever changing; and rather than going from bank to bank, I would recommend going to a mortgage broker that specialises in apartments because as you delve deeper there is a bit more to it. A broker will know all of it as well as the latest changes, and match you with the best bank for your needs.
I.e. some banks lend less to apartments that are in buildings that were used for something else previously (conversions); or some banks, if they have mortgages with over 20% of the owners in a building, won’t lend on any more.
What does each bank lend on apartments? Andrew Murray, Apartment Specialists, talking about all the different banks and how they lend on apartments is different to houses. Well, first of all, when you're looking to buy your first home a bank will lend up to 80% on the value of that home. So you can have a mortgage which represents 80% of the value of that home.
Now when it comes to apartments, yes that's the same, but only to a certain size. And where it gets complicated is that each major bank in New Zealand has different criteria, which is ever changing. So, for example, BNZ was 40 square metres, so if you found an apartment that was 40 square metres, they would lend 80% of that value as a mortgage.
Well, they just recently put it up to 50 square metres. So that means now you can't get 80% for your loan. So what does that mean if you're below these sizes for the banks. So that means, these sizes are the numbers I've been mentioning, if they are the size or above that means you can get an 80% mortgage. Now if it's below, that means they'll only give you 50%.
So I'm just going to run through the major banks here and if you forget what I've said - because I know I do talk fast from time to time - there's a table down below or underneath this podcast with the actual criteria. So for example if you're looking at Westpac, you can get an 80% mortgage on 50 metres squared or larger. These sizes do not include decks or outdoor courtyard areas. It's only internal area. So Westpac is 50 square metres, BNZ is 50 metres squared again and that's the one I mentioned.
It was 40 metres squared and it's now changed. ASB is 40 metres squared so that's the lowest. Then you've got Kiwibank which is 50 metres squared. Then you've got ANZ which does it slightly differently, which is 45 metres squared for a 1 bedroom and 55 metres squared for a 2 bedroom.
Now as I mentioned, this criteria is ever changing. The best way to actually get on top of it is not to go directly to a bank, because that particular bank will tell you that's how it is when every bank is different. It's actually better to go to a mortgage broker who specializes in apartments and they keep up with this criteria every minute of the day because that's what they do.
They'll match you with the bank that best suits what you're trying to do. So what bank is best for you. Now, I hope that helps. It does get a little bit more complicated than that and the mortgage broker will explain that to you. For example, some banks will not lend to certain buildings because they're exposed too much.
Many people in that building or they might have some buildings they just don't like for sometimes no reason at all, but a mortgage broker would help you there. But that's a good overall and I hope that's helped.
If you have any questions, flick me an email at [email protected] or call +6421 424 892 and I’ll be happy to help you with your queries.