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While your house may be worth a fortune, it’s now harder than ever to convert property assets into cash because New Zealand’s major banks are assessing mortgage and loan applications against income over equity.
Not only do New Zealand mum and pop investors have to come up with 40 per cent equity to buy an investment property, now the banks are charging them higher margins on their interest rates too.
New Zealanders continue to top up their mortgages at a steady clip, but more and more home owners are discovering that the equity in their homes is no longer enough for bank approval
What do the banks really look at when it comes to assessing a mortgage application. Surprisingly, income is less important than you think...
A recent example where the bank declined a mortgage application from an Auckland man who works 60 hours a week shows that the banks are also taking lifestyle factors into consideration under the new 'Responsible Lending' regime.
Home buyers will need to demonstrate clean and disciplined spending habits over about 18 months to have every chance of getting a mortgage.