Mortages for life Stlye Block.....

Any one out there know of any banks etc that will lend at 90% on a 18 acres of land with a 2 bed house. It seems that because the value of the house isnt 50% of the total value of the property were stuffed as they want a 30% deposit. very depressed as the repayments are not a problem. Our current house will only give us a 10% deposit when sold.

Lifestyle blocks seem to be a bit of a gamble in the banks eyes. When we bought this place 4 yrs ago neaar the height of property prices we paid less than GV, had a 35% deposit and they still required us to waste $1200 for a valuation. I couldn't believe it but they set the hoops and we just jump.

They are pretty conservative about lifestyle blocks unfortunately. A mortgage broker may be able to do something for you but in the current market banks aren't too keen on any lending over 80% so even getting 90% on a house can be a bit difficult. Worth a chat with a broker though.

Like skyline glenn we had to get a valuation for very low level lending at one point - the stupid thing was was if the property had valued up at $130,000 less than we offered for we would have still been able to get the mortgage. As I said to the loan officer I was hardly going to throw that sort of money away with a foolish purchase!

Talk to a broker. As others have said, banks can be funny about lsbs and they're also going through a cautious phase re lending generally but they have different policies and there might be one whose criteria you fit. When I bought this place as bare land the first three banks I approached weren't interested at all (didn't even get as far as discussing deposit and income etc) because it was too small to fit their criteria for a farm, and too big to be a lsb. I gave up talking to banks and called a broker.

Interesting about the house/land value. Perhaps your bank is more geared towards McMansions. Are they going on GV or have you had a valuation done? The numbers can be quite different.

A 90% mortgage is pretty big though - wouldn't take much of a drop before you'd have negative equity, and lsbs can suck up money at an alarming rate.

Good luck.

We found SBS very helpful and at the time we bought our first block they didn't require a deposit as large as the others were asking for. Not sure if that has changed but they're lovely to deal with anyway

My understanding is that banks are getting much stricter about any mortgages, not just LSBs, and going back to the old 70-80% lending in most cases.

Not knowing your individual circumstances but...I would be looking very carefully at a 90% loan, as HD says, doesn't take much nowadays to head into negative equity, as others have highlighted in other threads about drops in value/market stagnation. A few percentage point increases could also see you in trouble. I would also be wanting to do a registered valuation of the property to see how it stacks up with other comparable blocks in the neighbourhood.

HD is also very correct in saying that LSBs can hoover up money at an alarming rate...you want some slack in the budget/contingency plans for that too!

I am sure you've thought of these things, but no harm reiterating them!

I have had a recent experience with lending and banks over the last 10 days and let me say times have certainly changed out there regardless of how secure we all see our positions.

when we first borrowed in NZ 11 odd years ago, my Hubby's then long term bank (westpac) would only lend 50% on rural property, but the BNZ where my FIL banked and where i was opening my first account with them, gave us a loan at 60% value.

From our experience where we had a personal banker who we emailed to either invest or obtain extra funds when needed and had a successful reply within 24 hours our account has been shifted, our email enquiries remain unanswered unless something seriously goes wrong and i get onto the branch manager to nag why, with the outcome that we have just become another number.

And I don't think its an "us'' thing. times have changed and so has lending criteria. However much you can see the positive side to it all....

good luck.

For my part I have just opened an account at a different bank in the hope that dealing with local, I might get a bit more contact than of recent events at our other ''local'' bank.....

Hi and welcome to the site

I cannot reiterate stongly enough what others have already said - go and see a mortgage broker.

When we went to buy our first bit of dirt 16 years ago every bank we approached turned us down. In desperation we went to a mortgage broker. Within a week she had the money for us from one of the banks that had turned us down. Since then we have sold that farm, bought another and added two other properties to it, the latest being in February of this year when the mortgage broker negotiated 100% borrowing. In fairness, that would have been on the colatoral that we have in our existing properties plus another that is freehold but even then I doubt that we could have got any bank to lend us the full purchase price without a broker.

Brokers know the ins and outs, they know how to make numbers look good, they cost you nothing but they're working for you because every mortgage they obtain for a client makes them their income. Use them.

Swaggie, these days it doesn't matter where your bank is and local doesn't matter. Our account is held in Taupo, we deal with the Kaitaia branch and have a personal banker in Kaitaia and another in Taupo. Our mortgage broker is in Taupo but all but one of the farms she has got for us have been in Kaitaia. The farming arm of our bank is in Hamilton - and we have to be involved with them now because of the amount of land we have.

Cheers,
Ronnie

Hi and welcome.

Banks have beecome really hard on LSB unless you are buying a McMansion, as the resale on others is poor if they have to mortagee you.. We went to the bank earlier this year and they would lend us X amount to buy a house(s). BUT not the same amount to buy a farm(let). _ we have rentals already but do not claim depreciation so our bank sees us a little drifferent from most property investers. They told us if we wanted to buy what we where looking at, then we should "cash up" and reinvest in a LSB, they would lend us on a bigger farm (but that was not what we where looking for) as there was more resale value in it.
It seams more than 2.5Ha & less than 50ha is a no go for most people & banks........
Also most people only stay on LSB 5 years on average, so if you take the members here who have been on them 15-20 years there has to be a lot that give up in under 1!
So dependant on what you are doing for a living, have you thought about working on a farm, saving your wages (as some come with a house) and you get to do the Lifestle thing, earn a living and not have the capital out lay, not perfect, but a good second choice, and no loss if the market goes down, which some are forcasting it still will. (maybe that's why the banks will not lend).

lizard;316537 wrote: Also most people only stay on LSB 5 years on average, so if you take the members here who have been on them 15-20 years there has to be a lot that give up in under 1!

lizard, that is a myth, and was recently busted:

Myth busting
There is something of a myth floating around that lifestyle properties turn over very quickly as urbanites chasing the dream of semi-rural living soon learn the harsh realities of tank water, septic tank sewage, looking after paddocks and tending to the animals. The myth has it that these people toss in the towel after only a few short years and return to the city. So is this true or not?

Across New Zealand the average time that owners of lifestyle properties have been there is 7.2 years. Does that number sound familiar? It should - because it’s the same that we saw for houses.

Just like for houses, there are of course people who have owned their lifestyle property for less than two years. For lifestyle properties this is 8.6% which is actually fewer than for houses where it is 10.9%.

The story is similar when looking at sales of lifestyle properties in 2009 when 15% of those that sold had been owned less than two years. This is again less than houses where 18% have been owned less than two years. The proportion of houses and lifestyle properties owned for more than five years and more than ten years is very similar, in other words there is no evidence that lifestyle properties turn over more quickly than houses.

I think we can safely call that particular myth busted!

From qv.co.nz [8D][8D][8D]

Use a mortgage broker, our son was buying, went to "his" bank and was given according them a "special" rate. Was talked into going to a MB, who came up with a rate 0.5% lower. Which bank, you guessed it. "His" bank.[:0]:confused:

Myth busted!!! Thanks for the information Kate, maybe the "myth" keeps going as there are not as many lifestyle blocks as houses, so the "appear" to turn over quicker. I was going on what I have heard from a business manager at the bank....Ans a realestate agent a while a go. We have owned one of our life style blocks for 8 years, and do not intend selling it!! But I'd still like something bigger oneday.

Thank You all for your wise words, we have had advice from a RV that knows the particular block were after and has advised us that its worth $145,000 less then they are asking. which means banks etc will only lend on that RV and no more. I have spoken to a number of brokers and all have said that there was no one lending at 90% (unless house was valued at 50% 0f total value) We need to get nearer the 15% deposit . So back to the drawing board. Not Giving up. Will keep you posted.

Let's hope you can bargain the owners down...$145,000 is a big difference between their expectations and an RV's assessment...so I'm not surprised the bank is a bit concerned...

Good luck!

[FONT=Arial Mäori]Only been in my new property for 2 weeks and initially Westpac would only lend us 65%. We needed at least 70% and used a broker. They got us a deal which I used as leverage to get Westpac to match the brokers offer ... which they did. It cost us less to stay with Westpac than move to the new bank with the 70% offer coz they wanted a valuation and so much more. Westpac were actually really really good and in the end and proved to us that there is loyalty in the banking industry even if we did have to strong arm them to get them to show that locality. I doubt however any financial institute would lend anyone 90% of a any property ... rural or otherwise.
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