Borrowing Power Calculator.
Size up your mortgage borrowing potential.
How much can you borrow?
Before you get really serious about buying a home or property, you need to know how much you could potentially borrow. That figure is tied to the amount of debt you could comfortably service, which is why lenders ask lots of questions about your income and expenses. As a warm-up to the mortgage application process, use our borrowing power calculator. It’s designed to take everything into consideration – your income, dependents, expenses and debts. Remember that we’re providing an estimate here, because your borrowing power can vary between lenders. Why not get in touch with an expert mortgage adviser to figure out how much you can borrow?
What information will I need?
To make the most of our borrowing power calculator, you will need to know:
- How much income do you get? If you’re buying with a partner, you can include both incomes.
- How many people rely on you for financial support? i.e. children.
- What do you need to spend each month? For this you can use the information gathered by the budget planning calculator.
More helpful calculators.
need advice on how much you can borrow?
Get an expert mortgage adviser on your side.
If you’re trying to figure out how much you can borrow, so that you know which houses to look at, it helps to have an expert on your side. We can introduce you to a top adviser who knows the home loan market inside out. Working with an adviser is free of charge, because they’re paid by the lender you choose, so you’ve got nothing to lose.
How much will a bank lend on a property?
In New Zealand, it’s standard practice for a bank or housing finance company to lend up to 80% of the value of the property you want to buy. However, this percentage could be affected by your ability to service the loan. Before you commit to buying a property, you need to have a serious talk to your lender about what they’re willing to lend you.
In some circumstances, you can borrow up to 95% of a property’s value. However, it’s obviously a riskier business for both you and the lender. If you really want to push the boat out with a big-as-possible loan, there are these things to consider:
- To service a bigger loan, you will need more available income. The lender will be looking closely at what’s left over each month, after your expenses.
- If you borrow more than the standard 80%, you’ll probably get charged either a low-equity premium or the cost of mortgage indemnity insurance. The lender does this to gain some protection from the risk of you getting behind on repayments.
- You might have to pay a higher interest rate for a loan that’s more than 80%. Again, the lender is doing this to balance their risk.
- It’s highly likely you’ll need a registered valuation for the property you want to buy. If it turns out the valuation is below the price you’ve agreed to pay, the lender will work with the lower figure.
How much will I need for a deposit?
As a rule, your deposit will need to be at least 20% of a property’s purchase price. This means a $200,000 deposit could allow you to pay up to $1 million for a home. However, you and your lender need to feel confident that you can manage a $800,000 mortgage.
A deposit can come from several sources. For example: your savings, KiwiSaver and possibly a gift of cash from your parents. If you need to sell an asset to get a deposit together, that’s cool too.
If you want to borrow up to 95% of a property’s purchase price, it’s likely your lender will want your deposit to be savings, rather than a gift from parents. They prefer borrowers with a good savings record.
Sources for a deposit:
- Cash – your savings or money you can find by selling an asset.
- KiwiSaver withdrawal – if you’ve been a member for at least three years, you can take out almost everything. You just need to leave $1000 in your account.
- First home grant – if you qualify, you’ll get a lump sum of up to $5,000 for an existing home or $10,000 for a new build.
- The ‘bank of mum and dad’ – parents can help you out by gifting cash, guaranteeing your mortgage or borrowing against their property.
Ready for the next step?
Once you have refined your budget and assessed your borrowing power – It’s now time to consider the type of mortgage best suited for you and your family.
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