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Christmas spending and home loans
With the changes to the Credit Contracts and Consumer Finance Regulations 2004, having a spending splurge at Christmas now has a lot less of an impact on your home loan application.
Banks are now permitted to exclude discretionary spending from affordability testing. So one-off purchases, like gifts at Christmas, won’t be taken into consideration. However, you still need to show financial responsibility, so consistently spending beyond your means won’t do you any favours. Setting a budget and looking for deals is still a worthwhile idea, but giving an extra gift or two won’t torpedo your home loan chances.
Supply and demand
A lot of people don’t want the hassle of selling at such a busy period of the year, meaning the supply of homes available at this time is lower. This can work in favour of buyers and sellers alike.
For sellers, since there are fewer houses on the market, it can be easier to make yours stand out from the crowd. Buyers active over this period are generally actively looking to buy too, with fewer ‘window shoppers’, just keen to ‘see what’s out there’ rather than buy.
Those looking around Christmas are often either frustrated buyers who’ve been looking for a while, those keen to move in soon regardless of the season, or people looking to move from a different region and want to start off the year in their new home.
There can also be advantages for buyers. While there may be fewer homes to choose from, the seller may be eager to finalise quickly. This means if you can move quickly and settle early, you may be able to get your new home for a lower offer than the seller’s starting price.
Be aware of shutdown periods
Even if both you and the seller are eager to get a sale done and dusted, you need to take into account the holiday periods of people and businesses key to the sale. Solicitors, mortgage advisors, and other providers will likely be shutting their doors for a while around Christmas, New Year’s Eve and the period surrounding this time.
To avoid disappointments, get in touch with all the offices you think you’ll need, and ask when they’ll be away. You can then use this information to provide realistic timelines of how long something will take to the other parties involved in the sale.
A little preparation goes a long way
By putting together a budget to prevent overspending, doing the research to see what’s on the market, and knowing what you can get from who and when, you’ll be in a good position to either buy or sell this Christmas period.
If there is anything that’s particularly bothering you or has you worried, talking to someone is always a good option. Whether that’s your banker, mortgage advisor or a friend or family member you know who has had a similar experience. A chat may provide some insight that soothes your concerns and helps put you on the right path to buy or sell during the summer holidays.
Lisa McShane
Lisa McShane is the Head of Home Loan Partners and Specialists at Bank of New Zealand (BNZ). With over 29 years in the banking sector, Lisa has honed her skills in customer engagement, team leadership, and financial advising.
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