Currently we have several options available to clients who have a deposit of just 10%. There are some requirements, but jumping into the market can be worthwhile for most people who meet them.

Some additional requirements:

5% of the deposit has to be genuine personal savings or if it is from the sale of an asset, proof must be provided. As lending of this type is restricted somewhat, banks tend to pick clients who are looking at getting a home well within their budget.

You may pay a slightly higher interest rate or lender mortgage insurance.
A professional valuation will be required at some stage and certain properties are excluded.

More tips for mortgage applicants with low deposits

We are often approached by clients who would like to ensure that they have the best possible chance of getting approval. Usually with a low deposit (10%) it is important to get the home loan application looking as strong as possible by highlighting the strengths of your financial outlook.

Getting declined by one bank does not mean that you should lose hope. We often find we are able to turn a no into a yes!

Here are some of the things we consider when putting together a strong application for one of our mortgage clients.

Savings statements help, even old ones – if you have depleted some larger savings for a genuine reason, explanations help. Your Kiwi saver counts towards your savings history and could be used to purchase a home if you have been a member for more than three years.
Comparing how each bank will charge the client for having a low deposit is very important. Some banks are a lot cheaper than others.

We look at our clients goals in the coming years to work out which lender will work best for them in terms of the interest rates as well as the setup fees.

A bank will want additional comfort when a client has a low deposit. We find it important to highlight a person’s education and experience in their industry. As well as stability in their employment. Overseas experience and education does count.

Using a guarantee?

If you are fortunate enough to have someone ready to guarantee your deposit amount check out our article on using gurantees.