Apply for a home loan from abroad

With the average value of residential property more than doubling since 2007, out of market risk (not being in the local property market) has impacted on many kiwis wanting to return home. A solution to this is to purchase an investment property while living abroad, so when you choose to return, your not priced out of the local market.

Get on the New Zealand property ladder, build your portfolio and leverage your income from abroad, by applying for a home loan today.

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5 Steps to Buying a Property in NZ while living abroad

1. Confirm you can finance your property in NZ

Often the biggest stumbling block to buying a home in New Zealand while you are living abroad is to obtain bank finance. New Zealand banks have been tightening the rules for lending to NZ expats, and many expats who were previously able to borrow money have found their borrowing capacity dramatically reduced (or become non-existent).

You will need a minimum deposit of 30% and be employed earning wages or salary to be eligible.

2. Determine your selection criteria for buying a home in NZ

Are you looking for property as a long term investment or perhaps wanting to buy your dream home prior to returning to NZ to live in permanently.

Do you plan to move into the house when you return to NZ, or will the property be for investment purposes?  Are you wanting a low maintenance, brand new apartment, or an older property that has future development or renovation potential?

3. Start Searching For Your Property or Engage a Buyers Agent

Many people are uncomfortable using a Buyer’s Agent or think they are not worth the money.  These people think they can do all their searching and due diligence using www.trademe.co.nz and google maps.  I personally do not recommend ever buying a property that you or someone independent to the selling agent has not inspected.

While some people may have access to friends or family that are willing to do a lot of running around for them, for other people living outside NZ there are many benefits to using a buyers agent. A buyers agent will short list properties for you based on the selection criteria you have specified. They will physically inspect the property and checkout the neighbourhood and street the property is on.

4. Negotiate Purchase Agreement and Complete Settlement

Once you (or your Buyers Agent) have negotiated a contract to purchase your home, you will then need to undertake the various inspections and approvals that were a condition of your offer.  These might include :

Building Inspection Report (generally focused on the structural integrity of the property)

Finance Approval – it is good practice that no matter how confident you are in your ability to obtain finance, that your offer should always be subject to obtaining finance approval.

Valuation Report

Once you have completed all the conditional requirements of your contract, you can then advise the Sellers Agent that the contract is now unconditional and that you will be proceeding to settlement.

5. Obtain a Chattel Depreciation Report & Hire a Property Manager

Essentially, a chattel depreciation is a tax deduction you can claim that represents the loss in value of the fittings of your property during the course of the year.  Depending on the age, style and size of your property it may be possible to obtain in the order of $2000 to $7,000 per year in depreciation tax deductions.

The best time to get a depreciation report is as soon as you purchase a property.  In order to claim chattel tax deductions you will require a depreciation schedule prepared by a licensed quantity surveyor.

You will also require a property manager to look after your new asset. They will source tenants and manage your property on your behalf. This will normally cost around 8% of your rental income.

 

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Resources for overseas buyers

1. https://www.settled.govt.nz/- Guiding Kiwis through buying and selling a property
2. www.trademe.co.nz – Property listings & Insights
3. www.realestate.co.nz- Property Listings
4. www.homes.co.nz- Property Listings & sales history
5. Tax advice - http://www.ird.govt.nz/international/comingleaving/coming/
6. Legal advice - http://www.lawsociety.org.nz/for-the-community/find-lawyer-and-organisation
7. Suburb information, property trends, rental income information, valuation reports https://www.qv.co.nz/

Case Study

Craig Milner, an engineer on the super-yachts in Monaco managed the process of finding and purchasing an NZ investment property while living abroad

Why Did You Want to Purchase A New Zealand Investment Property?

I wanted to leverage my income and get a foothold in the NZ property market to ensure I wasn’t priced out of the market when I return to NZ down the track.

How did you find the property?

I decided that I wanted to purchase an investment property in my home town of Auckland, as the property market had been increasing there for some time. With the help of TradeMe and my sister I found a property and completed due diligence.

What did you purchase?

I purchased a 3 bedroom house in Birkenhead. The house was already tenanted when I purchased it, and so I didn’t need to worry about any vacancy period after settlement. The house needs to be renovated which I will organise when the tenants are happy to. ”

Was it difficult managing the purchase of an NZ Investment Property from overseas?

The entire process went quite smoothly and was managed via a combination of internet, scanning, emailing, and phone calls.  The only major complication was signing the mortgage documents with my lender.  As the bank required the original mortgage documents to be witnessed by specific categories of people, I needed to go the NZ Embassy in Paris to have my signature witnessed by staff working there.  If I was living in a city where there was no NZ Embassy, things may then have got even more complicated. ”

Do this next. Start by clicking here. We’ll ask you only a couple of quick questions so that we can start to understand your situation before we talk and get right down to business.

Frequently asked questions

1) Do NZ Expats Need OIO (Overseas Investment Office) Approval to Purchase Property in NZ?

A) A common misconception of NZ Expats is that they will need to obtain OIO approval to purchase property in NZ.  Recently the Government has been cracking down on foreign investors who have purchased property without the necessary approvals from the OIO. However, NZ Citizens living overseas do not require OIO approval to buy property in NZ.

2) I'm an Expat Kiwi and I want to purchase a property in NZ. Can I get finance from a NZ bank?

A) Yes we can arrange finance for you, lending requirements have tightened and you will a minimum of a 30% deposit. Most banks will also apply a shading to your overseas income of anywhere between 20-40%.

3) I'm an overseas citizen (non resident), can I obtain a mortgage on a property based in NZ?

A) With the exception of Australian citizens, the banks wont provide a mortgage to a foreigner wanting to obtain a mortgage on a NZ property.

4) Will I need to return to NZ to complete the property transaction

A) This depends on weather you have been AML/CFT Anti-Money Laundering and Countering Financing of Terrorism processed by the lending institution that is providing the mortgage. If this process has been completed in is possible to sign the necessary documents in-front of the appropriate authorities abroad, however more often than not a trip home should be factored into your budget to fulfill this requirement.

5) What about currency risk?

A: Paying off a loan which is based in NZ dollars from overseas earned income does expose you to interest rate fluctuations. Below are steps you can take to help manage this risk.

Find a money transfer provider who can deliver better exchange rates than your bank.

Consider using forward contracts to lock in favourable exchange rates for up to one year.

Set up recurring payments, so you don’t get hit with late fees.

Assess the value of sending one larger lump sum versus a series of smaller payments.

Lets see if we can help you get your property buying plans off the ground. Enquire today so that we can set about finding out what your options are.