HOME RUN

• Published date: 31 July 2021

Real estate agents, mortgage advisers, lawyers and market watchers all say they have noticed a shift in the past few months as investors back away from the city.

First-home buyers are stepping into the void and have offers, often with conditions, accepted.

So what is required for people who are renting now to get into a home they can call their own in Whanganui?

The money

Whanganui mortgage adviser Aaron Stampa said the first thing prospective buyers needed to do was find out how much they can borrow from the bank.

“Without knowing how much money you can borrow you can’t really go shopping.”

To find out how much a buyer can borrow they need to see a mortgage adviser or go directly to their bank.

The buyer’s income, deposit and debts are crunched to get an amount they could feasibly borrow to buy a house.

In Whanganui it is still possible, although many in the game will say it is not easy, to buy a house for $400,000 or less.

This week OneRoof revealed Whanganui’s median house price sat at $454,000 this month.

Buyers will probably need a minimum deposit of $40,000 or 10 per cent of the total price of the house.

Banks prefer a 20 per cent deposit, but half of that can be enough, Stampa said.

When a deposit dropped below 20 per cent — the situation many first-home buyers are in — the question was whether the borrower could afford the higher repayments.

“The servicing has to meet guidelines,” Stampa said. “I wouldn’t say you have to be on a high income.”

Each bank will have its own guidelines but they typically assess a figure known as uncommitted monthly income (UMI) to find out a person’s ability to service a mortgage that is above 80 per cent of the value of the house.

For example if a buyer had a 10 per cent deposit a bank may require that borrower to have a UMI of $1000, Stampa said.

Most first-home buyers will use their Kiwisaver accounts as their deposit — $1000 has to be left in the account when funds are removed. Along with that, buyers can get up to $5000 for a single person, or $10,000 for a couple from the Kāinga Ora First Home Grant.

Those figures double for new builds.

But the couple have to be earning less than a combined $150,000 and in Whanganui the house has to sell for no more than $400,000. For a new build that figure is $500,000.

Many people across the real estate scene in Whanganui say that figure should have increased when the Government announced new housing policies in March.

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