As a local Auckland mortgage broker I have arranged a great number of pre-approved mortgages for first home buyers whom are looking to enter the AXIS Homes ballots in Hobsonville Point which is one type of new build.
I then get to see and share the elation when people are successful in the ballots, and I also see the disappointment when people miss out. Unfortunately there is more disappointment than elation.
In the office we have therefore now decided to have an extra discussion with people about what they can afford.
I wrote this short post on my finance blog to help people think about a Plan B. There will become a point when you will need to make a decision – to either keep trying for an AXIS Home or to look at another type of new build.
You can read our other recent blog post: Should We Try Buying An AXIS Home In Hobsonville Point?
Restrictions For AXIS Homes
You can find the criteria on the AXIS Homes website.
Firstly you must be New Zealand permanent residents or citizens and a first home buyer, or in the same financial position as a first home buyer as deemed by housing New Zealand.
The points that affect finance are you must have a gross household income for the past 12-months no higher than $85,000 per annum for a single purchaser and no more than $130,000 per annum, where there is more than one purchaser.
You must also have proof of finance to complete a purchase of an Axis Series home which should mean that you have a 20% deposit, although I know some people are being provided bank pre-approvals with less than this, although those may cause issues once the banks see the agreement to purchase.
Finally, that you will agree to live in the house for a minimum of two years and this is a clause within the agreement to purchase.
What Deposit Is Required?
Currently the banks are able to lend up to 90% on new builds, but only 80% on AXIS Homes.
This means that on an AXIS Home being sold for $550,000 a 20% deposit is $110,000 which given the non-AXIS Home new builds only require a minimum of 10% deposit then there is a lot of scoop to spend more, subject to affordability.
Debt Servicing – Make Sure You Can Afford The Mortgage?
When I look at mortgage applications for AXIS Homes those people want to enter a ballot, but I also now (as a matter of course) look at what their maximum capacity to borrow is so they can also look at another type of new build.
Of course most people that are entering a ballot for an AXIS Home will have incomes no higher than $85,000 per annum for a single purchaser and no more than $130,000 per annum, but some may have had recent pay increases and still be under the threshold for the past 12-months.
A Recent Example Where We Helped
This week we had a couple come and see us about getting pre-approved finance to enter a ballot for an AXIS Home. With their savings, KiwiSaver and the HomeStart Grant they had $110,000 that they could use for the deposit, so on an AXIS Home for $550,000 they had the 20% deposit and this meant they would have a mortgage of $440,000 costing about $550 per week.
We know that only a few are lucky enough to have their names drawn in the ballot, so we looked at what they could afford for a standard new build.
They had incomes of $60,000 and $55,000 with no other debt. This income allows then to purchase a new build for $875,000, so with their deposit of $110,000 they would have a mortgage of $765,000 which would cost them a bit over $1,000 weekly but being a bigger home, they said they would be happy to have a boarder who could contribute about $250 as well.
They have put their name into the ballot, but at the same time have started looking at new homes knowing that they would be “lucky” to get an AXIS Home, but also that they do not want to still be waiting in a couple of years and find that houses in Hobsonville Point are now out of reach.
Keep Your Options Open
AXIS Homes are good value, but they are also not something that you can choose to buy.
The ballot system is designed to keep things fair, but it means a lot of people will miss out too.
The AXIS system also excludes a lot of people due to income so as your income increases you may be forced to look at other options.
Yes, some of the other types of new builds can be expensive but there are some well-priced options too. As an Auckland mortgage broker I can help you with good advice that may make things clearer for you.
In many cases you will pay a bit more initially but will be in a bigger and better home that will suit your family for longer and maybe this is a type of new build to consider.