Some home loans are far trickier than others to sign off.

If you've got a well-paying job, a decent deposit and no black marks against your credit, there's a good chance you can get a mortgage on a standard home.

Step outside the box in the current market and you could find that you or your home is way less attractive to a bank than you might think.

Buyers are finding they don't meet increasingly strict criteria as 2017 ticks by.


The High Street banks have tightened their criteria for all borrowers this year due to a number of factors, says Jeff Royle, mortgage broker at iLender.

The first is the Reserve Bank of New Zealand's tightening of loan-to-value ratio rules late last year; banks' concerns about cooling property markets; and in addition moves by the Australian Securities and Investments Commission targeting our banks' parent companies over the Ditch.

"Most New Zealand banks are funded by their Australian parents so we have a knock-on effect," says Royle.

The overall tightening has hit non-standard mortgages such as those over leasehold properties, apartments, transportable homes and others. In some cases it's nigh impossible to get a loan, Royle says.

Leasehold properties whether they are apartments or standalone homes have been hit hard. Banks have been burned in the past after lending on leasehold properties that dropped significantly in value, he says. Sometimes by hundreds of thousands of dollars.

Clients who have bought leasehold properties this year have done so effectively with cash.

In one case, the buyer of a penthouse leasehold apartment had considerably more capital in the property she was selling in Ponsonby and took out a bridging loan on the apartment until the old property had sold.

The security was over the standalone home. Once the old property had sold she was mortgage free so the bank didn't need to take a risk on the leasehold property.

Relocatable and kitset homes are popular with some buyers, but they can prove a problem to borrow against for those people without deep pockets.

In both cases the banks will lend on the land, but aren't willing to advance money on the buildings until they are in situ and have received code compliance, says Royle.

"It is still possible to get up to 90 per cent against the land, but it is almost impossible to borrow against the house until you get code compliance," he says. "You have this gap in the middle to fill."

Royle has seen some buyers negotiate with the house moving company that sells relocatable homes.

"If the house moving company likes you a lot and takes no money until the house is on the piles and has its certificate of compliance, it may be possible. Or if the client takes a personal loan for 30 to 40 grand for the deposit."

Home buyers face a very similar problem with kitset homes, says Royle. It's the same issue that the buyer has to pay for the home before it's delivered, but the lender doesn't want to take the risk until the house is on site and has a certificate of compliance.

"I have a mate in Whangaparaoa who has just [bought] a Matrix Kitset home," says Royle. The house was built in the factory in Upper Hutt and delivered to Auckland.

"He couldn't finance the house. Fortunately he had so much equity in the section that it wasn't a problem."

Potentially leaky buildings or apartments are difficult to get mortgages on and banks ask about the construction methods before lending.

"They don't like plaster houses and chilly-bin houses," he says. "But it is very much on a case by case basis."

One client bought into the well-known Spencer on Byron building in Takapuna, which has leaky issues.

He also used bridging finance tied to the standalone home that was being sold in order to finance the deal.

Even though the buyer should get a capital gain of around $200,000 after all costs when the repairs are complete, the banks weren't interested.

Don't expect banks to lend you more than 65 per cent to 70 per cent on live/work units, Royle adds.

These are popular in newer mixed use zones such as Albany. Typically there is a work unit/warehouse downstairs and an apartment upstairs.

Loans for houses on Maori land are more difficult, says Royle.

"Westpac used to go to 65 per cent seven or eight years ago. I am not aware of any lender who will lend now on Maori land. In the event of repossession, who owns it?"

However, it is sometimes possible to get a Housing New Zealand-backed Kainga Whenua loan through Kiwibank.

When borrowers have difficulty landing a mortgage because of issues such as their credit scores, brokers sometimes turn to non-bank lenders such as finance companies.

If, however, it's the property that's problematic, these non-bank lenders can be just as risk-averse as the banks, says Royle.