Applying from overseas
Buying a home in NZ from overseasCan Kiwis buy a home in New Zealand if they live overseas? Can you buy one if you live here, but you’re not a New Zealand citizen? Let’s dig into what you need to know about buying if you’re living overseas or you don’t have a New Zealand passport.
There are different property purchase rules depending on what passport or visa you hold, and how long you’ve been living in NZ, if at all. We spell it all out for you below.
There are no restrictions to buying or building, regardless of whether or not you live in NZ
Have lived in NZ for the past 12 months
There are no restrictions on buying or building
Have not lived in NZ for the last 12 months
Can buy property category of ‘residential' A or ‘lifestyle’ B .
‘Residential and otherwise sensitive’ C land requires OIO consent.
Have lived in NZ for the last 12 months
Can buy property in ‘residential’ or ‘lifestyle’ categories.
Have not lived in NZ for the last 12 months
Requires Overseas Investment Office (OIO) consent.
Have lived in NZ for the last 12 months
No restrictions on buying or building.
Have not lived in NZ for the last 12 months
Requires Overseas Investment Office (OIO) consent.
A ‘Residential’ includes a house, or land to build a house on in cities and towns.
B ‘Lifestyle land’ usually refers to a lifestyle block in the countryside, but close to cities or towns. In other countries these may be known as small-holdings or hobby farms.
C ‘Residential and otherwise sensitive land’ refers to land that’s residential but may have more development restrictions, due to its location on an island, next to a beach or river or next to a conservation area.
If you’re married, in a civil union, or in a de facto relationship, only one of you needs to meet the Overseas Investment Act rules for buying a relationship property in New Zealand. This is true regardless of the visa status of the partner who does not meet the rules.
If you’re a NZ citizen and you continue living overseas after buying, your lender will assume the property you buy is an investment property. These have a different maximum loan-to-value (LVR) ratio than an owner-occupied property. Depending on the property, the maximum LVR on a standard residential investment property can be up to 60% of the value. This is a restriction implemented by the Reserve Bank of New Zealand.
When it comes to using overseas income to meet your home loan repayments, NZ banks and lenders take a conservative approach. If you’re only using overseas income for loan payments, a bank will only use a percentage of that income in their servicing calculations. This is generally 80% or 90% of the total income, and the reduction accounts for any exchange rate fluctuations.
If the bank deems your property to be an investment property, then in addition to scaling back your income to mitigate exchange rate differences (as mentioned above), they’ll also reduce the potential rental income by 30%-35%, which accounts for a portion to go towards taxes (due to recent changes in tax deductibility of interest) and the fact that in New Zealand the landlord pays certain ongoing costs such as rates and insurances.
Banks may request the latest 12 months bank statements as evidence of income for compliance purposes. This, and any other documentation requested, may need to be certified by a trusted referee such as a notary public.
Things are considerably easier if you plan to live in NZ in the property you buy. If you’re buying a home to live in, the maximum LVR a bank will lend is higher than for an investment property. Generally 80% LVR for an established property.
There are also instances where you may be eligible for a First Home Loan, which allows you to buy a home with only 5% deposit.
If you’re relying on overseas income to meet your home loan repayments, the bank will only use a percentage of this in their servicing calculations, as mentioned above.
When you apply, you’ll must supply your last 3 months of bank statements, and if you already have a job lined up here, the bank will want to see a signed employment contract.
NZ lenders are conservative and they’ll build a profile of you to determine if you can be trusted to repay the money you’ve borrowed.
With this in mind, NZ application forms are extensive and may well feel intrusive. As well as your identification details, you’ll need to disclose your statement of position, which would include the make-up and value of your assets, what liabilities you have (credit card limits, vehicle financing etc), all your income and expenses and details of your last 3 years of employment and address history.
You’ll need to provide:
Sometimes source of wealth may be required – to meet the regulatory requirements around anti-money laundering and counter financing of terrorism (AML / CFT)
It can be confusing to understand the different rules and policies for the passport or visa you hold, where you’re currently living, and your timings on coming to NZ. Our home loan specialist team understands these and can answer your questions. Get in touch via the chat bubble at the bottom right of this page, or email us at help@tella.co.nz for guidance.
Check out our other guides on a more in-depth explanation of the home loan application process in NZ, and even how to open a bank account. We’ve linked them in our Related Guides section below.
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