The property decides more applications than the borrower does. A 75-year-old with good credit is a straightforward applicant; a 75-year-old with good credit and a leasehold apartment in the city is a conversation with the lender’s credit team.
This page runs through the property types I see most, in rough order of how easily they get through.
Your Own Home: The Standard Case
A freehold, owner-occupied house of conventional construction in good repair, worth $250,000 or more, in an established town or city. This is what both lenders built the product for and it is where most applications sit. A 1970s brick-and-tile in Glenfield, a weatherboard villa in Devonport, a 2000s townhouse in Albany: all standard.
The valuation is usually done online first (Heartland charges $17.14 for its i-val) and only goes to a full market valuation at $850 to $1,500 if the property is unusual or the online figure is unreliable.
Rental Properties And Second Homes
Heartland lends against an investment property, a second home or a holiday home through its Secondary Property Loan. The borrower still has to be 60 or over, the property still has to meet the condition and value criteria, and the borrowing limit is lower than for an owner-occupied home. If the property is tenanted you can keep renting it out, subject to the lender’s conditions.
SBS generally requires the property to be your main residence.
A secondary property loan can be a useful way to fund something without touching the family home, particularly where the owner-occupied house is in a trust or is the one the children expect to inherit intact. Heartland’s interest and the rental income then run side by side, and the rent can be used to pay the interest down if you want to stop the balance growing.
Apartments And Unit Titles
Apartments are assessed case by case, and several factors push them towards a decline: small floor area, leasehold land, high body corporate levies, known remediation issues, and buildings with a large share of short-term rentals. A well-run, freehold, unit-titled apartment in a larger complex in Takapuna or Milford is often acceptable. A 40-square-metre studio in a city tower is often not.
Expect a full valuation rather than an online one, and expect questions about the body corporate’s finances and any planned special levies.
Holiday Homes And Baches
Two problems arise with baches. The first is location: a bach at Mangawhai or on Waiheke is in a market the lenders know; one on a remote stretch of the Coromandel or in the far north may fall outside their location criteria. The second is construction and condition: many older baches are non-standard builds or have unconsented additions.
Where the bach passes both tests, Heartland’s Secondary Property Loan applies. A bach that does not pass is sometimes better sold, which releases far beyond what any reverse mortgage would.
Lifestyle Blocks And Rural Land
Lifestyle properties on a few hectares are assessed on the house rather than the land, and the lenders look for a residential character rather than a working farm. Larger blocks, properties with farm income, and anything zoned rural production are usually outside criteria. Distance from a main centre matters as well, because the lender is thinking about how readily the property would sell in ten or fifteen years.
A lifestyle block near Kumeu or Dairy Flat with a modern house is a reasonable prospect. A hundred hectares in the King Country is a different conversation.
Leasehold, Cross-Lease And Retirement Village Units
Leasehold. Land owned by someone else, with ground rent payable, is generally declined or heavily restricted. The lender’s security erodes as the lease runs down and ground rent reviews add risk.
Cross-lease. Common on the Shore from the 1960s to the 1980s. Usually acceptable, provided the flats plan matches what is on the ground. Unconsented alterations that are not on the flats plan can hold things up until the title is updated, which is a job for a surveyor and a solicitor.
Retirement village units. Most are held under an occupation right agreement rather than a freehold title, so there is nothing to mortgage. Both lenders decline them. Heartland offers a separate Village Access Loan, which is a different product designed to bridge the purchase of a village unit while the family home is sold.
Checking A Specific Property Before You Apply
Where a property is at the edges of the criteria, the useful thing to do is ask the lender before paying for a valuation. I do that through Heartland’s adviser channel and through SBS, and the answer often differs between the two, which is one of the reasons for using someone who deals with both. Bring the address and I will tell you what each lender is likely to say. The advice page explains the process; for the full comparison of the two lenders, see Heartland vs SBS.
