- Hello, everyone, it's Alex from Prosperity Finance,
I'm here to share with you the best financial tips
so that you can be more successful
in achieving your financial goals.
Today I'm going to talk about different types
of deposit sources you can use
when buying your next property.
And also, the evidences that the banks normally asked for,
for each of those types of deposit sources.
So the first type, of course,
is deposit that you've already paid.
So normally, when you win auction,
or when the sales and purchase agreement
becomes unconditional, you have to pay for five to 10%
of the total sales price.
And the bank will ask you for a receipt
to show that you've paid for these deposit.
And normally, you can request a receipt
from your solicitor directly.
Then, the second type of deposit source
is more relevant to first homebuyers.
So that's a home start ground or a KiwiSaver withdrawal
for a first home.
To prove that you have this type of deposit source,
a bank will normally ask you for a legibility letter
from either the Kaingaora,
if it's a Home Start Grant,
or from your own KiwiSaver provider.
And you can get these letters from,
like both entities are from your KiwiSaver provided directly
by applying online.
And the third type of deposit source
is of course your own saving.
The bank will normally ask for six month of bank statements
of your savings account
to show that you have genuine savings
for the past half a year.
And this is not limited for just New Zealand savings.
Of course, you can use overseas savings as well.
But the requirements differs from bank to bank.
But normally, you will also expect the bank to ask you
for six months of bank statements
from your overseas savings accounts
to show that you have genuine savings.
And on top of that, you also have to supply evidences
of transferring money directly
from your overseas savings accounts
into your New Zealand account.
Then the fourth type of deposit source is either a gift
from your family members, or it's from inherited money.
When the source is from gifting money,
the bank will normally ask you for a certificate of gift,
which needs to clearly state the purpose of the gift
is for purchasing a property.
And also it has to state that the gift is unconditional,
there's no interest, and also it's non-refundable.
Of course, if it's inherited money,
the bank will normally ask you for relevant legal documents
which you can get from your own lawyer.
The fifth type of deposit source is borrow money
from your close relatives.
Yes, you can actually borrow money, but this is very special
and not every bank will accept this type of deposit source.
If the bank you're applying a home loan for
can accept this kind of deposit source,
normally they will ask you for a deed of acknowledgement
of debt,
within which it has to outline the purpose of debt,
and also it has to be interest free.
And also it has to have very specific repayment conditions.
Then, the fifth one of the deposit source
is sales proceeds of assets.
The assets can be either a real estate
or it can be other types of assets
like car or valuable items.
If it's a property that just recently sold,
the bank will normally ask you
for a sales purchase agreement.
And also you need to provide them with your bank accounts,
the bank statements to show that the sales proceeds
have been deposited into your bank accounts.
Lastly, you can also use equity in your existing property
as deposit.
In this case, there's a potential that
it will allow you to buy your next property
with hundred percent borrowing,
so you don't have to actually
put any cash into the purchase.
But this is, because it's a little bit complicated
and it's really just deserve another video to talk about it.
Okay, so that's basically the seven types of deposit sources
that people normally use and the bank normally accepts
when buying your next property.
And hopefully you found this interesting and also helpful.
I will see you next time.