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Mortgage FAQ's

What does it all mean!

Let's face it, there are some tricky 'Mortgage' speak out there. We
answer some common questions with these Mortgage FAQ's. Do contact us if you need any clairifcation.

What is a home loan?
Generally, a home loan is obtained from a lender to purchase a home. The loan is secured against the home you are buying, and the lender's interests are registered on the certificate of title.

What is a mortgage?
The home loan is secured by a mortgage on the title of the property. A mortgage is a form of security taken over real estate and land.

Why don’t I just go to the bank myself?
We have access to a large number of lenders, to be able to get you the most favourable terms. Going to your bank restricts your options and you may not meet their lending criteria. We know what the lenders’ criteria are, so we can save you the time and hassle of dealing with the banks.

What is a pre-approval?
It is an indication that the bank will lend you the money up to a maximum that they deem to be affordable to you. And in today’s market, obtaining a pre-approval can be advantageous when making an offer.

What costs might I incur when buying a property?
Below are some estimated costs that you may have to pay. This is all part of the initial conversation we have with you, so we can understand your needs. Depending on which lender you use, some of these costs can be avoided. 

Registered Valuation: $700 - $1,000 (Can vary depending on the size of the property)
Solicitor’s Fees: $800 - $1500
Application Fee: 0 - 1% (This would generally be from a non-bank lender and is a percentage of the loan amount)
LIM Report: $200 - $300 (Depending on the urgency - standard is 10 working days)
Builders Report: $500 - $750

(Please note, prices may differ between Industry Professionals)

How do I apply for a home loan?
We will go through the application process with you and help you gather all the additional information required to ensure you have every opportunity for approval from the lender.

How much do I need for a deposit?
This is a very open ended question and depends on your circumstances. Generally, a 20% deposit is preferred by the lenders, but different deposit amounts apply to different purchasers.

What is the meaning of ‘principal’?
The amount you borrow. For example, say you want to buy a $100,000 home. You have $25,000 and you need $75,000 to complete the purchase. The $75,000 is the principal.

How do mortgage brokers get paid?
Mortgage brokers don’t work for the banks - they work independently and are paid directly by the lender. In 35 years we have never charged a fee to a client, but there are some possible circumstances where a fee may be applicable.

How often should I review my home loan?
It is sensible to examine your personal finances on a regular basis. We advise that you should revisit your home loan at least once a year. You may find that you need to do nothing, or you may realise that the home loan option you have chosen no longer works for you or doesn’t meet your changing needs.

What do these common interest terms mean?
Fixed rate: The interest rate is fixed or set for a definite and agreed period of time - for example, from 1 year to 5 years. This means that the interest rate never changes during the set period. It remains constant regardless of shifts in the economy or changes in interest rates made by the lender.

Variable rate: The interest rate varies and changes. This means that the borrower pays the mortgage interest rate as it moves up or down based on changes in the market and economy. The mortgage rate of interest generally changes when the Reserve Bank of NZ makes changes to the Official Cash Rate.

Interest only: The borrower pays only the interest on the home loan. The principal amount is paid at the end of the loan or when the mortgage is discharged.

What does Conditional Approval mean?
The lender has approved your loan providing you meet certain conditions at time of closing. Conditional loan approval means there is no guarantee that a mortgage will actually be approved until the specified conditions are met.

There are four main types of property ownership in New Zealand – freehold, leasehold, unit title and cross lease.

Each type means different rights, responsibilities and restrictions for the owner.

Ask your lawyer or conveyancer to review the record of title (also known as the certificate of title). This is the legal document that contains the property’s legal description, details of its ownership and the rights and/or restrictions registered against it. 

Freehold: also known as fee simple, is the most common ownership type in New Zealand.

Leasehold: when someone else owns the land. You purchase an exclusive right to possession of the land and the buildings on it for a specific period of time according to the terms of the lease.

Unit title: ownership that is most common in a building development where there are multiple owners.

Cross lease: you own a share of the freehold title in common with the other cross leaseholders and a leasehold interest in the particular area and building that you occupy.

You should always get advice from your own lawyer and other registered professionals – what is written here is not intended to replace that advice.

What will your mortgage broker advise you on?

Mortgage advisors take the time to run through issues with you such as:

  • Educating you about mortgage basics like deposits, Kiwisaver, loan to value ratios (LVRs), low equity premiums, fixed versus floating and so on;
  • Guiding you through the process when you want to buy a house;
  • Considering your personal financial situation (including any debts relating to credit cards)
  • Discussing the issue of parents contributing to your mortgage or going guarantor;
  • Advising on fixed versus floating rates or splitting your loan across multiple different fixed rates;
  • Arranging pre-approved finance. With a conditional mortgage offer, you can go shopping for your dream home;
  • Talking to you about lump sum or regular extra repayments on your mortgage;
  • Discussing penalties should you need to break your fixed rate mortgage;
  • Helping you complete the paperwork, and
  • Assisting you when life turns to custard. If your situation changes once you have the mortgage your advisor or manager should be able to help you renegotiate your loan.

What about non-bank lending for a mortgage?

In situations where you can’t borrow from a bank, a non-bank lender such as Resimac or Bluestone might still lend to you. Yes, you pay a little more in mortgage interest but if the mortgage market is proving tough to crack then you’re better off having more loan options when it comes to financial services providers.

Don't know where to start?

Let’s talk. We're here to answer your questions and get you on your way.