Answers to your all question
A few questions that every new person has:
1. Do I qualify for Home Loan?
To qualify for home loan, there are some preliminary requirements set by the lenders. Some of them are serviceability, income, employment, Amount of deposit, character requirements and many more. Each lender has different lending criteria which they consider deciding on each individual applicant. So, to find out if you qualify for a home loan, give us call to discuss your situation and make an appointment to see one of our expert advisers to take advantage of our Free No obligation advise.
2. Can I apply for mortgage even if I have bad credit?
There are few kinds of lenders in loan market New Zealand.
Major lenders (mostly major bank I.e., ANZ, ASB, BNZ, Westpac)
Secondary Lenders (Resimac, pepper money, credit unions, housing societies etc.)
Applicants with previous adverse credit history would normally come under category of applicant who will generally be looked after by second tier lenders. On some occasions major lenders could say yes if the bad credit is minimal and paid or disputed.
3. What is the difference between pre-approval and unconditional approval?
Preapproval is generally subject to terms and conditions to be met which are set by lender for the particular application. Once preapproval is done, applicant would start looking at houses and start placing offers to the property of their choice and come under a budget. Best part of getting pre-approval done is that it gives you an indication of how much can you afford to spend on house. Whereas once your offer to a property is accepted and all conditions are met then preapproval goes unconditional. Unconditional is commitment to buy. So, no matter what, the purchase goes ahead.
4. How Much can I borrow?
This is questions from every person who wants to buy a property. To know about how much can you borrow normally full financial assessment is required. Which can be easily done by making a time to see one our expert mortgage adviser. A thumb rule to know how much you can borrow is, one could borrow 4.5 times of your annual income. For example, if an applicant’s household annual income $200,000, then they could borrow unto $90000 (4.5 x 200,000), this is just an indication, loan amount is dependent on a lot of other things like, liabilities, expenses, affordability, serviceability etc.
5. How much deposit do I need?
Deposit for first home buyers can normally start from 10% but an ideal applicant for major lenders is 20% which does not get charged any fee for low equity margin. For investment property one would need deposit 30% and upwards of property value.
6. Which home loan type should I use?
There are various Loan types available in Loan Market I.e., Table loan, Fixed interest loan, Floating rate etc. we advise all our client to take their independent professional advice from their accountant to know pros and cons of each type.
7. What is LVR?
LVR stands for loan to value ratio. Loan to Value Ratio (LVR) is calculated by dividing the loan amount by the value of the property. For example, when we talk about 20% deposit on a property then we are talking about 80% LVR.
8. What is UMI?
UMI stands for uncommitted monthly income also known as minimum surplus. calculate a minimum 'surplus' that we should have left over each month after fixed payments and a living allowance are deducted.
9. What Does my home loan repayment include?
Home loan repayment consists of 2 things, principal and interest. Generally initial repayments contain very low amount of principle and major part of payment goes towards interest.
10. When should I consider refinancing mortgage?
Some reasons why people look to refinance is: Fixed term, Better rate, longer term, lower repayment, better loan product, better What overall services and few more if you are looking to achieve any of these goals than you could consider refinance.
11. What is the home loan application process?
We have 5 stage application process
initial assessment: in this stage you would sit with our mortgage expert and talk about personal, financial condition, adviser would take notes to analyses if you qualify the prerequisite of mortgage application. And would go through the application form.
analysis: our expert would do analysis regarding serviceability, required deposit, and would make a list of documents required to support application. Adviser would calculate
Application: adviser would verify all documents provided by the applicant against the information supplied and once documents are ready than would apply to an applicant.
pre-approval: once all documents required are submitted, lender would access and ask if any further details/ documents are required. If not, then lender would give a pre-approval. And would advise on how much can applicant borrow. Once preapproval is done you can now start shopping house under your price range. You can now place offer to the property of your choice.
unconditional: once your offer is accepted then applicant need to provided required documents to the lender I.e. sale and purchase agreement, building reports etc. once lender is happy with everything then approval will go unconditional means you are now omitted to buy. Once settlement is done, MOVE IN!
12. How long does home loan application process take?
Generally, lenders would come back to adviser in 2-5 working days. duration to complete the application process is highly dependent on adviser’s expertise and availability of applicants supporting information and documentation. As an incomplete application would result lender coming back asking for more documents and each time it could take unto 2-5 working days. A clean application with your local expert adviser would get you an approval within 2-5 working days.
13. What interest rate will I get?
Interest rates could be different of each applicant as its varies from lender to lender, as secondary lender tend to charge bit more than major lenders as they have bit more risk to cover. on the other hand, major banks will always have fixed rate promotion running every time. This fixed rate for initial period could be very helpful at the initial stage as repayments stays low.
14. Why should I use you as my mortgage broker?
We are qualified, licensed by regulatory authority, reliable, experienced and your local mortgage advisers. and more Ove you will find us the most transparent in this loan market which make us the best choice most kiwis.
15. How does mortgage brokers get paid?
Our services to the customers are generally free of cost. We get paid by lenders however this reimbursement from lender does not affect applicants cost of loan.
16. Why are your services free? Is there any hidden cost which I am paying in other forms?
Our services are free to the customers but not free to the bank, when we invest time and expert advice in the application to get bank some business, then bank pays a commission. However, there is no hidden form of cost to the applicant for using our services.
17. Can I borrow 100% of purchase price?
No, there is no lender offering 100% loan of purchase price at this stage. Lowest deposit could be 5% if you are a first home buyer who’s buyer a brand-new house as owner occupier.
18. I am self-employed, can I still apply for mortgage?
Yes, you can, our expert adviser will make process seamless, so you will not feel any difficulty. Documentation about financial condition of personal and business are generally required by the lender. as far as lender’s lending criteria is met being self-employed should not be a problem.
19. Can I use equity in property to buy rental investment property?
If you have enough equity in your property then you can use that equity to buy rental investment property and build you property portfolio.
20. What is serviceability?
Serviceability is term used by most lenders to identify if the applicant can service the loan. Every lender has their own way calculate this and this could be very different to sometimes what an applicant would think. To have a thorough discussion, you are welcome to make an appointment without mortgage expert.
21. I can afford the loan repayment, but bank said no ?
Most lenders use their own calculators to calculate the surplus required to be able to afford the loan. Also, generally applicants do not take a lot of other thing into consideration which calculating their serviceability. Which is exactly why the mortgage broker industry exists. We are expert and reliable and very quick to do the calculations to be able to know if one could afford the loan or advise the right lender who might look at if it’s not suitable for major bank.
22. I have been declined by my bank can I still get home loan?
Come and talk to us with your detailed application and discuss the reason of being declined. There are few reasons which are hard to get passed like if someone is not a resident or citizen or income is too low service the loan etc. which are mandatory requirements with any lenders. however, in few cases where minor tweaks are needed to the application to make the approval happen. To the applications where it is declined for negative credit history or adverse credit, this could have a very good chance with other secondary lenders. key to any approval is serviceability of the loan and deposit available for the purchase.
23. Can I get home loan if I am on work visa?
No, in New Zealand it is required to be either resident, permanent resident or New Zealand citizen to be able to buy a property.
24. Which lender do I choose?
Our expert adviser will give you options of suitable lenders in the loan market according to your needs and where you meet the lender’s lending criteria.
25. What should I expect from a mortgage broker?
Mortgage broker is a qualified professional which is regulated by financial authority. You would expect them to be transparent, reliable, and expert in their niche. They should always follow what required I.e., record keeping, no discrimination, compliance, duty of care, integrity, accuracy and most importantly the disclosure of terms of engagements and services.
26. What if I am not happy with service I got?
We are always happy to hear feedback on our service. If at any instant you are not happy with our service. We advise our clients to talk to person in-charge and raise the issue. You can also email us to notify the issue. We aim to resolve any issues you may have within certain time frame. However, if you are still not happy then we are part of a disputes resolutions scheme which help mediating the issues between clients and advisers. Feel free to ask the details if required any time.
27. Can I use kiwi saver for my deposit?
We normally advise our clients to talk to your KiwiSaver provider to find out if applicant is eligible for withdrawal for a deposit to buy the property. Please note we do not give any advice on KiwiSaver.
28. What is regular income?
Regular income is the income with is received by the applicant and paid by the employer in applicants bank account on certain frequency. And the amount received is similar each time and matches applicant’s employment contract.
29. Can my parents help me with the deposit for my home loan?
Yes, if your parents have some equity or cash saving or similar to help then yes, they can help. Lenders would normally expect this help to be non-repayable so that applicant is able to afford the mortgage and not go into hardship because of 2 repayments.
30. What documents are required for home loan applications?
Documents required really depends on individual profile, however most common documents required are, proof of income, proof on address, proof of identity, Bank statements, other loans statements, credit card or other card statement, other liabilities repayments etc. this document could be different between a salaried income person and a self-employed person.
31. What happens when fixed interest rate period ends?
When the fixed interest period ends than you can talk to our adviser to fix it for another option available from the lender. And if lender does not offer the expected then people consider refinancing their loans.
32. Can I consolidate my other debts?
Yes, most of the times adviser would suggest you to consolidate other debts as consolidating them could free up the serviceability of the applicant. However, this is totally unto lender to decide if they would like to offer this to particular applicant. Consolidation also depends on the type of debt.
33. Can I get home loan for apartment?
Yes, however the LVR might be different depending on location, build type and deposit available towards it.
34. Is it must take house insurance?
Consider it yes, as risk management is very important to the biggest purchases. Few lenders ask this as mandatory requirement before settlement. And Some lenders might not ask a copy but its highly advisable to look into this as soon as your offer is accepted.
35. What are the hidden costs involved when buying a home?
Some costs that applicant have to pay from the pocket before the loan is settled by the lender. I.e.
- Solicitor fee – ranges between $1500 – $2500 depending upon the complexity of the agreement.
- Valuation report – Between $800 – $1400
- Lim Report – Approx. $300
- Builders Report – Approx. $400
- Loan Processing fee – (Only few Lenders charge this) – Approx. $500
- Meth Report – $200
36. Can I get preapproval for a house selling in auction?
Yes, you can get preapproval for house selling in auction. However, the process can be bit slower in this process as sometimes lenders would like to know about the each property you might look into biding as they want to be sure that it meets their property criteria.
37. What is a Non Bank Lender ?
A non-bank lenders is lender who have slightly different/lighter criteria in comparison to major banks.
Few benefits of Non Bank lenders are as follows:
- Bad credit home loan
- secondary documents accepted
- Accepts new job applicants
- Accepts some more documents which are not accepted by major lenders
38. Does a bank charge loan application fee?
Generally, most major lenders does not charge any applications fee. However, couple of secondary lenders may charge unto $500 application fees but this is very rare now.
39. How much can I save if I refinance my mortgage with you?
Refinance could generally save you a huge stress.
Some benefits of refinance are as follows:
- savings on interest cost
- floating rate to fixed rate
- additional loan amount
- change in financial status
- better services from new lender
40. What are repayment holidays?
Repayments holidays are generally offered by lenders for a certain term. For example, if an applicant has hardship due to sudden financial hardship. Then an applicant could apply for repayment holidays so he could cope the financial hardship.
41. Can I get a loan for renovations?
Renovation loan is generally done in the form of top ups from existing lender as far as there is enough equity and income to maintain serviceability. In some cases, existing lender may not offer the popup. In that case applicant might look at refinance to be able to avail the amount for renovation.
42. Can I get construction loan?
Some lenders are offering construction loan for owner occupier property at 95% LVR. To be able to get construction loan, lender normally requires fixed price builder’s agreement.
43. Can I buy new house before I sell my old house?
Yes, this type of loan is normally called bridging loan. This is basically bridge between buying and selling you property. Out Mortgage expert would help you with this.
44. What are other related professionals related to Home Loan Application process?
One would deal with few or all of the following to get supported documents sorted:
- Mortgage industry participants: Lender, lending Staff, Mortgage adviser.
- Professional Industry participants: accountant, budget adviser, building inspectors, insurance company, licensed real estate agent, property manager, registered valuer, solicitor , conveyancer, Territorial authority
45. How can I start the application process?
Give us call on 0800 20 60 40 to book a meeting with one of our experts. And we will guide you from the beginning till the settlement.