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Arguably the easiest way to pay for a home is by getting a mortgage. Most of the property's cost is shouldered by the bank or mortgage company, and divides it into monthly repayments over a certain period. Getting the right loan is key as it could last you up to 30 years to repay it.
For beginners, taking out a mortgage can be very intimidating. You have to deal with several factors such as location and budget, as well as unfamiliar terms like principal, interest, deposit, and more.
To top it off, there are over 200+ loans from different lending institutions in New Zealand, making it extra difficult to find the right mortgage plan for you.
We’re here to help you find the right mortgage plan that meets your budget, income, and financial goals.
When you’re ready to buy your own home, that's when you can start looking for the right mortgage offer for you. Get the most competitive interest rates, fees, payment terms, and loan terms by using a mortgage calculator for a personalised quote.
You don't need to have millions of cash in your bank account to buy a home. You'll find that there's a lot of mortgage loan options to match every financial situation, including the ones from low-income and single-income households.
Of course, that’s not to say that you don’t need to prepare for a mortgage plan. Before taking out a loan, it’s smart to prepare yourself for this long-term commitment. Here are some quick and easy tips for you:
You already know this: how much you can borrow and your interest rate will be based on your credit score. It shows your credit history including credit cards, utilities, and other loans. It can be accessed for free through credit reference agencies like Equifax, illion, and Credit Simple.
You may also want to check the defaults under your name. If the details are incorrect, prepare at least 3-4 weeks ahead to get them corrected. Most of all, pay overdue debts that lower your credit score.
It's worth checking to see if you’re eligible for a KiwiSaver withdrawal. The requirements and specifications are simple:
Talk to your provider for any inquiries regarding your KiwiSaver first home withdrawal. You may also check if you're eligible for First Home Grant and First Home Loans, which can significantly lower your deposit and increase your borrowings.
Take on freelance projects in your free time. Whatever it is, it’s wise to start more streams of income before taking out any loan.
If you’ve been serving the company for a long time and have exceeded expectations, you may want to request a salary increase. An additional $3,000 per year may seem like a small difference, but this can enable you to purchase a house worth $50,000 more. This can affect the location and size of the home that you can purchase.
The requirements vary depending on where you get the mortgage plan. Usually, these requirements can be categorised into three: personal documents from home, proof that you can pay the mortgage, and your assets such as income and investments.
Documents from home:
Proof that you can pay:
Note that some companies may require more or less, depending on your circumstances. Talk to your bank or mortgage lender for the complete list of requirements that works best for you.
There are two common ways to apply for your mortgage: either choose to meet with a mortgage broker, or talk to the bank directly. Each one has its own pros and cons.
A mortgage broker, also called a mortgage adviser, serves as the middleman between you and the lending institution. All brokers in New Zealand are regulated by the Financial Markets Authority, and usually have affiliations with banks and financial institutions. According to industry estimates, about 40% of mortgages in New Zealand are processed through a broker.
Going straight to the bank is a more straightforward option. If your credit report doesn’t show complicated records of debt, overdue payments, or income streams, this is likely to be the best option for you. However, if you have huge debts, have a low credit score, and have been finding it difficult to sort out your finances, then you may be better off arranging your loan with a broker.
Finding the right property is crucial when you’re finally approved conditionally. This determines whether you get approved unconditionally or rejected ultimately. The great thing about having a pre-approved loan is, your budget is set. As the bank has specified the amount that you can borrow, it’s easier to determine whether a property is the right fit for you.
Avoid these common mistakes when house hunting.
For most Kiwis, one of the biggest mistakes is not shopping around. They only go through one or two properties, and then call it done. New Zealand has a very competitive real estate market. There may be ‘steal’ properties that you’re missing out on because you’re rushing to finalise your loan and purchase a property.
As a rule of thumb, it’s best to look for at least 20 properties. If you’re not rushing, try looking for more. The more options to choose from, the better. This way, you have better chances of approval when you finalise the properties with the bank.
A lot of homebuyers see only what’s in front of them; they don’t see things for the long term. Even if the house is within budget, a lot of people would reject a property because it has imperfections or slight damages. After all, you’re bound to fix or alter it if you are to personalise your house.
Of course, it’s also not wise to pick a house that has been in a state of disrepair. To know whether the house is worth considering, check the essential parts of a house, including:
When these parts are damaged or faulty, it takes a lot of money to get them repaired. It may not be worth considering them, even if they’re in a prime location.
Don’t simply focus on your place of residence. Check what’s happening in the surrounding area too. Asking these questions may help.
Of course, making a careful decision is important but make sure to balance it as well. House hunting can be extremely time-consuming and physically draining. Set realistic expectations by doing your assignment. Research accordingly so you can make firm decisions.
On the other hand, don’t settle for less. The cost of settling in a house that you’ll end up hating is more expensive than the loan itself. Don’t rush things and weigh your options accordingly. What’s worth the wait is always worth having.
Remember that conditional approval isn’t the conclusion. Most lending institutions offer a timeframe where you can back out if you don’t find the terms of your plan amenable. As mentioned, don’t settle for less. Always make sure that the terms are according to your needs.
Before settling for anything, always shop for the best deals. Use our free mortgage comparison tool, right here at glimp. We keep our information up-to-date so you can always get the right deal for you. What’s more, we offer exclusive promos and deals that you can’t find elsewhere — even on the lender’s website.
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