Top Tips for Choosing the Right Mortgage Provider
Whether you are choosing to mortgage your home for the first time or refinancing your home, finding the best lender can be daunting. Follow these tips for searching for the best mortgage lender and use Glimp’s mortgage comparison tool to make the process easier for no extra cost to you!
New Zealand’s real estate landscape is changing fast as the resident and tourist population increases. A study on stuff.co.nz showed that 69% of Kiwi homes are owned or mortgaged. A mortgage allows you to enter into a loan style contract with a bank in order to live in a property and gradually pay back the loan in monthly increments. Mortgages vary greatly per individual depending on the deposit you can afford to put down, the interest rate you desire and the amount you can pay back each month.
Consider these tips for securing a mortgage loan lender before you start using a mortgage comparison program.
Know your credit score
A credit score is something you gradually build overtime, as a result of making credit card payments or paying back loans in a timely manner. This score accumulates rather slowly and is greatly affected by events such as late payments.
Having a higher credit score will show a potential lender that you are capable of paying back a loan on time. Having a lower credit score means lending to you is risky and banks will be less likely to accept your application for a loan.
You can find out your credit score with a number of free programs but getting your answer fast may require paying a small amount of money.
Use services such as Centrix, Dun & Bradstreet or Veda Advantage to determine your credit score. Many banks or professionals actually advise using all three programs if you want an accurate insight as to what your credit score is. You may also apply for your credit score through your bank but this takes time and costs money.
If you do discover your score is lower than you’d like and making it trickier to land the mortgage lender you want, there are some things you can do.
Pay off outstanding debts that you have. Often when people have debts they opt to move them around rather than pay them off entirely; your credit school will not be fooled by this. Manage credit card balances by monitoring how much revolving credit you have versus how much you are actually using. You can also inquire with your credit card company as to whether they will accept multiple payments throughout the month rather than one payment in full which will reduce your balances.
Leave old debts that have been paid off on your credit report so that it is clear you paid them off. Good debt - debt that you've handled well and paid as agreed - is good for your credit. The longer your history of good debt is, the better it is for your score.
Pay bills on time; while paying one large chunk of cash on time may seem better than paying annual, on-time payments, often proving you can be trusted with monthly payments is better for your overall credit score.
If you follow these general rules and try not to indicate risk by acting out of the ordinary, your credit score will naturally increase.
Question potential lenders’ communication policies
When sifting through mortgage lender options, keep in mind each bank’s policies on communicating with you to avoid being stuck with a company that has insufficient means of communication. This can lead to unnecessary stress if you decide to refinance your loan, change your payment method or simply have questions you need answered. Ask a potential lender:
- What means of communication do you use? Email? Phone?
- How quickly do you return calls or emails? – NOTE: it should be soon, well under 48 hours
- Can I receive information about my mortgage via email, postal service or only in person?
- How often will you update me on my mortgage interest rate and loan progress?
- Will you tell me if and when my interest rate changes BEFORE the new rate is applied?
Asking these sorts of questions ahead of time can make a difference between being stuck in a stressful situation, many times over the course of your loan term and feeling comfortable and informed about the details surrounding your loan.
Read the fine print – know the additional/potential fees that could arise
Banks function only to get as much money out of their customers as possible. While it may seem obvious, make sure you read the fine print, including getting a second opinion from a professional you trust, before you agree to a mortgage. Mortgages are generally contracted for many years so finding yourself in a less-than-ideal situation because you did not understand a certain aspect of your plan could affect you long term.
Some things to look out for include:
- Who pays the closing costs at the end of the loan and how much is that closing cost
- Some mortgage lenders will require an “earnest money” deposit to start the loan process. Be cautious and aware of contracts specifying that the earnest money will be kept regardless of whether the lender offers a loan or the loan closes. Ask the lender to specify under what circumstances the earnest money will be kept. If the answer is vague, keep shopping around for a different lender.
- Ask about transaction fees for the mortgage
- And many more details that vary per plan. The point is, do your research, get a second and maybe even third opinion and read the fine print yourself, carefully.
Use a mortgage calculator tool to view as many options as possible
You can easily compare mortgages with tools, such as Glimp’s NEW, FREE one, in order to save time and get the best idea of the options you are faced with. Comparing multiple lenders gives you the most complete view of your options.
Within a bank, there are also different mortgage interest rates, deposits and other details that can increase the number of options you have. Using a tool to help you compare lenders and compare mortgages, all at once, in an easy to navigate, adjustable platform can save you tons of valuable time. No one has hours to search for the perfect mortgage plan.
Glimp has been around for New Zealand residents for some time. Originally for finding utilities such as broadband plans, power providers and credit card companies, Glimp’s newest service is a mortgage finder. Functioning the same way as their other service locating platforms, the mortgage finder asks just a few questions and provides you an extensive list of potential lenders in less than five minutes.
You can use Glimp whether you are looking to take out a mortgage on a home or business for the very first time or if you are searching for the best lender and plan to refinance an existing loan.
Answer questions based on the total loan you are looking to take out, the deposit you want to put down for your mortgage and the terms behind your interest rate. Glimp will calculate your bank, interest rate and monthly payments and lay them out easily for you.
Let us try an example.
You are mortgaging a home for the first time and select “mortgage” from the first page of the Glimp mortgage finder.
Next, enter your answers to “How much you would like to borrow?” and “What is your deposit?” The minimum borrow is 700,000 and the minimum deposit is 100,000. We will set 500,000 as the amount borrowed and 100,000 as the deposit put down for this example. Once the information is plugged in, hit submit…and that’s it!
You will then be taken to a page with all of your options that allows you to toggle between adjustments with buttons at the top of the page. Use the buttons to change the amount you want to borrow, the number of years you will promise to pay back the loan in and the fixed mortgage rate years (1-5 or “Floating” meaning the rate does not have a fixed rate of interest). Customize your search without ever leaving the results page.
With these results the following mortgage possibilities, endorsed by Glimp, are listed in order of lowest to highest rate:
- HSBC Premier – Fixed Rate: 3 Years, Interest Rate: 4.89%, Monthly Repayment: $2891
- ASB Bank Special – Fixed Rate: 3 Years, Interest Rate: 5.09%, Monthly Repayment: $2949
- Bank Direct – Fixed Rate: 3 Years, Interest Rate: 5.09%, Monthly Repayment: $2949
- BNZ Special – Fixed Rate: 3 Years, Interest Rate: 5.09%, Monthly Repayment: $2949
- ICBC – Fixed Rate: 3 Years, Interest Rate: 5.09%, Monthly Repayment: $2949
- Sovereign - Fixed Rate: 3 Years, Interest Rate: 5.09%, Monthly Repayment: $2949
- WestPac - Fixed Rate: 3 Years, Interest Rate: 5.09%, Monthly Repayment: $2949
- TSB Bank - Fixed Rate: 3 Years, Interest Rate: 5.15%, Monthly Repayment: $2967
- Kiwi Bank - Fixed Rate: 3 Years, Interest Rate: 5.25%, Monthly Repayment: $2996
- SBS Bank - Fixed Rate: 3 Years, Interest Rate: 5.25%, Monthly Repayment: $2996
- The Cooperative Bank - Fixed Rate: 3 Years, Interest Rate: 5.25%, Monthly Repayment: $2996
- Resimac - Fixed Rate: 3 Years, Interest Rate: 5.3%, Monthly Repayment: $3011
- TSB Bank - Fixed Rate: 3 Years, Interest Rate: 5.45%, Monthly Repayment: $3056
- ASB Bank - Fixed Rate: 3 Years, Interest Rate: 5.49%, Monthly Repayment: $3067
- Bank Direct - Fixed Rate: 3 Years, Interest Rate: 5.49%, Monthly Repayment: $3067
- BNZ - Fixed Rate: 3 Years, Interest Rate: 5.49%, Monthly Repayment: $3067
- Housing New Zealand - Fixed Rate: 3 Years, Interest Rate: 5.49%, Monthly Repayment: $3067
- SBS Bank - Fixed Rate: 3 Years, Interest Rate: 5.49%, Monthly Repayment: $3067
- Sovereign - Fixed Rate: 3 Years, Interest Rate: 5.49%, Monthly Repayment: $3067
- ANZ Bank - Fixed Rate: 3 Years, Interest Rate: 5.59%, Monthly Repayment: $3067
- Westpac - Fixed Rate: 3 Years, Interest Rate: 5.59%, Monthly Repayment: $3067
- The Cooperative Bank - Fixed Rate: 3 Years, Interest Rate: 5.75%, Monthly Repayment: $3146
- Heartland Bank - Fixed Rate: 3 Years, Interest Rate: 7.58%, Monthly Repayment: $3810
Using a mortgage comparison tool is the easiest and fastest way to find your ideal mortgage plan. While this list can still seem lengthy and confusing, Glimp’s platform is not. Formatted in an easy to navigate table, every option is clearly laid out and sorted in order of rates.
Read some of Glimp’s 5 star reviews from real life customers all across New Zealand –
“Very fast and clear. I could select options according to what I needed to see the best deals. I'm really happy with the deal we got. Thanks Glimp.” – Rachel
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“Didn't know it existed until it was exactly what I needed and there it was! Took all of the stress out of finding the best deal to suit our needs.” – Mikaela
“I believe you have an excellent company, using you services have been very valuable, thank you very much for all your help. Completely recommended.” – Elmer
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If you are reading this article, it means you have made a huge step in your life and decided to mortgage or refinance your home. That is fantastic; a huge step forward in your future!
Your next step is research. Consider all the steps listed above to simplify this process and just remember, you are not alone. Talk to friends that have mortgaged their home, use the Internet and this article to absorb everything you can and make your decision an easier, well-informed one.