How does it work?

Your interest rate is the cost you are paying the bank or lender for the loan you have taken out. If the interest rate goes up, your repayments increase, if your interest goes down your repayments will decrease. For eg. On a $700,000 loan with an interest rate of 5% on a 30yr loan term you would have weekly repayments of $867 per week. For the same loan on a 3.79% interest rate the repayments would reduce to $751 per week. The loan size is the same but the cost is lower.

First things first you want to speak with one of our Mortgage advisers. Once connected our advisers can run through your financial position with you and work out what your borrowing capacity is. We have access to all the major banks policy and calculators and will be able to work through which bank will be most likely to approve you. Sometimes, when we review your position we need to make changes. These are great meetings that provide you with a clear outline of the changes that may need to be made to get you approved. Everyone is different so its important to get in touch so you know exactly where you stand.

This is the part where we say what no body wants to hear – “It depends”
These days it is so important for us as your adviser to make sure we have a great understanding of your current scenario. With our experience and knowledge, we can work out which bank will suit what amount you need to buy your home. Surprisingly to a lot of people, your own bank may only be able to approve you for $100,000 less than another bank.

Great question and this can sometimes be a moving target in New Zealand. As it stands right now the general LVR rules implemented by the reserve bank mean you need a 20% deposit for buying a home to live in and a 40% deposit if you want to buy an investment property. The rules do state that the banks can lend outside these perimeters when the funding is available to it is always worth calling our advisers to check if this is a possibility when you have a 10% deposit. Additionally, and importantly if you are looking at buying a new build there are Exemptions in place. For people wanting to buy a new build to live in the banks are open to 10% deposits and investors only need 20% instead of 40%.

We talk about he options here from the beginning to make sure we are going to take on a mortgage that fits your lifestyle. Once you have been approved and find a home we have our second important meeting to finalise your loan structure. There are so many ways to skin a cat and we can tailor the loan structure to suit your budget and future goals. We like to say a home is a long term goal but a 30yr mortgage shouldn’t be.

The Loan to Value ratio (LVR) is the amount of your loan compared to the value of your property.
LVR is calculated by dividing the amount of the loan by the value of the property. For example, if the property is worth $250,000 and you have a deposit of $50,000, the LVR will be 80%. ($250,000-$50,000)÷$250,000 = 80%.
S&P – Sale and purchase agreement, we get asked what an S&P is alot. When you are approved and looking at buy

This is the person who owns the property you want to buy. It is not the agent selling the house.

Unconditional is what we use to say you have made an offer, it has been accepted and there are no conditions remaining. You now own it. If you make an offer but want a builders report done your offer is not unconditional, it is conditional on the buyer being happy with the building report once completed.

This is everyone’s favourite. This is the day you get the keys. Behind the scenes a lot of things happen to get here. We have had you approved, your deposit has been paid and the funds from the bank have been issued to your lawyer and paid on to the vendors. You collect the keys and its move in day!

Early repayment adjustments, simply put this is the break fee. When you want to change your fixed rate early or repay some debt while its on a fixed rate you will be presented with an ERA fee.

When you get your home loan if we didn’t meet the deposit requirements set by the reserve bank at the time. Currently 20% deposit. The banks will charge one of these on your lending. The margin is a few basis points added to your interest rate. For example: Rate could be 4.59% + LEM of 0.75% because we used a 10% deposit. = New rate of 5.34%. The premium and fee can mean we get the standard rate but banks will charge you a fee of similar interest. For example: $500k loan + LEP of 0.75% is $3,750. You can pay the $3750 fee but some banks will allow us to add this to your loan. Meaning your new loan would be $503,750.

The mix up we see here is the confusion between the deposit on the house and the deposit for the bank to approve the home loan. Buying a house at Auction. Often you will be required to pay 10% if successful. This is simply your “holding deposit” of sorts and is calculated as part of your deposit for the lending. It does not reduce your deposit. If we get you approved for a home loan for a 30% deposit, once you have paid the 10% to the agents for going unconditional you will still need to pay a further 20% by settlement.

This is a huge part of the mortgage approval process now. We throw it around in the industry all the time. “Does the servicing work?” Or “Servicing is tight, let’s look at your expenses” This word is common practice but we know its not well understood. Servicing is simple, it is the summary of what your income is after all expenses are taken into consideration. Each bank has their own unique calculator for this. Once we add up all your daily living expenses, deduct tax and acc from your gross incomes we are left with figure that we can use to help us work out how much you can afford to borrow.