What Does a Mortgage Broker Do?

A Guide for Kiwi Homebuyers.

Buying a home can feel like a roller coaster – amidst the ups and downs, one question frequently pops up:

Do I need a mortgage broker? What about a broker with a higher-level personalised service – such as a NZHL Mortgage Mentor?

Short answer: Probably.

The first step in deciding whether to use a mortgage broker is to understand what they are and what they do.

Simply put, a mortgage broker or adviser liaises between homebuyers and lenders. A NZHL Mortgage Mentor goes further. When you partner with a Mortgage Mentor, they’ll be with you beyond securing your mortgage, offering financial coaching services for the lifetime of your loan.

Imagine a mortgage broker or Mortgage Mentor as your trusted guide, helping you navigate New Zealand’s mortgage market. They’ll help you find the best mortgage for your needs and shoulder the heavy lifting of paperwork and applications.

New Zealand’s mortgage landscape is dynamic, with many loan types. Still, it’s no surprise that Kiwis, known for our DIY spirit, might be tempted to tackle it alone. However, navigating this maze without a skilled guide can be pretty challenging.

Why a mortgage adviser could be the key to unlocking a smoother, more confident home loan journey:

Good Mortgage Advisers Are:

  • Market Experts: They possess a deep understanding of the nuances of the New Zealand mortgage market, have a thorough understanding of specific considerations for homebuyers, and stay abreast of the latest market conditions.
  • Credit Can-Doers: Have banks turned you down in the past? Maybe you’re self-employed? If you’re finding it hard to meet a bank’s lending criteria, they will work to understand your particular challenges and find the right solution.
  • Experts at Finding you the right fit: Rates are important, but they’re only part of the mortgage story – the right loan structure can have far more impact on your long-term success, potentially helping you reach financial freedom faster.
  • Paperwork Wizards: Let’s face it, mortgage applications can be daunting. Your broker deciphers the jargon, streamlines the process, and ensures all your paperwork is in order, saving you valuable time and stress.
  • Working for you, but (largely) get paid by the bank: Mortgage brokers and Mortgage Mentors are paid via commission from the lender. However, often you will need to pay and application and/or service fee as well.

Beyond the Numbers: The Human Touch of a Mortgage Mentor

A good mortgage broker goes beyond just finding the right loan for you. They should become your trusted adviser, offering guidance and support throughout your home loan journey.

And it really is a journey…For example, Sarah and Daniel are a young Kiwi couple dreaming of buying their first home, a cosy townhouse in Christchurch. They had saved a sizable deposit, researched suburbs and school districts, and attended seemingly endless open homes. They finally found a perfect property for them – but they were daunted by the LVR restrictions and the complexities of navigating the mortgage market. Their broker, Emily, was able to ease their worries by explaining the government grants available for first-time buyers and comparing loan options. She helped them secure pre-approval, confidently setting them up to buy.

A Mortgage Mentor will:

  • Listen to your needs and goals: They’ll take the time to understand your aspirations, budget, and risk tolerance – ensuring the recommended loan aligns.
  • Communicate clearly and regularly: You’ll never be left in the dark. Your Mortgage Mentor will keep you informed every step of the way – answering your questions in plain English.
  • Advocate for your best interests: They will negotiate with lenders on your behalf, ensuring you secure the most favourable terms and conditions possible.

Why Local is Your Best Bet

The distinct regional flavours (especially when it comes to lifestyle and properties) are what makes New Zealand great. It also means using a local, specialised mortgage broker whenever possible is best.

Like John did when he decided to swap city life for a picturesque cottage in the Hawke’s Bay countryside, he was faced with issues with limited lending options. Fortunately, his local Hawke’s Bay mortgage broker, Mark, was able to successfully secure pre-approval that considered John’s income and potential rental income from the cottage. John’s dream became a reality thanks to Mark’s expertise.

New Zealand-Specific Home Financing Considerations:

  • The Great Kiwi Dream and LVR Restrictions: Homeownership is central to the Kiwi identity, but Loan-to-Value Ratio (LVR) restrictions, requiring a minimum 20% deposit for most residential properties, can make it more challenging for first-time buyers. Your broker can navigate these guidelines and explore government-backed programs like KiwiSaver HomeStart Grants and Welcome Home Loans to bridge the deposit gap.
  • Interest Rates and Volatility: New Zealand’s floating interest rates, linked to the Official Cash Rate (OCR), can fluctuate. Your broker can help you choose a fixed-rate mortgage for stability or a variable-rate option if you’re comfortable with potential adjustments. They’ll also advise on strategies to help spread the risk of interest rate rises in the future.

Choosing the Right Mortgage Broker

To Find Your Best Mortgage Broker Match:

  • Seek Referrals: Look for testimonials and online reviews to gain further insights. Ask if anyone in your area has experienced the more personalised and ongoing service levels of an NZHL Mortgage Mentor.
  • Ask About Experience: Ask your potential broker about their relevant experience in financing properties similar to yours.
  • Prioritise Communication and Trust: Choose a broker you feel comfortable with who actively listens to your needs and communicates clearly.
  • Ask Questions: When engaging a mortgage broker, clarity is key. Here are some questions to consider:

Can you craft a structure around future goals, such as renovations or a new family member, rather than just negotiate a rate?

Do you live in and service clients in our area?

What success have you had in helping clients get free of their mortgage sooner and save interest costs? Can you share examples?

How are you paid? What are your fees and commissions?

The Bottom Line

While there’s no one-size-fits-all answer to the “broker or no broker” question, understanding the value they bring can empower you to make an informed choice.

A Mortgage Mentor will make the path to homeownership clearer and less daunting. The human touch, expert guidance, and legwork-busting can be the difference between a stressful slog and a smooth ride. Their role is to guide you, advocate for you, and ensure you secure the best possible mortgage for your unique needs and goals.