A Guide for the Kiwi Home Buyer
Are You Looking to Buy a Home in New Zealand?
That’s great! Purchasing a home (be it for the first time or the fifth time) is always a landmark moment.
Every home ownership story is unique – but the one thing they all share is a (sometimes stressful) journey towards securing a mortgage. Thankfully, navigating this journey doesn’t have to be a solo mission. A mortgage broker can serve as your wise and experienced guide.
Before you get started, it’s important to ask your potential mortgage broker some questions. Don’t be shy—a good broker won’t mind answering. They understand that clarity is crucial to a productive partnership. They’ll ask you plenty of questions as well to fully understand your situation in order to provide the best service.
Our Guide to Working with a Mortgage Broker
We created this guide specifically for the New Zealand home buyer. It’s designed to walk you through the main topics you’ll need to consider when engaging a mortgage broker.
We will cover:
- Evaluating Your Broker’s Services and Working Style
- Understanding Your Financial Position
- Loan Structures
- The Long View
- Special Considerations for the New Zealand Market
Evaluating Your Broker’s Services and Working Style
There’s a reason this topic is at the top of the list. It’s also important to be sure the broker you choose is the right fit for you. Compatibility involves many factors.
Key areas to consider are:
- Relevant specialised experience
- Local knowledge
- Communication style
The breadth of options and advice your mortgage broker can provide is greatly influenced by the depth of their experience with your type of property and understanding of the local market. Many brokers offer additional services like insurance advice. These services can be beneficial, especially if they’re tailored to the unique aspects of New Zealand’s market. Transparency about how your broker is compensated is important. Most receive a commission from lenders; however, some may charge you directly. Knowing this helps you assess any potential extra fees you could be facing.
Key Questions to Ask Your Mortgage Broker:
- What are your qualifications and experience?
- What types of properties do you specialise in? (ie: commercial, rural, etc.)
- Do you offer other financial services?
- How do you get paid?
- Can you provide references or testimonials?
- How will we communicate? (Email exchange, phone, face-to-face?)
Understanding Your Financial Position
Your financial position determines the kind of property you can afford. A broker can help you understand your borrowing limit. They’ll consider your income, expenses, and any existing debts. This understanding is necessary to set realistic expectations for your property search.
You need to consider more than just the purchase price of the home. Besides the loan, buying a home involves various expenses like legal fees, inspection costs, and insurance. Your broker should provide a comprehensive breakdown of these additional costs so you can plan your finances accordingly.
Key Questions to Ask Your Mortgage Broker:
- How much can I borrow?
- What are the associated costs?
- Are there any fees not listed?
Loan Structures
Interest rates are important, but they’re only part of the story—the right loan structure can have far more impact on getting you free of your mortgage sooner and potentially saving hundreds of thousands in interest costs over the typical 20—or even 30-year span.
The New Zealand mortgage landscape offers various loan types, from fixed-rate to floating-rate mortgages, offset loans or revolving credit facilities, and table loans. Each has its advantages and drawbacks, and a broker can help you navigate these options based on your financial situation and plans.
Understanding your repayment options is vital in New Zealand, where interest rates and market conditions fluctuate. Ask about the flexibility of repayments, options for extra payments, and any fees for early repayment.
If you’re considering an investment property, specific questions apply. New Zealand has distinct regulations and market trends for investment properties, and your broker should be able to navigate these nuances.
Key Questions to Ask Your Mortgage Broker:
- What loan structures are available to me?
- What are the repayment options?
- What about investment properties?
The Long View
If you like the idea of ongoing support beyond securing your mortgage, a NZHL Mortgage Mentor is a great option. They will provide long-term guidance and advice, helping you adjust your mortgage strategy as needed.
When considering the long view, having the right insurance in place is critical, considering factors like what would happen to your family, lifestyle, home, belongings, and financial well-being if something unexpected happened. Enquire if your broker can assist with related insurance solutions. You might need to sell or move before your mortgage term ends. Discuss with your broker the implications of such a decision, including any penalties or fees.
Key Questions to Ask Your Mortgage Broker:
- What happens if I sell or move?
- Can you assist with related insurance?
Special Considerations for The New Zealand Market
The New Zealand property market has unique characteristics, such as regional variations in pricing and demand. Your broker should be knowledgeable about your local market.
Key Questions to Ask Your Mortgage Broker:
- How do local market conditions affect my loan?
- Do you have experience with similar properties?
- Can I get a loan that accounts for potential future income derived from the property?
The Bottom Line
Choosing the right mortgage broker or mentor is critical in your home-buying process, especially in New Zealand’s unique market. By asking the right questions, you can ensure that the person advising you is experienced, and a good fit for your specific needs and circumstances.
The right advice can make a world of difference in your journey to homeownership.
