If you are thinking of buying yourself a new home or adding to your existing property portfolio there are a number of different factors that you must consider when you look to choose a home loan provider. In this guide we will address some of the key factors that you need to pay attention to and be aware of when choosing your home loan provider
Wherever you are in the country or wherever you want to buy, you need to be aware of the location you are buying in. Some regions such as Auckland or Wellington have higher than average house prices and there can often be a significant variance in house price or quality dependant on what suburb you are looking for a home in. Your real estate agent should have a good idea of the capital value (CV) of the homes in the areas you are looking at property in.
As the location changes so too does the range of mortgage lenders. If, for example you were getting a home loan for a house in Napier, you would have access to mortgage lenders, local finance companies and credit unions such as NZCU Baywide, and a range of other smaller lenders that may not be available in cities such as Auckland where major banks like ASB, ANZ and Westpac have more market visibility.
As well as looking at location, comparing mortgages and shopping around for the best rates is something that you should always do when looking for a mortgage lender. You’ll need to consider the length of your loan, as well as weather you want to have a fixed or flexible rate for the term of the loan. You need to carefully evaluate the risks of fixed vs floating rate mortgages. Just because a lender has a low rate now, does not mean it will stay that way for the entire loan period.
Since the introduction of new legislation to cool the heated Auckland housing market, the deposit required for a bank to provide a home loan has risen to a minimum 20% for an existing home. This means that where all lenders were able to offer 0% deposit mortgages at a higher rate of interest, banks and some financial institutions are no longer able to do so. This means you might have to have a minimum of 20% cash in hand when you attempt to get a home loan so that the bank providing the loan has some security. Not all financial institutions are beholden to this legislature however. Credit unions such as NZCU Baywide are able to offer 0% deposit home loans up to a certain amount. But this is at the risk of the union and can often come with additional terms and conditions