Why Work With a Mortgage Adviser - Finding a lender who will say yes to your mortgage.
In a perfect world getting a mortgage would be simple and straight forward, however for many people it’s a complicated and often difficult process especially if you fall outside what a bank would define as a standard customer. Budding home buyers often face hurdles due to how banks assess their personal and employment circumstances, or due to the size of the deposit.
Factors such as -
- Term of employment with current employer - For low equity loans (<20% deposit) this can be very important.
- Salary/overtime/bonuses/benefits - Lenders assess differently
- Debt (credit card, student loans, other mortgages, personal loans)
- Credit history - This can have huge impact. We work with lenders specialising in this area.
- Deposit amount - Note lenders often like to see 5% of genuine savings even where buyers have received gifted deposits.
- Type of house (new build, apartment etc) - What you are buying matters
- Visa/residency status
- Child care/child support/WFTC/family support
- Boarders - There is a significant difference in how each lender assesses these.
- Overseas income - you may live in NZ but earn overseas income. Each lender will look at you very differently.
Its important to remember when working with a Loan Market adviser, that whilst our bread and butter is certainly selecting between the mainstream lenders, we also have a portfolio of lending options with large respectable companies that choose not to be banks.
These lenders can be much more creative with their policies and don’t fall under the Reserve Bank of New Zealand legislation. If speaking with your bank hasn't helped, a mortgage adviser can take another more extensive look at your affairs and often unlock the door on a home loan.Working with a mortgage adviser is a great way to save a lot of leg work, confusion and often rejection from lenders. A good adviser will know each lender’s criteria well and can identify those who will look at your situation more favourably.
They can help position your application strongly and even think outside the square by using a range of lenders and products to get you onto the housing ladder.
For example an adviser could look at lenders you might not be aware of who for a slightly higher rate might work with a lower deposit and as equity builds they can then help you refinance the mortgage with another bank or lender offering more favourable criteria and lower interest rates.
While you’re working full time and trying to raise a family it’s often a huge ask to be able to visit each lender and put forward your case, even more so when you have extenuating circumstances which make you a difficult prospect for lenders to comprehend.
The team at Loan Market Queenstown takes the hassle out of home loans by comparing and negotiating interest rates and lending criteria from the widest range of lenders in New Zealand to find the right mortgage for you. Often this can enable our clients to get into their first home sooner as well as saving time, money and stress.
What is a low equity margin charged by banks on low deposit mortgages?
If you have less than 20% deposit you may be aware it exists but what is it for and what are the fees for various deposit sizes? In recent times there has been a flurry of media fueling the belief by many that you cannot purchase a new home with less than 20% deposit. As we have noted in earlier articles (Buying with less than 20% deposit) this is incorrect and it is possible to purchase a property with a lesser deposit however there are potential costs to doing this.Banks and lenders can charge a variety of fee’s or apply margins on interest rates to cover what they deem is a higher risk loan, due to the lower level of equity in the home.
I know what you will be thinking….. ‘those greedy banks’...... to an extent you would have a point however this isn't simply banks profiteering off the hardship of first home buyers. NZ banking regulations and financial common sense plays into the banks looking to charge a higher price for lending in areas they deem higher risk and low deposit mortgages fall into this category.
What has raised the eyebrows of some in the industry is not the fact the fee’s exist but the fact they are often poorly explained and hidden in fine print which means the transparency is low for the customer and comparing between lenders is difficult.
When making such a large borrowing decision it’s important to have all the information clearly laid out for careful analysis to allow the best decisions to be made.
As these low equity fees and premiums/margins vary between banks and landers getting the right advice when looking at a low equity mortgage is important. The difference can often be more than ten thousand dollars, so it pays to shop around.
A mortgage adviser can help, they know the fees and margins of all the lenders and also what the other relevant lending criteria are, which enables them to match you with the best possible mortgage for your personal circumstances and ensure you are not paying any more than you need to. They can also help position your application strongly and advocate on your behalf for a competitive deal.