FAQs
Answers to common questions about home loans, refinancing, KiwiSaver, and mortgage advice.
Common Questions
What does a Mortgage Adviser do?
In simple terms, a Mortgage Adviser organises and manages the process to obtain a mortgage loan from a lender on behalf of a client.
They are the link between the client and the chosen lender. They ensure your loan is completed smoothly through to settlement whether it is a refinance or a purchase.
Why use a Mortgage Adviser? What are the benefits?
Using a Mortgage Adviser opens up the choice of lender options to you be it a bank or other financial institutions. More choice can provide better options to benefit the client for a more effective mortgage loan. Mortgage Advisers can have greater negotiating power with lenders than a client to achieve a lower cost product.
Mortgage Advisers are independent and impartial from the lenders and therefore provide advice and recommendations to their clients that are in the client’s best interests.
By using a Mortgage Adviser, the client saves time as the Mortgage Adviser does all the work for them and keeps them updated on progress.
Who would use a Mortgage Adviser?
Whether you are a first home buyer or a seasoned investor, a Mortgage Adviser can help to ensure you are correctly structured to meet your financial goals.
How much does it cost to use a Mortgage Adviser?
It does not cost to use a Mortgage Adviser as the lender pays the Mortgage Adviser for procuring business on their behalf, so it makes sense to use one.
What is refinancing?
Refinancing is when a new loan is used to payout and close an existing loan. This is normally done to receive a lower interest rate or repayment type and it normally involves one lender paying out another lender.
What's the difference between fixed and floating rates?
With a fixed rate loan, the interest rate and loan repayment amount stays the same throughout the fixed rate period. Even if the Official Cash Rate (OCR) changes, the fixed rate will not change during the fixed rate period. The fixed rate period is typically between 6 months and 5 years and chosen by the client to suit their needs. With a fixed rate loan you are limited on how much you can repay into the loan on top of the required repayment and can incur fees for lump sum repayments.
With a floating rate loan, the interest rate can be varied by the lender at any stage. This type of loan is heavily influenced by the OCR, which is controlled by the Reserve Bank. For example, if the OCR increases, the floating interest rate will increase which then increases the loan repayment amount. Floating rate loans enable the client to make lump sum repayments without incurring any fees.
How can I use my KiwiSaver to purchase a property?
To be able to withdraw KiwiSaver funds to purchase a property you need to meet the following criteria:
1. You can withdraw all of your KiwiSaver apart from the government’s $1,000 kick-start payment.
2. You need to have been a KiwiSaver member for a minimum of three years.
3. You need to be over the age of 18 to be able to withdraw the funds.
4. The property you are purchasing needs to be your first home and you cannot be purchasing an investment property. There is still the opportunity to use your Kiwisaver if you have previously owned your own home and in the same financial position as a first home buyer.
How would I qualify for the First Home Grant?
To qualify for the First Home Grant you need to meet the following criteria:
1. You need to have been a KiwiSaver member for a minimum of three years and contributing at least 3% of your income to your Kiwisaver fund during that time
2. You need to be over the age of 18 to be able to withdraw the funds
3. The property you are purchasing needs to be your first home or land and you cannot be purchasing an investment property
4. You have not received the KiwiSaver Home Start Grant or its predecessor the KiwiSaver deposit subsidy before
5. You need to be a member of a KiwiSaver scheme, complying fund or exempt employer scheme
6. You are the sole buyer and have earned $95,000 or less (before tax) in the last 12 months or you and your partner have earned a combined income of $150,000 or less (before tax) in the last 12 months
7. You have a deposit that is 5% or more of the purchase price. (The 5% deposit can include savings, gifts, KiwiSaver, the First Home Grant you may be eligible for or any other equity held. Note, the deposit cannot be borrowed or secured against other property)
8. You are purchasing an equal share in a property proportionate to the number of intended property owners.
9. You are buying one of the following types of property and land arrangements:
– Fee simple
– Stratum estate (freehold and leasehold)
– Cross-lease (freehold and leasehold)
– Leasehold
– Maori land
10. The purchase price of the property is within the regional house price caps as shown in the following link:
https://kaingaora.govt.nz/home-ownership/first-home-grant/check-property-criteria/
11. You must live in your home for at least six months from settlement date or the code of compliance certificate issue date
12. If you are a previous property owner, you should not have realisable assets totaling more than 20 percent of the house price cap for existing/older properties for the area you are buying in. Realisable assets are belongings that you can sell to help buy a house. For example, if you were buying a house in a $525,000 cap area, your realisable assets cannot be worth more than $105,000. Housing New Zealand considers the following to be realisable assets:
– Money in bank accounts (including fixed and term deposits)
– Shares, stocks and bonds
– Investments in banks or financial institutions
– Building society shares
– Boat or caravan (if the value is over $5,000)
– Other vehicles (such as classic motorbikes or cars — not being used as your usual method of transport)
– Other individual assets valued over $5,000
– Deposit funds paid to real estate agent
Conflicts of Interest
Home Loan Finance Ltd receive commissions from the lenders we provide financial advice for. If a mortgage is taken out and originated by Home Loan Finance Ltd, the lender will pay a commission to Home Loan Finance Ltd. The amount of commission is based on the total loan amount borrowed.
As part of our care, Home Loan Finance Ltd often refers our clients to Insurance Advisers. We receive a small referral fee when the client takes out insurance through that provider.
Each recommendation is based on the specific needs of the client as part of our advice process. A register is held and updated for conflicts of interest. Annual training & Compliance Assurance Reviews are undertaken to ensure compliance.
How much deposit do I need to buy a home?
The amount of deposit required depends on the type of property you’re purchasing and your circumstances. Many first home buyers can purchase with as little as a 5% deposit, while investors generally require a larger deposit. Every lender has different criteria, so it’s important to seek advice tailored to your situation.
Can I get a mortgage if I'm self-employed?
Yes. Self-employed applicants can often obtain home loan approval, although lenders may require additional documentation such as tax returns or accountant-prepared financials. Different lenders assess self-employed income differently, so obtaining professional advice can help identify the best options available.
How long does it take to get a home loan approved?
Approval timeframes vary between lenders and depend on the complexity of the application. In many cases, a pre-approval can be obtained within a few days, while full approval may take longer depending on documentation requirements and lender turnaround times.
What is a mortgage pre-approval?
A mortgage pre-approval is an indication from a lender of how much they may be willing to lend based on your financial position. It allows you to house hunt with confidence and provides a clear understanding of your budget before making an offer on a property.
How much can I borrow?
The amount you can borrow depends on several factors, including your income, expenses, existing debts, deposit, and credit history. Every lender has different assessment criteria, so borrowing capacity can vary between institutions.
Do I need a good credit score to get a mortgage?
A good credit history can improve your chances of approval and access to competitive lending options. However, some lenders may still consider applications where there have been previous credit issues, depending on the circumstances.
What costs should I budget for when buying a property?
In addition to your deposit, you may need to budget for legal fees, building reports, LIM reports, valuation costs (if required), moving expenses, insurance, and any lender-related fees.
Can my parents help me buy my first home?
Yes. Many first home buyers receive assistance from family members through gifts, guarantees, or equity support. Different lenders have different policies regarding family assistance, and we can help determine the most suitable structure.
What is equity?
Equity is the difference between the value of your property and the amount you owe on your mortgage. As property values increase and your loan balance decreases, your equity generally grows.
Should I choose a fixed or floating interest rate?
The right option depends on your financial goals and circumstances. Many borrowers choose a combination of fixed and floating rates to balance certainty of repayments with flexibility to make additional repayments.
What happens if my fixed rate expires?
When your fixed rate term ends, your loan will generally move to the lender’s floating rate unless you choose a new fixed rate option. We can help review your mortgage before expiry and discuss available options.
What is an offset account?
An offset account is a transaction or savings account linked to your home loan. The balance in the account reduces the amount of your loan that interest is charged on.
Example: If you have a $600,000 mortgage and $50,000 in your offset account, you’ll only pay interest on $550,000.
Offset accounts can be a great way to reduce interest and paying your loan off faster, while still keeping access to your savings.
What is a revolving credit home loan?
A revolving credit loan works like a large overdraft secured against your property. Interest is charged on the balance, not the limit. Your income can be paid directly into the account, and any money sitting in the account reduces the interest charged.
You can withdraw funds when needed, making it a flexible option for people who are disciplined with their spending and have regular surplus cash flow.
Can I buy an investment property?
Yes. Investment property lending is available through a range of lenders. Deposit requirements, servicing criteria, and lending policies differ from owner-occupied lending, so professional advice can help identify suitable options.
Can I switch banks without selling my house?
Yes. Refinancing allows you to move your mortgage from one lender to another without selling your property. This can be done to access better interest rates, improved loan features, debt consolidation, or additional borrowing.
What documents will I need for a mortgage application?
Requirements vary between lenders, but commonly include proof of identity, income verification, bank statements, evidence of your deposit, and details of any existing debts or liabilities.