Buying property can be a complicated process. At Next Door we guide our clients through the process, ensuring it’s as straightforward and painless as possible. Here are our simple answers to the hard questions.
Next Door provides you with access to New Zealand’s major and alternative mortgage lenders, with an extensive range of home loan options for Gisborne. We streamline the process, removing the hassle and the legwork for our clients allowing you to access the best the market has to offer, quickly and painlessly.
Your personal adviser works for you, not for the lender, so:
- we’ll keep you informed of what’s on offer and weigh up what works best for you now and as your needs evolve
- we’ll review your arrangements and changing circumstances annually, or as often as you need
- we’ll remind you when your fixed term’s ending
- we’ll help you achieve financial freedom faster
Yes, often KiwiSaver can be used towards the deposit on a first home. Check with your KiwiSaver provider to confirm your options.
First home buyers in Gisborne need a deposit of at least 5%, ideally 20%. Often this is made up of savings, along with a KiwiSaver withdrawal, and some first home buyers may also be eligible for a Kainga Ora First Home Loan. If you are looking to buy an investment property, the required deposit is higher, but you can often use the equity in your current home in lieu of a deposit. Next Door’s panel of lenders offer a wide range of mortgage solutions - whatever your circumstances, your Next Door adviser will be able to help you explore your options.
A number of factors should be considered when choosing a mortgage in Gisborne, not just the lowest interest rate. The loan structure, fees, term and market conditions need to be considered along with your short and long term goals and aspirations. The size of your deposit will also impact which rates are available to you. Your Next Door adviser will guide you through this process, ensuring your loan matches your needs. Check the latest mortgage interest rates on offer.
Apart from the deposit, other costs include:
- LIM report - a Land Information Memorandum (LIM) report provides a summary of all the property information held by your local council ($200-$400)
- Builder’s report - fees vary depending on who you use ($500-$600)
- Registered valuation - a valuation is usually required to get a mortgage and lenders often stipulate who to use ($500+)
- Legal fees - these vary depending on the complexity of the process and the advice required ($1,000-$2,000)
- Moving costs
A Land Information Memorandum (LIM) is a report prepared by council at your request. It provides a summary of the current property information held by the different departments at council on the day the LIM was produced. Be aware that it does not provide all information on the property, for example, if council hasn’t been notified of a weather-tightness issue with the property, it won’t show on the LIM.
A LIM provides information about some or all of the following:
- Stormwater or sewage drains
- Any Heritage New Zealand protection
- Special land features such as erosion or flooding
- Any rates owing on the land
- Permits, building consents or requisitions, and other certificates previously issued by the local council or building consent authority
- Zoning – how the land may be used and any conditions that apply
- Any notices to the council by any statutory organisation that has the power to classify land or buildings for any purpose
- Any notices to the council given by any network utility operator under the Building Act
- Any other information that the council thinks is relevant
Gisborne District Council LIM report turnaround time is 10 working days and fees vary, but for residential titles allow $400.
A valuation is an assessment of a property’s market value, based upon an inspection of the property as well as comparable sales in the local area. A registered valuation is usually needed in order to get a mortgage and can also be carried out to determine how much you should pay for a property, how much you should sell a property for, and if you are looking to refinance your current mortgage (as values change depending on market conditions and renovations). As the LVR changes, you may become eligible for special interest rates, which may require a registered valuation. Your Next Door adviser can refer you to the appropriate provider as stipulated by your lender.
Your property’s LVR (Loan to Value Ratio) is the loan amount (the mortgage) against the value of the property. Eg, an $800,000 loan on a property valued at $1m has an LVR of 80%. When buying a property the LVR is determined by the deposit. As your property's value changes or your loan amount changes, so too does the LVR. The government has set LVRs as criteria for banks for owner-occupied properties (80%, ie, 20% deposit is required) and investment properties (60%, ie, 40% deposit is required). Banks still lend at higher LVRs but the loans can incur a Low Equity Premium fee and/or a less favourable interest rate as the risk is higher. Your Next Door adviser will regularly review your loan arrangements to ensure you utilise the most favourable rates available as your property value increases and your LVR changes.
An LEP or LEM can mean extra interest, or an additional one-off charge, on top of your mortgage. Depending on the size of your deposit and your lender, it can range from an extra 0.25% to 1.5% per annum, or a 2% premium on the amount of your loan.
There are plenty of options for paying off your mortgage faster, and as anyone with a mortgage understands, the faster the loan is repaid, the less overall interest is paid. Choosing the best route to achieving financial freedom will depend on a number of factors - at Next Door our advisers will guide you through the process, ensuring that your mortgage matches your situation, goals and aspirations.
Often people aren’t sure that their current mortgage is right for them. At Next Door we review our clients’ mortgages and related financial position annually or as often as they like to ensure their needs are being met throughout the loan term and as circumstances change. Contact us today to book your mortgage review.
A pre-approval is also known as a conditional approval - it’s the bank or lender confirming the amount they are willing to loan you, as long as the property meets their criteria. A pre-approval puts the power in your pocket - you know exactly how much you have to spend based on your deposit and ability to make the repayments - as you start house-hunting and negotiating on price.
Offset mortgages allow you to ‘offset’ the interest paid on your loan with your savings/account balance. For example, if your loan is $100,000 and you have $20,000 across your other accounts, you will only pay interest on $80,000 of your loan. Because interest is calculated daily, this can save you significant money over the long term. Multiple accounts (with the same bank) can usually be attached to the offset mortgage - so, for example, your parents might opt to attach their accounts to the loan which means their savings would offset your loan.
Refinancing your mortgage means replacing your current mortgage with a new one. It’s a normal part of homeownership and can be helpful when your circumstances and needs change. It can be a great opportunity to reduce your term, improve your interest rate and pay off your mortgage faster.
It’s important to remember that refinancing is not just changing your interest rate or repayments, it’s repaying your current mortgage completely and taking out a new one. This can either involve sticking with your current mortgage provider or switching to a new one. If you are changing to a new provider, you will need to involve a solicitor - which has costs. Your Next Door adviser will guide you through the options and help you find the mortgage that matches your needs.
Steps to refinancing:
- Ask your adviser what’s currently on offer and get them to review your current arrangements
- Ask your adviser to talk you through the costs (your current lender may have break fees, and if changing lenders you will need to involve a solicitor which has costs) and benefits (the new lender may pay a cash contribution and may offer more favourable rates)
- Instruct your adviser to help you apply and qualify for your new mortgage
For a mainstream mortgage, a minimum of 20% will be required, but it varies depending on the type of loan and the lender. Your Next Door adviser will guide you through your options.
If you have a current mortgage and are coming up to the end of your term, most lenders will allow you to “lock in” the current fixed interest rate for up to 60 days before you refix your rate. If you don’t lock your rate, the rate may change. This is most important when the market is particularly dynamic. Different lenders have different rules around locking rates. For example, the “rate promise” offered by ASB enables customers to lock in a rate but if their advertised rates have dropped by the refix date, they will give you the lower rate. Your Next Door mortgage adviser will contact you before your term conclusion to discuss your current needs and ensure you can take advantage of rate-lock benefits.
It is possible to split your loan into portions with different terms and interest rates. This gives you more flexibility to choose the blend that fits your needs. You may want the benefit of a fixed interest rate and consistent repayment amounts, while keeping a portion on a floating rate to allow you to make higher repayments without penalty. In addition, you may want to include a revolving credit portion which will enable you to repay and redraw.
Revolving credit mortgages are essentially like having an overdraft. Your loan becomes your everyday account, so money moves in and out of your loan as you get paid and as you spend and pay bills. It is only recommended for disciplined borrowers - unlike fixed-term or floating mortgages, there are no set repayments on set dates, you can make repayments whenever you want, for as much as you want.
Refixing is the process of locking in a new interest rate for a certain period of time once your current fixed interest rate period is up. This gives you the certainty of repayments over a set period, which makes budgeting easier. It is worth considering your short and longer term plans before you refix because if you choose to repay or change the mortgage before the fixed term is up, you may incur penalties. Your Next Door adviser will guide you through the process, ensuring that your mortgage matches your situation, goals and aspirations.
Topping up your home loan means extending your borrowing either in the same loan or by taking out an additional loan. Often home renovations such as a new bathroom or kitchen, or adding a pool, or a new car or wedding, are funded by adding to an existing mortgage. Talk to your Next Door adviser about your options.
A construction loan is for building a new home or undertaking a substantial renovation. The loan will start as interest-only (usually on a floating rate) and allow you to make progress payments to your builder to a maximum limit rather than receiving all the funds as a lump sum. Your lender will make payments to your builder/supplier through a series of installments as they complete various stages of construction.
Once your build is complete your loan will be converted to a standard table loan (or another loan structure agreed to at the outset). If your loan has a high LVR, you'll need a fixed-price contract from a reputable building company from the outset covering the full cost of a ‘turn-key’ house at completion.
A floating or variable interest rate is an interest rate that moves up and down with the market. The advantage of having a loan with a floating interest rate is that you can make extra repayments without penalty. The disadvantage is that your repayments can increase as interest rates rise.
A fixed-rate mortgage is a mortgage with an interest rate that doesn't change for a period of six months to five years. At the end of the term, you can choose to re-fix again for a new term or move to a floating rate. The advantage of a fixed-rate loan is that you have certainty of how much your repayments will be as these will not change during the fixed-rate period. The disadvantage is that you are locked into the loan for the duration of the term and may incur penalties for extra repayments or for repaying the loan before the term is up - for example if you were to sell the property.
A non-bank lender is a fully registered home loan provider with a broad range of solutions for people who don't fit traditional bank requirements - often the solutions are more competitive with a wider range of products and more flexible terms. Many borrowers find that for all sorts of reasons banks won’t lend to them, whereas non-bank lenders are more flexible and able to accommodate borrowers that banks don't.
Non-bank lenders (also known as alternative lenders) play an increasingly important role in the financial market, delivering multi-billions of dollars in loans across the world. They're registered lenders, with loans subject to the same forms of regulation as banks, but with a more flexible set of loan products. Often non-bank lenders are a good choice for self-employed or borrowers who have encountered a major life event that has impacted their credit history (such as a relationship break-up or redundancy/job loss).
The key difference is the way non-bank lenders assess an individual's ability to pay back a loan. They look past credit scores and into a person’s history and life situation to carefully assess their ability to manage the loan, with each case decided on its own merits. Banks are more risk averse - so while someone might be considered too high a risk from a bank’s perspective, non-bank lenders are often willing to take on that risk because they’ve done a comprehensive assessment of that individual's circumstances and financial position.
Next Door's panel of lenders includes the market's best non-bank lenders, ensuring our advisers can scour the market to find a loan that fits your current needs and future aspirations.
If you're looking to consolidate your various loans (car, credit card etc) into your home loan, Next Door can assist, helping to ensure your arrangements reduce your interest and overall costs.
If you're looking at putting in a swimming pool, renovating your kitchen or bathroom, taking that long-overdue holiday or buying a new car and need to top up your home loan, Next Door can help.
Next Door assists clients over 55 who might be looking to access the equity in their home without having to sell. A reverse mortgage enables those over 55 to unlock some of the equity in their home, helping them fund a more comfortable retirement or provide the next generation with help towards getting on the property ladder. Contact us today to discuss your requirements.
With a reverse mortgage, you aren't required to make regular repayments. Interest is calculated on the outstanding balance and added to your loan each month. Repayments can be made at any time, which reduces the balance and interest charged.
The total loan amount, including the interest accumulated, is repayable when you move permanently from your home - eg, when you sell your property, move into long-term care or pass away.
Eligibility requirements:
- must be over the age of 55
- home must be owned outright or have a standard mortgage that can be paid off by the reverse mortgage
- loan amount depends on borrower's age and the home's value
- Proof of citizenship or permanent residency (passport, birth certificate or permanent resident visa)
- Proof of income (3 recent consecutive payslips, 2 years' financial statements, IRD statement)
- Bank statements (3 months transactional and credit card)
- Proof of deposit (KiwiSaver, savings statement, gifting declaration)
- Expenses (breakdown of current living expenses)