Frequently asked mortgage questions
Why should I work with a mortgage advisor?
I do the hard work for you and aim to save you time, money and stress. I know how the banks and other lenders operate and can confidently guide you through the mortgage process.
Does a Mortgage Broker have to be qualified? What qualifications or experience do I have?
You will be comforted in knowing that I have banking/mortgage experience and knowledge of many years.
Rhonda has successfully completed the NZ Financial Services – Residential Property Lending Strand (Mortgage Advisor) and completed the final papers on “Core Strand” and she holds a NZ Certificate in Financial Services – Level 5 – Residential Property Lending.
Do I need to live in the same city as my mortgage advisor?
The short answer is, No. Location is no obstacle when it comes to working with a mortgage advisor.
If you work with The Mortgage Advisor and live within the Wellington region I can meet you at your local café, your home after hours or any location that suits you. If you’re busy to live outside the region I can chat virtually. With social media, mobile, email and video-calling both your and our location is no issue.
How long does it take to get a mortgage pre-approval?
Typically, once I have all the required documentation it’s around 3-5 working days from date of submission. During peak times I can see this stretch out to around 8 working days. I ask that you get in touch with us as soon as possible, to avoid unnecessary delays.
What is a variable/floating interest rate?
A variable/floating rate is a rate that is not locked in and can move with the market. If the rate changes – your repayment changes so you would need to manage this loan carefully. The benefit to a floating loan is that you can repay the loan in full or make extra lump sum repayments at any time without penalty. I always advise you around the best structure for your current situation, and financial goals.
What is a fixed interest rate loan?
A Fixed rate loan is a rate that you choose to lock in for a fixed period of time. There are fixed rate options from 6 months through to 5 years. The benefit to a fixed rate loan is that the rate won’t change within the period you have fixed for and your repayments won’t change – good for budgeting. The negatives are that if the market moves downwards you will still be locked in at your rate until the term expires, and there are limited extra payments that can be made during that fixed rate period. You can request to pay the loan off earlier or move to a new fixed rate, but I would need to request a “break cost” quote from your lender/Bank. I always advise you around the best structure for your current situation, and financial goals.
Is it worth breaking my Fixed Rate term to move to a lower rate?
In this situation I would, initially, request break costs from your current provider as the amount of these costs determine whether it is feasible to do so. I would then run the numbers around your interest costs on your current mortgage set up versus what the new set up could look like and I can then provide advice around whether this is the best option for you going forward.
When should I lock in my next fixed rate?
Around 60 days out from your fixed rate expiry date the banks will often send you a letter informing you it’s time to look at your fixed rate rollover options. Whether you choose to lock in a rate then is all down to the market. If we are in a downward rate trending market I would typically recommend you look to wait a little closer to your fixed rate expiry date before locking in. If we are in an upward rate trending market, I might advise that you act as soon as possible.
If I lock in a fixed interest rate for 1 year – what happens when the 1-year rate term expires?
You will have the opportunity to re-negotiate your mortgage terms at this time – interest rate, fixed rate term and loan term. When you work with The Mortgage Advisor, I can support you through this process.
When does it make sense to refinance?
People usually refinance to save money, either by obtaining a lower interest rate or by reducing the term of the loan, or if they are unhappy with their current provider. Refinancing is also a good time to look at consolidating any non-mortgage debts.
The decision to refinance is case-by-case, as I would need to factor in any costs to move (break costs on current mortgage, solicitor fees, valuation if applicable) so I would only recommend refinancing if there was an advantage for you to do so. Or again if you were unhappy with your current provider.
Do I need to involve a solicitor when I purchase a home?
Yes, you will need to engage a solicitor as they manage the purchase process and have your name changed to the “owner” on the property title. You should involve your solicitor from the start of the process, as they can provide guidance around how to present your offer and complete pre-offer checks on the property.
Remember to allocate your solicitor costs when working out your budget for buying a home. Depending on your location and your solicitor these fees can vary from $800-$1500.00 – added costs for Family Trusts etc may apply.
When would I need a Registered Valuation and how much do they cost?
A Registered Valuation is required for all purchases or loans that have less than 20% deposit. Let’s say you buy a house for $600,000 and you have $100,000 deposit. This means you have 17% deposit so the bank would require a Registered Valuation to be completed. These valuations can cost anywhere from $700-$1200. The costs can be factored by the location, size of the home and urgency of the request.
The bank may also request a Valuation if you’re buying a brand new home where there are no Government Valuation records held, if you’re completing significant renovations to your home and the banks needs the value on completion confirmed, and if you want to borrow extra funds (loan top-up) but current records show you don’t have enough equity - a valuation can sometimes assist with the decision making.
Most banks now have a preferred supplier panel of valuers so The Mortgage Advisor would place the order for the valuation on your behalf.
When I buy a house do I need to have a Builders Report completed?
In most cases the banks don’t add this as condition of approval unless they have concerns about the property or certain disclosures have been noted on the purchase agreement – rusty roof, had leaks in the ceiling, monolithic cladding etc.
Do I recommend you have a builder’s report? Yes. A report will cost you around $500-$700. In the scheme of things – this is a very small percentage of the total costs of the home you are about to buy so I say it’s better to be safe than sorry.
I can put you in touch with your local, trusted Building Inspectors.
What is a LIM report? Do I need one?
A Land Information Memorandum (LIM) is a report prepared by the local 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. However, be aware that it does not provide all information on the property. For example, if the council hasn’t been notified of a weather-tightness issue with the property, it won’t show on the LIM.
A LIM provides information on 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.
Your Lawyer can order this for you, but you can also apply online at the local council website. The fees vary due to the level of urgency for the request but typically cost around $300-$550.00.
Do I really need a LIM report?
Difficulties arise where works have been completed without council consent or where people have failed to obtain a final code of compliance certificate.
Councils may not be able to give retrospective consent for un-permitted or un-consented works. A LIM condition in a sale and purchase agreement means you can check whether any work on the property has been given consent before you agree to buy the property. If the LIM shows there was no consent granted for work done, you can either try to negotiate with the seller to see if they will fix the problem, or you can back out of the agreement.
Ready to chat? Get in touch with me today.
Office Location Whitby, Wellington. I work with clients across New Zealand.
Email rhonda@themortgageadvisor.co.nz
Call Rhonda Mills 027 482 0871
