Home loan in New Zealand

Loan

Where to get a home loan in New Zealand

Home loan in New Zealand – Are you a first-time or existing homeowner, looking to refinance or buy a new home in New Zealand?

In this guide, I’ve compiled a list of possible options as well as the best mortgage deals available.

To make this unique and top-notch, I build a focus on three fundamental pivots you should pay close attention while handpicking the best deal, they include;

  • Lowest priced
  • Zero or low fee and
  • Mortgage provided by trusted lenders

While you consider a home loan in New Zealand, as well as any other location, you are advised to give priority to pricing.

The lower the price, the better and more affordable on your path to navigate with such a deal.

How reliable are the lenders, are they trust-worthy, have they been in business for some time to have achieved a track record?

Do not jump into a deal without verifying and establishing a focal fact.

Facts you need to know about home loan in New Zealand

Buying a home undoubtedly should be your highest financial commitment, in this case your payment is expected to last a period of 10-25 years or more.

However, your best deal would be a home loan with the lowest interest rate, some other factors can go a long way to reduce how much it will cost you over all to complete the payment.

1. Split interest rate

Sometimes interest rate could fluctuate in the future, if you are not certain of its future direction, do not commit to a particular interest rate.

You choose to keep half of your loan with either fixed or variable rate or viz versa. With this tact you can avoid over paying for your mortgage.

2. Free extra repayments

Can you make overpayment without being charged a fee for it, if this is allowed, it will be an opportunity to lower your payment quick enough, and save on interest cost.

If you have the ability to make an extra payment during the mortgage tenor, it will be ideal to look for a lender who provides such liberty in its contract clause.

This will lower your loan amount quicker, as well as save an interest cost.

3. Offset mortgage account

If you are looking to save on interest cost, an offset account will help you to do just that, by this arrangement you can offset money you have in your bank account against your mortgage balance.

For every dollar in your bank account, you have an offset against your mortgage amount, in this case you will pay less interest.

4. Redraw facility option

There’s an arrangement where you could be repaying your loan with a little more than your minimum repayment, in this arrangement, a redraw facility means you can withdraw the excess or extra money available on your loan and use it for whatever reason you so wish.

Consider a lender who offers a redraw facility if you would like to pay your loan with a redraw facility afterward.

Possible fees for a home loan in New Zealand

You should be mindful of some fees that are likely to occur in the cause of paying your loan, some of these loans are added and payable with your mortgage while some are paid up-front.

Some of these fees are;

A. Establishment fee: Here’s a fee you pay upfront to draw down your mortgage, it usually ranges between $0 $400, etc.

B. The service fee: This is a monthly charge that covers the cost of maintaining your mortgage.

C. Legal, valuation, builder reports and settlement fees: You will need the service of a building inspector or valuer to ensure the building is in good standing or doesn’t have inherent problem. With this done, you can ascertain its real worth.

It will usually take a one-time budget of about $2,500 for a standard home.

D. Discharge fee: Once your mortgage is paid up in full, some mortgage will charge you discharge fee

E. Early repayment fee: In a situation where you pay off your mortgage fee the agreed ending date, there’s a set fee you need to pay so as to compensate the lender who has lost interest revenue.

F. Feature fees: You will likely pay an ongoing fee if you agree for extra repayments, redraw facilities, or an offset account.

Top home loans in New Zealand

If you are looking to have a mortgage loan in New Zealand, there are top financial institutions that are willing to see you through, however, you will need to decide which loan is ideal for you, to be on a safe side, you will have to factor your financial lifestyle and risk appetite to make a sound judgment.

Some of the loans available to choose from are;

1. Fixed Mortgage

A fixed mortgage is a home loan that the interest rate is set up-front, within a period between six months and five years.

Typically, your rate payable will not change regardless if interest rate in New Zealand fluctuates during your loan tenor. However, fixed mortgage is less flexible than floating loans, you cannot make additional lump-sum repayments, where you face stiff penalties for early termination.

2. Floating Mortgage

If you go for a floating mortgage, your interest rate will be dependent on the rate set by Reserve bank of New Zealand, this means that if interest rate rise, your repayments will take a corresponding shift upward, if they fall your repayments will decrease.

This could result to a major fluctuations in the amount you have to pay within the period of 25 – 30 years of the loan term, a floating mortgage exposes you to a higher risk than a fixed loan.

3. Split Mortgage

A split mortgage allows you to split your mortgage into different positions, with varying interest rates, you can get some certainties over your future costs, so you are not as heavily exposed to raising interest rates.

4. Low deposit loan

This is where you have less than 20% of the value of a property, low deposit mortgage are not easily found. Banks are under restrictions by the Reserve Bank of New Zealand on how many low deposit loans they can offer.

5. First Home loans

The first home loan is a unique deposit loan which does not fall within the ambit of Reserve Bank of New Zealand restrictions.

It’s a special initiative to help New Zealanders with lower incomes to buy their first home, most lenders require equity contribution of at least 20% before your mortgage application is considered, with a first home loan you will need only equity contribution of 5%.

6. Interest-only mortgage

This is a type of mortgage where you pay only interest on your loan without paying off any of the principal. In this case, you can expect to pay lower installments, at the end of the tenor you will have to pay back the principal amount in full.

This mortgage is popular with property investors, who plan to renovate and then sell the property in a short period of time, gains through raising properties could out possibly outweigh their borrowing costs.

7. Offset Mortgage

With the offset mortgage, you can minimize the amount of interest payable on your loan, you can link one or more everyday or savings accounts to your mortgage account, and you will only pay interest on the difference between the balance in those accounts and your mortgage balance.

8. Revolving credit facility

In a revolving credit facility, your borrowings are linked to a transaction account, just same as an overdraft.

You’ll have an agreed credit limit and you will use your account just as you would any everyday account, where you pay in your earnings and drawing on it to pay bills and living costs.

Things you need to consider going into home loan in New Zealand

  • Loan term: The standard loan term in New Zealand is 30 years, a long term transmits to lower repayment, but higher interest rates.
  • Interest structure
  • Repayment structure: Most loans are structured with regular fixed repayments over a period of time.
  • Fees: Home loans attract different costs, from application fee to administration charges, as well as penalties for early payments and termination.
  • Deposit/equity contribution: To access a loan in New Zealand, you need to contribute 20% to 35% of the of the property amount.

Where to get a home loan in New Zealand

If you are looking to access a mortgage loan, you can either approach a bank or a mortgage broker.

Shop around and find loans that suit your financial outlay, property goals, lifestyle, and risk appetite.

There’s much more to comparing mortgages, in this case going through a mortgage broker may save you a lot of stress, where you do not meet the bank lending criteria, you may still get a mortgage from alternative sources.

Kindly find the below lenders to get a loan in New Zealand

  • Heartland Bank
  • HSBC New Zealand
  • TSB
  • Kiwibank
  • ANZ
  • BNZ Classic
  • The Cooperative bank
  • Westpac
  • ASB
  • SBS
  • First Credit Union

Kindly check the table below for the available loans and conditions attached

LenderDurationMinimum EquityFeesEarly payment chargesRates obtainable with term (1-2-year fixed
Heartland Homes loansOne year fixed home loan20%No establishment feeYes4.79% –  5.15%
HSBC New ZealandOne year fixed home loan20%Establishment fee – $400Yes4.89% – 5.14%
TSBOne year fixed home loan20%Up to $250Yes4.85% – 5.29%
KiwibankOne year fixed home loan20%NoneYes4.95 – 5.45%
ANZOne year fixed home loan20%Up to $500Yes4.99% – 5.45%
BNZOne year fixed home loan20%Up to $400Yes4.95% – 5.39%
The Cooperative BankOne year fixed home loan20%$260Yes5.39% – 5.89%
WestpacOne year fixed home loan20%$400Yes5.15% – 5.45%  
ASBOne year fixed home loan20%$150Yes4.99% – 5.45%
SBSOne year fixed home loan20%$400Yes4.89% – 5.29%
First Credit UnionOne year fixed home loan20%NoneNone5.35% – 5.85%
      

Can a foreigner get a mortgage in New Zealand?

New Zealand has banned most foreigners from buying homes as it tries to tackle runaway housing prices.

Previously, the housing market was open to investors worldwide, however, the government has recently passed a legislation to allow only the New Zealand residents to buy homes.

Non bank mortgage lenders in New Zealand

While the bank give out majority of the home loans, there are non bank lenders as well to help you in case you couldn’t get a loan from the banks.

Kindly find the below non-bank lenders in New Zealand;

  • Resimac
  • Squirrel Money
  • Basecorp
  • Pepper Money and
  • Liberty finance

Conclusion on where to get home loan in New Zealand

There you have what you should look out before while looking for a home loan, possible fees, top home loans, where to get a home loan, etc., kindly choose what fits into your budget to commence and make the most of your journey.

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