How Mortgage brokers help New Zealand house buyers
It is often said that the biggest financial transaction for most people is buying a home. For most people they need to find some sort of financing as hardly anybody has enough cash to buy a house outright so people look for mortgage finance as the means to making that house purchase.
However, people often get caught up in the excitement of buying their dream home and do not fully understand the mortgage financing costs they are letting themselves in for. After all, most mortgages are for 25 years or more which is a long time to be paying money to the lender. So before you get excited about any particular house, it will be a good idea to talk to lenders or mortgage brokers before you commit to any house purchase.
Most people will go to see their bank since the banks are heavy advertisers of their mortgages and provide lending for the majority of home loans. Also, people think that if they have been a customer of a bank then they will get preferential treatment when they want a mortgage.
However that is not the case. Banks treat each mortgage application on its own merits and show little loyalty to long-term customers. As a result, people are often forced to look at a range of banks and mortgage lenders to find a loan for the house. But this provides a huge problem for potential borrowers are there is a massive range of different lenders and even more different mortgage products to consider.
In many countries, a mortgage broker will be able to provide analysis and advice about different home loans to make the job easier for borrower. In America and Britain almost all mortgages are arranged through a broker however, in New Zealand the opposite is true with 80% of mortgages being completed directly with the banks.
Reasons to use a mortgage broker
Given that the mortgage market is so complex with dozens of lenders as well as the main banks and that each finance company has a range of different mortgages, it can quickly become an impossible task for the average borrower to follow. As a result they turn to a bank to take the easy way out.
However, a mortgage broker will not only understand the different mortgages on offer but they will also be able to assess which ones will suit different people to support their personal circumstances.
So a mortgage broker will save you time and plenty of stress by helping you get a sound grasp of the possible mortgages that are available.
Submitting a mortgage application – a broker can help
Once you have got to grips with the various mortgage rates, fees and other lending criteria, you have to complete the application documents. A broker will help you with this process by explaining the various boxes and types of information that the lender is asking for. They can also advise on the documents you need. If you make the application simple for the underwriter at the bank, your case will at least be looked at rather than being turned down because it did not meet their documentation criteria.
Advice on structuring a mortgage
Once you have the application approved you can decide how to structure the loan. Most borrowers have little idea what that might mean but you can fix a portion of the total and have some on a floating mortgage rate.
This sounds complicated and people might wonder why they need to even be concerned about this but it can make a significant difference to your repayments and the interest you will pay.
Put simply, a mortgage broker will work with you to look at various scenarios to show you how you can reduce payments, or make the best use of current interest rates.
Mortgage brokers are not tied to any lender
The majority of mortgage brokers are self-employed either on their own or as a member of a broking firm. They make their income from commissions paid out by the eventual lender. Since lenders tend to pay the same commission and the broker has to declare to borrowers how much they will receive, the broker can select a mortgage that is best suited to an individual’s needs.
However a bank will only be able to offer its own mortgages.
Banks will not lend on some house purchases or certain borrowers. So a borrower will need to find an alternative funding source. This can be difficult but a mortgage broker will have access to second and third tier lenders who may be in a position to provide finance.
Better mortgage terms via a broker
It often comes as a surprise to people that a broker can arrange better terms with a person’s own bank branch than they can negotiate for themselves. The reason is that a broker puts a lot of business to a bank and so they can ask for preferred rates or lower fees. This is a common situation and is perhaps the best reason to look for a home loan through a broking firm.
Finding a mortgage broker
Even though only 20% of mortgages in NZ are via a broker there are still plenty of companies you can contact. It is often a good idea to look for someone in your area so it is easy to meet them.
Auckland has plenty of mortgage brokers. Here is a North Shore mortgage broker and this is a mortgage broker in west Auckland you can contact. And for those looking for Hamilton mortgage brokers, this website will help.
The next step
Contact one of these brokers http://hamiltonmortgagebrokers.co.nz/ as soon as possible so they can get you pre-approved for mortgage finance. Then you can start to look for a house to suit you and your family.