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Buying a home is one of the biggest financial commitments you'll ever make. If you're a first-time home buyer or even an experienced property investor, working with a financial adviser often referred to as a ‘mortgage broker’, can help simplify the process.
Here are 10 frequently asked questions that home buyers in New Zealand often have when working with a mortgage broker.
1. What does a mortgage broker do?
A mortgage broker acts as an intermediary between you and lenders, helping you find the best mortgage deal based on your financial situation. They compare multiple lenders, assist with applications, negotiate loan terms, and guide you through the approval process.
2. How much deposit do I need to buy a home?
The standard deposit for a home in New Zealand is 20% of the purchase price for most borrowers. However, most major banks and lenders offer loans with as little as 10% or even 5% deposit, particularly for first-home buyers.
3. Can I get a mortgage with bad credit?
Yes, but your options may be different. Mortgage brokers work with a range of lenders, including non-bank lenders who may approve loans for those with poor or inconsistent credit history. Your eligibility will depend on factors such as income stability, debt levels, and whether you have a deposit or equity.
4. What types of home loans are available in New Zealand?
There are several types of home loans, including:
• Fixed-rate mortgages – Interest rate remains the same for a set period.
• Floating (variable) rate mortgages – Interest rate fluctuates with market changes.
• Offset mortgages – Your savings help reduce the interest charged.
• Revolving credit loans – A flexible loan that works like a large overdraft. A mortgage broker can help determine which type suits your financial goals.
5. How much can I borrow?
Your borrowing capacity depends on your income, expenses, existing debts, and credit history. A mortgage Adviser assess these factors and use lending calculators to estimate how much you can borrow while ensuring affordability.
6. Do mortgage brokers charge fees?
Many mortgage brokers in New Zealand provide free services to borrowers, as they are paid a commission by the lender. However, in some cases—such as arranging finance for complex situations or working with non-bank lenders—there may be fees involved. Always ask your broker upfront about their fee structure. At Optimise Finance we believe that transparency with our clients is key. See our Disclosure Statement to find out more about how we are paid.
7. How long does mortgage approval take?
Mortgage approval timeframes vary by lender, but typically:
• Pre-approval can take a few days to a couple of weeks.
• Full approval usually takes 5-10 working days after submitting all required documents. Working with a mortgage broker can speed up the process as they ensure your application is complete and correctly presented to the lender.
8. What government schemes can help first-home buyers?
First-home buyers in New Zealand may be eligible for:
• First Home Loan – Allows first-home buyers to purchase with just a 5% deposit.
• KiwiSaver Withdrawals – Use your KiwiSaver funds towards your deposit. A mortgage broker can help you navigate these schemes and understand your eligibility.
9. Can I use my KiwiSaver for my home deposit?
Yes, if you meet certain criteria. First-time buyers and those who haven't owned property in the last five years may withdraw their KiwiSaver savings (except for the minimum $1,000 balance) to help with a home deposit.
10. Why should I use a mortgage broker instead of going directly to a bank?
Mortgage brokers offer several advantages over going directly to a bank:
• Access to multiple lenders, including banks and non-bank lenders.
• Better interest rates and loan terms through negotiation.
• Expert advice tailored to your financial situation.
• Assistance with paperwork and lender communication.
• Ongoing support even after your loan is approved.
Summary
In summary, buying a home can be overwhelming but working with a mortgage broker simplifies the process and ensures you get the best possible deal. If you have questions about home loans, deposits, or eligibility, a mortgage broker can provide expert guidance and tailored solutions.
Thinking of buying a home? Contact Optimise Finance today for a free, no obligation consultation on 021 581 502 or matt@optimisefinance.co.nz and take the stress out of securing your home loan.
Disclaimer: The information in this article is provided for general informational purposes only and does not constitute financial, legal, tax, or other professional advice. While we strive for accuracy, we do not guarantee that the information is complete, up to date, or free from errors. Before making any financial or legal decisions, we strongly recommend seeking independent professional advice tailored to your individual circumstances.
To the fullest extent permitted by law, we disclaim all warranties, express or implied, including but not limited to accuracy, reliability, or suitability for any specific purpose. We accept no liability for any loss or damage arising from reliance on this information.
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