First Home

Why Use A Mortgage Adviser?

Here at Kris Pedersen Mortgages, we make the complex process of getting a mortgage a whole lot simpler. We do the leg work for you to get a mortgage approved, so that you can get onto the more important stuff like finding the right house for you, rather than stressing about finance. We’ll give you all of the info you need to know, explain what the banks look for in applications, and help you get the best possible deal for your mortgage.

We work with a wide range of lenders, not only banks – so even if your situation is a bit more difficult, we can help. We meet with you and discuss your plans, and what is possible for you when it comes to getting a loan. Once we’ve got you approved, we can discuss interest rates, how to structure your loan and align this structure with whatever your goals are.

Best of all, banks pay us a commission – so under most circumstances our advice to you is free*.

*T’s & C’s apply.

How Much Deposit Will I Need?

Banks generally are comfortable to lend to 80% of a standard residential property’s value under standard criteria – if you’re living in it. Banks will look at loans up to 95% however at the time of writing this they can only lend 1 loan above 80% LVR to every 10 under 80% LVR due to current Reserve Bank regulation. So essentially loans over 80% are rationed and therefore harder to get.

Banks normally like to see genuine savings as the deposit. But it is of course possible to get assistance from family or friends. This may be by gifting or the other party being a guarantor or by a family loan. Kiwisaver is also an option, along with First-Home Grants.

How Much Income Will I Need?

This question is something that is often asked by people looking for a mortgage, and it’s always something that we have the same answer to; it depends. The income you need to support a particular loan amount depends on a range of factors, such as your deposit amount, the nature of your income (salaried, self-employed, bonus, commission, etc.), how much other debt you have (if any), and the nature of that debt (Student Loan, Car Loans, Credit Cards, etc.), and your living costs. As a result, there are so many variables that are to be considered, and therefore it is hard to give a blanket answer to this question.

For more information around how banks assess affordability, check out our blog here.

If you’d like an assessment on your particular situation, get in touch.

Build Loans

Along with above criteria Banks will look at construction loans. There are three main types. These can be turnkey, fixed price contract or material and labour basis. We can discuss the differences with you, but in summary banks can usually lend a higher LVR on these loans (e.g. 80% for a rental property that is a new-build) as they are exempt from the LVR rules. Banks have relatively strict criteria on these loans.

Types of Loans

In New Zealand there are a few different ways that mortgages can be structured: 

• Principal & Interest loans (also called Table Loans) with terms up to 30 years. The repayments are set to repay interest and principal over the term of the loan which can be good for budgeting. Repayments are typically fortnightly or monthly, and can be fixed and/or floating.
• Interest-Only loans are available for up to 5 years with interest generally payable on a monthly basis. This type of loan is favoured by many property investors who want to defer paying down principle. This interest only option may not be available to above 80% LVR borrowers, and can also be difficult to get on owner-occupied properties. You are not paying principal back so this lowers outgoings, however you will need to repay the principal after the interest-only period expires.
• Principal-Reducing loan - also called Straight-Line. Repayments are higher compared to table loan but reduce overtime as the interest costs reduce as the principal does. With this sort of payment, the amount of principal that you repay stays the same every loan repayment.
• Revolving-Credit. This is like a big overdraft limit (usually interest only), it offers flexibility but does require a disciplined borrower to reduce the amount owing.
• Fixed loans. A fixed-rate home loan is a loan where the rate remains constant (or "fixed") throughout the period of the fixed-term, and these can range anywhere from 6 months to 5 years in NZ. 
• Floating/Variable loans. A floating/variable home loan gives you flexibility on your mortgage to make lumpsum payments/extra payments as, and when you wish without penalty. Floating mortgages are typically more expensive than fixed mortgages, and so in many cases it can make sense to have a combination of both.