As mortgage advisers we are often asked what deposit is needed for a home loan.

The New Zealand banks are restricted by Reserve Bank rules which means that they will normally ask for a 20% deposit; however they still have the ability to do some lending with as little as 5% deposit. They have always had the ability to do this, but in most cases they won’t unless the applicants are deemed as very attractive to the bank and there is good reason for not having the deposit available.

There are two specific types of loans where you can get a home loan with a 5% deposit;

First Home Loan – from the 1st October 2019 the Government backed Welcome Home Loan has had a name change to First Home Loan. Another change is the deposit that was required for a Welcome Home Loan was 10% and now with the First Home Loan it has been reduced to 5%.

The First Home Loan is managed by Housing New Zealand and we have contacted them to see if there are any other changes but they are not aware of any yet..

Over the years as a mortgage adviser I’ve seen advertisements and articles about “the mortgage trick” … that there is some magical trick or secret that the banks are hiding from you.

As you may have already learned, there is really no trick which is disappointing but not surprising!

But there are some “methods” to paying your mortgage off faster and Eat My Mortgage is a system that helps you to structure your mortgage and form habits that will over time help you pay your mortgage down faster.

Fintech is the term used to refer to innovations in the financial and technology crossover space, and typically refers to companies or services that use technology to provide financial services to businesses or consume
The word is made from “Fin” being the financial service and “Tech” of course being the technology used to deliver the product.
It is an emerging industry that uses technology to improve activities in finance

We have already been exposed to FinTech with the use of our smartphones for mobile banking and we have all probably heard a bit about online services that offer payment gateways like PayPal and cryptocurrency.

Most FinTech businesses target those people that are quite used to using technology and currently in financial services they do not offer advice.

Financials advisers and mortgage advisers need to ensure that they understand what options are available including the new FinTech options so they can include these in the advice that they offer. It will become more important that they do as the technology gets better and is deemed a more acceptable alternative.

When you apply for a a mortgage (either a new loan or refinancing from another bank) you may get discounted interest rates and a cash incentives.
Sometimes also known as a cash-back, when a bank offers a cash incentive it’s generally given by the bank to “buy” your business. The banks all want your business and if they can lock you in as a customer then they will make money from the mortgage and the other products that they can get you to sign up for. Banks tend to promote products like credit cards, personal loans, insurance and KiwiSaver all of which help the banks make their large profits

While a cash incentive is appealing, it should not be the primary reason to select a specific bank.

A mortgage adviser will look at options for you, and when selecting a mortgage they will look at the features of a mortgage, the interest rates being offered and anything else such as cash incentives that may make one bank stand out from the others. Some banks make it easier to pay the loans off faster, other may offer the lowest home loan rates and then there will be those banks that offer cash incentives.

Banks do not offer cash incentives because they want to be nice – it’s part of the overall strategy they they use to attract people as customers so they can make more money from you.
If you are dealing with the banks directly then you should be aware of this and also consider the whole package too.
The amount of the cash incentive is going to depend on your overall profile which includes the loan amount, the value of your property and your income. Your mortgage adviser will know how hard they can negotiate too.
But also be aware that the banks do lock you into a minimum period, and should you repay that mortgage or refinance to another bank within that period then you will need to pay that cash incentive back to the bank. Not all banks are created equal and while most banks will seek any cash incentive be repaid for up to 3-years, some banks do vary or scale what they ask is repaid.
A revolving credit mortgage is a flexible loan like an overdraft which is secured over your property.
The borrowers (you) have a lot more flexibility than with a standard home loan.
Like an overdraft a revolving credit mortgage is an transactional account with a loan limit. This means you can borrow up to this limit when required, but you are only charged interest on the amount that you borrow on any particular day. Most banks will also charge a monthly account fee with these types of accounts.
Often a revolving credit mortgage will be an interest only loan leaving you to manage the principal repayments on your own. Some banks have the option of a reducing limit on the revolving credit loan which makes it a principal and interest loan.

You will find that most mortgage reduction programmes will include the use of a revolving credit mortgage for at least a small portion of the overall lending. Eat My Mortgage uses a loan structure that includes a revolving credit loan so you can control your repayments and pay your mortgage off faster.

Most mortgage advisers will recommend a revolving credit loan but often they are not used properly.

There are articles that are critical of revolving credit, but it’s typically an issue with how they were set up or how they are used.

Speak to one of our mortgage experts to discuss how to get the best from a revolving credit mortgage.

Lots of people ask what is a mortgage reduction program as they have heard that there is some way to pay your mortgage off faster, but they are unsure how it all works.

There are a few different mortgage reduction programmes and a lot of mortgage advisers that can provide some advice.

Advice is always good as it can give you ideas on how to structure and manage your mortgage, but advice is often just a one-off idea.

Many mortgage reduction programs are expensive as they require some professional to spend time explaining a programme and helping set it up for you. Some of these will cost over $5,000 and therefore they really need to work to ensure that you get value from them.

The concept of a good mortgage reduction program is to set up a good loan structure and then over time to change some habits and fine tune how you manage your mortgage. This is why the online mortgage reduction program called Eat My Mortgage really stands out – it has an affordable monthly subscription and provides regular advice to help you pay your mortgage off faster.

Do you want to know how to get the best mortgage rate on your new home? Most people do

Buying a home is exciting, but finding the best mortgage rate is even better!

As mortgage advisers we negotiate with banks to find the best mortgage rates.
We can often be more successful that someone that goes directly to a bank for two reasons;

Sometimes a mortgage adviser will see other ways to save money too.

Why would you chase around with the banks when a mortgage adviser can do this for you for free.

As mortgage advisers we often get asked how do I find the best mortgage lender?
It’s one of those obvious questions to ask, but an impossible one to answer.
The best mortgage lender for one person may not be the best for someone else – everyone has different ideas of what makes a good mortgage lender.
What lots of people really mean is what is the best home loan.

But again this is a hard question to answer.

A lot of people will focus on the lowest home loan rates being offered and select a bank solely on the basis of rate.

Other people will be focused on the features of a home loan that may make it easier to pay the loan off faster. Some banks do have loans with features that really do make them better than others and we have researched the home loans on this website – read more about paying off your mortgage faster here.

There is never one answer that will suit everyone but a mortgage adviser can help you decide on the best loan and the best mortgage lender.

As mortgage advisers we often hear people discussing which bank is best for house loan and sometimes the discussions are interesting, but not always accurate.
Of course everyone is welcome to their own opinions, but you should be careful about who you listen to.

So which bank is best for house loan?

It depends what you need from a home loan.

A lot of people will focus on the lowest home loan rates being offered and select a bank solely on the basis of rate.

Other people will be focused on the features of a home loan that may make it easier to pay the loan off faster. Some banks do have loans with features that really do make them better than others and we have researched the home loans on this website – read more about paying off your mortgage faster here.

Sometimes people will want an interest only loan and select the bank that offers this.

There is never one answer that will suit everyone but a mortgage adviser can help you decide.

When people get into trouble with their mortgage repayments they may start to ask what a home rescue loan is and how do I get a home rescue loan.

A home rescue loan is not a specific loan, but a loan designed to rescue your home from being sold.

When the bank or lender issues a demand for payment they will give you a set time frame to get your mortgage repayments up to date before taking further action towards a mortgagee sale.

If this happens you need to contact a mortgage adviser as soon as possible to discuss your options.

Sometimes the cost of a home rescue loan can be quite expensive, but it may be the only option to save your home from being sold.

Getting onto things early will generally give you more options, so don’t procrastinate or bury your head in the sane.

Contact a good mortgage adviser that deals with banks and non-bank lenders to get the best advice.

A lot of people want to find out if it is possible to buy a house with bad credit.

If you ask most people at the banks they will say “NO” as bank policy generally does not allow this, but mortgage advisers have access to non-bank lenders.

So there are options.

Some of the non bank lenders offer home loans for people that may have bad credit.

These are often referred to as specialist loans or bad credit home loans.

The problem for many people (and including many mortgage advisers) is knowing what will be the best option as the fees and interest rates vary between the lenders and depending on the credit, deposit and a range of other factors. You want to know that you are getting the best deal with non bank lenders, or maybe you can get the loan with a bank.

This is where specialist non bank brokers can really help.

Having a car loan can affect your ability of getting a mortgage.

The banks will be concerned with your ability to pay both your car loan and your mortgage, so it’s more about what your repayments are rather than the amount owing.

As mortgage advisers we can assess this with you before applying for your mortgage, and if necessary we can look at restructuring your car loan to reduce the repayment commitment.

It’s important top understand how the banks assess your ability to service loans, which can differ a lot to what you may think you can afford. The banks have a very conservative approach so often you may be surprised at how they calculate your affordability, but they have the money and the rules which we must work with.

People often ask if they can buy a car and add it to their home loan or should they use specific car finance loans.

There is no easy answer as every situation is going to be different.

It would seem to make sense to top up your home loan as the interest rates are lower but you need to set it up properly. The key is to match the term of any loan to the useful life of the item, so when financing a car on your home loan you want to ensure that you set up the loan with a relevant loan term – not the 25-year or 30-year standard home loan term.

You also want to ensure that the extra borrowing is not going to put the overall lending over 80% of the property values as that can trigger the extra cost of a low equity margin which can affect the whole home loan.

Our team of mortgage advisers will be able to provide you with the best advice, and can arrange either a top-up to your home loan or car finance.

People are asking what is eat my mortgage?

Eat my Mortgage is an online mortgage reduction system.

Through this online system you will learn how to structure and manage your loans with your existing bank and pay your mortgage off much faster.

It has been designed as an online system to ensure that it keeps the cost done. Other mortgage reduction systems are very expensive and while the people promoting them will argue that they are good value, the cost puts off the people that may benefit from them. Eat my Mortgage was designed to be affordable for ordinary Kiwis with the view of making this the most popular mortgage reduction system in New Zealand.

Eat My Mortgage programme goes beyond just showing you how to set up your loans.

You will also be given regular challenges aimed to help you pay your mortgage off faster, plus you will be rewarded as you go.

The concept is to make the huge task of paying your mortgage more palatable by looking at a number of small things that you can do over time to pay the mortgage off faster.

In New Zealand most mortgage advisers will work with a range of banks; however there is a perception that Bank of China only work with Chinese brokers and Chinese customers.

Mortgage Managers is one of the more successful mortgage broking businesses and much of that success has come from being able to offer choice, a willingness to learn and adopt to new ideas and to the new lenders.

Bank of China are able to offer some very competitive home loan interest rates, and also have some different criteria which suits some situations better than some of the other more well known banks.

The brokers at Mortgage Managers work with Bank of China

You may have heard that changing to fortnightly loan repayments is a good idea but are unsure.

The reason is quite simple.

By paying fortnightly repayments instead of monthly repayments you will make an extra monthly payment each year.

This can cut years off your loan which will save you literally thousands of dollars.

With a fortnightly repayment plan, instead of paying your entire mortgage payment once a month, you pay half of the standard amount on a specified date every two weeks and over the course of a year you’ll make 26 half-payments which are equivalent to 13 full payments.

This can seem to many people a lot less painless than increasing your monthly home loan repayments which would in fact have a very similar result with the correct structured home loans.

You can find more information on the benefits of changing to fortnightly loan repayments on this old blog post. READ MORE

You might be surprised how much of a difference just changing to fortnightly repayments can make and is one simple way to pay your home loan off faster. But of you are really serious then you could sign up for a mortgage repayment system like Eat My MortgageCLICK HERE for more about this.

While it is possible to engage more than one mortgage adviser, it’s not really going to benefit you and will often cause issues for the mortgage advisers too.

You are always better to work with just one good mortgage adviser (or a mortgage broking business) as they should have access to a good range of lenders and can therefore source you the best options.

If you are using more than one broker then they will often submit your application to the same lenders, causing frustration for both the brokers and lenders as the broker has spent time to prepare the applications, they will most likely be presented differently and the lender will only spend time on one application anyway – often the first application received rather than the best prepared.

The same issue occurs when people go straight to the banks. The bank staff are likely to have presented differently and if declined it takes a lot of extra effort for the mortgage adviser to get the bank to overturn their decision and approve the application.

It is also important to understand that most mortgage advisers only get paid on success, and therefore will most likely prioritise those people who work with them exclusively.

As professional mortgage advisers the team at Mortgage Managers will only work exclusively.

In New Zealand the banks will normally charge a low equity margin on home loans where there is less than 20% equity or deposit.

A low equity margin (LEM) s is basically a higher interest rate charged on your home loan because the banks see lending of more than 80% as a higher risk and there are additional funding costs to the banks. The banks charge a higher interest rate to cover the deemed extra risk and to offset the higher bank funding costs associated with lending with low deposits.

The banks generally scale the margin charged depending on the LVR (loan-to-value-ratio) on your home loan.

Unfortunately this affects first home buyers mostly … often the people that that need to save every dollar that they can!

When people source loans directly from a bank then they will generally just accept what the bank will offer them, often just accepting that this is what they have to pay.

However as professional mortgage advisers we research things like low equity margins so we can offer people good advice and better choices.

You can read more about low equity margins on this website too. READ MORE HERE

You can find a mortgage adviser here too.

As mortgage advisers we have become known throughout New Zealand for helping people get mortgages with bad credit?

So the answer is YES, you can often get a mortgage with bad credit.

There are some banks and a number of non bank lenders that will provide home loans for people that have bad credit, but you want to deal with an experienced mortgage adviser to ensure that you are given the best chance of success and ultimately the best deal.

You can read about successes on our non bank broker blog; READ MORE

People often ask what is second tier lending?

Essentially, second-tier lending are non bank loans to help buyers secure a mortgage when the banks may say “NO”.

There are various reasons why a borrower may not be able to get a mortgage with a bank and is therefore willing to accept lending from another organisation. It may be that the borrower has a lower deposit than the bank requires, the borrower may not be able to “prove” their incomes to satisfy the bank, there may be some poor account conduct or bad credit or the borrower may fall outside of bank criteria for another reason.

The non bank lenders are known as second tier as they are generally more expensive and therefore the second choice; however there are times that some borrowers will prefer them to a bank.

Some mortgage advisers are very experienced as non bank brokers.

In most cases it is recommended to split your home loan.
There are two key reasons;

Your mortgage professional can explain this in more detail.

As mortgage advisers we are always following home loan interest rates.

There are the home loan interest rates that are advertised by the banks, but then there are the discounted rates that they can offer too.

A good place to see all of the advertised home loans interest rates is on the Mortgage Rates website.

You can use these as a guide, but it’s always best to have a good mortgage adviser source rates for you as they can often get more competitive rates.

If you have a low deposit (under 20%) then you will need to consider the low equity margins that the banks apply too.

Credit scores have become commonplace in New Zealand lending over the last few years.

When you apply for a home loan either the mortgage adviser or bank will do a credit check, and as well as showing the enquires and any payment defaults the credit checks now all have a credit score.

Credit scores range from 0 – 1,000 and the higher the score the better risk you are deemed to be for lenders.

The credit score is made up from a range of information including your shopping pattern which includes the type, number and date of any credit inquires, your demographic stability (changes of address), the age of your credit file and your repayment history including any payment defaults, collections or judgements.

Some banks have adopted a minimum credit score into their lending policies and the general rule is they will not lend to people with a score below 300; however there are exceptions and some lenders that do not focus on credit scores as much.

Unfortunately the answer to this is YES.

Often the banks will do a pre-approval either over the phone or online and in these cases they rely on the information that you provide them. It seems like they have approved you for a mortgage but there is a lot of fine print and it’s not until they receive the supporting information and assess your loan application correctly that some things become obvious and at that time they may deny or cancel any pre-approval.

Most mortgage advisers do not have the ability to pre-approve mortgages without getting the supporting information, which means getting a pre-approval with a broker takes longer but because they have the information the pre-approvals that mortgage advisers source are typically more robust and less likely to be denied later.

Even if you have a mortgage pre-approval from a bank it would be well worth getting a second opinion from a mortgage adviser. This is something that most brokers should be happy to do for you at no charge and it will highlight any areas of concern or gives you confidence that you can rely on the pre-approval.

Of course sometimes things happen to significantly change a persons situation and that could void any pre-approval.

A mortgage adviser may seem to be offering a free service and in many cases you will not pay.

Of course nobody works for free and mortgage advisers do like to get paid as there is often a lot of work that is done to help you get your finance approved.

The reason people think that mortgage advisers are free is because mortgage advisers are often paid by the banks and lenders when you successfully get a loan. When this happens the brokers aren’t paid by you, but they are paid a commission by the lender that you end up going with.

In some cases especially with non bank lenders you may be charged a fee by the broker or a fee is specified within the lenders loan offer.

Your mortgage adviser will be able to confirm if they are paid by the bank in which case they will not charge you, or let you know if there will be a fee and what that fee is.

When your mortgage is set up you are advised on what the repayments will be and you may want to pay a higher amount in an effort to pay off your mortgage faster.

As mortgage adviser when someone asks “can I pay more off my mortgage?” the answer will almost always be yes; however it really does depend on how your loans have been set up as some banks will not allow you to pay anymore that the minimum on a fixed loan.

In general terms you can pay extra onto a loan that is a revolving credit or a floating rate loan, but a fixed rate loan has fixed repayments.

With fixed rate loans you can pay extra with some banks but not with all.

Ask an adviser or your bank and they can let you know what you can do with your loan or you can check the research on the various loans HERE.

Sometimes it might be better to refinance your mortgage to a bank that offers more flexibility with repayments.

When your mortgage is set up you are advised on what the repayments will be and you may want to pay a higher amount in an effort to pay off your mortgage faster.

As mortgage adviser when someone asks “should I overpay my mortgage?” the answer will almost always be yes; however it really does depend on how your loans have been set up as some banks will not allow you to pay anymore that the minimum on a fixed loan.

In general terms you can pay extra onto a loan that is a revolving credit or a floating rate loan, but a fixed rate loan has fixed repayments.

With fixed rate loans you can pay extra with some banks but not with all.

Ask an adviser or your bank and they can let you know what you can do with your loan or you can check the research on the various loans HERE.

Sometimes it might be better to refinance your mortgage to a bank that offers more flexibility with repayments.

As mortgage advisers we get asked a lot if you can get a mortgage if you have bad credit.

Often we are contacted after someone has spoken to their bank and been told that they can’t get a mortgage.

The key things to be successful in getting a mortgage if you have bad credit is to identify and explain the reasons for the credit issues, give the lender comfort that the issues will not repeat and to select the best lender for the given situation. Some of our mortgage advisers specialise in these types of lending scenarios – arranging bad credit mortgages.

Often the major banks will not provide mortgages to people with bad credit, but there are options with some banks and non-bank lenders.

You need to be aware that these are specialist loans and there are often extra costs and higher interest rates.

One of our team of mortgage advisers can do a free assessment and advise on this for you.

Everyone wants to know which bank gives the best mortgage?

This is a very common question and one that is almost impossible to answer and there are a lot of people that just focus on which bank offers the lowest interest rate on the given day that they are looking. Other times and especially with first home buyers it may be more a case of which bank will provide a mortgage.

Every bank has a range of home loan options and while they all look similar; however there are some differences that you should be aware of particularly if you want to pay your mortgage off faster. We research the bank options and you can read more about this HERE and we also have a mortgage reduction system that you can access if you are serious about paying your mortgage off.

To get the best advice on this you can contact one of our advisers.

You can have the conversation about what is important to you and they can then provide some recommendations for you to consider.

There are many reasons people have to use a mortgage adviser and they may not be what you would typically think.

An experienced mortgage advisers are able to give you a lot of good advice and also offer you choice. A broker has a choice of bank and non bank lenders and can help you select the types of loans that would suit your situation best. A mortgage adviser will also help negotiate the best home loan interest rates and can help ensure that you have a suitable loan structure.

The real question is why wouldn’t you use a mortgage adviser?

Did you want to know who pays a mortgage adviser?

In New Zealand most mortgage advisers get paid a commission by the banks for residential lending so they do not need to charge you a fee. For loans that are sourced through the non bank lenders there will typically be a broker service fee which is specified within a loan offer and often paid when the loan settles, but these fees are ultimately paid by you as the borrower.

The mortgage adviser will be able to explain how they get paid once they has done the initial assessment and know which bank or lender will be used.

There are some mortgage advisers that will charge an upfront fee, and others will commit you to a fee should you repay your mortgage within the first year or two years as they may have to repay their commission to the bank. Again, these fees should be disclosed before you commit to using that broker.

When a mortgage adviser arranges your mortgage with a bank they will get paid a commission.

Most banks will pay a commission which is calculated as a percentage of the loan size, so on small loans the commission is minimal but on larger loans the commission can see the broker being paid quite well. The commissions that banks pay can vary between about 0.45% to 0.90% and these are paid to the broker group. Some banks also pay the broker groups an ongoing commission or a fee for maintaining the mortgages.

The individual mortgage adviser that you work with would often receive a share of the overall commission received by the broker group and this will vary a lot. Some brokers receive no commission and instead are paid a salary or a base retainer with a smaller commission component.


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