We’re talking, of course, about mortgage brokers. A mortgage broker essentially acts as a middleman between you and home loan providers, and really can improve the approval process from beginning to end. How?

Better rates: Mortgage brokers typically have access to a bunch of different products across a range of lenders, enabling them (and you!) to quickly compare rates and negotiate with banks to find the home loan that best suits your circumstances.

Industry pros: Do you know what an acceleration clause is? What happens when your guarantor goes missing? Any idea what constitutes a ‘reasonable’ lending fee? Mortgage brokers deal with home loans day in, day out, and can help you decipher contract small print to ensure you’re not getting ripped off.

Impartial advice: Unlike lenders, brokers have relatively little interest in which mortgage you ultimately choose. As such, they’re a pretty good source of impartial information and advice.

Strong relationships with banks: The chances of your mortgage application being approved largely comes down to whether a lender thinks it can trust you. Good brokers have strong relationships with many different banks, which can speed up the application process and boost your chances of securing a home loan.

Free: The icing on the cake is that using a mortgage broker is completely free! They get paid by the lender, so you don’t have to worry about yet another cost to buying a house.

While there are many benefits to using a broker, it’s important to keep your options open. In addition to talking to a broker, be sure to check our New Zealand mortgage rate comparison tool for up-to- date insight into the best home loan rates in Aotearoa.

The post Why use a mortgage broker? appeared first on PocketWise.

So, why exactly are so many people opting for fixed rate home loans?

1. Certainty

2. Immunity to OCR changes

3. Special deals

The post What are the pros of a fixed rate home loan? appeared first on PocketWise.

What is the OCR?

The Reserve Bank of New Zealand (RBNZ) has the unenviable task of managing the country’s monetary policy and basically ensuring the economy doesn’t turn to custard. This responsibility includes setting the OCR, an interest rate that helps the country as a whole hit inflation targets (ideally around 2 per cent).

In August, the RBNZ reduced the OCR by 25 basis points to 2 per cent. A number of factors went into this decision, including weak global economic conditions, projected domestic growth, house price inflation and more.

Why should I care?

Financial mumbo jumbo aside, the OCR can have a very noticeable effect on your day to day life. How? Well, every bank in New Zealand is influenced to some extent by the RBNZ’s decisions, and will typically pass on OCR changes to customers. For example, if you have a floating rate home loan and the OCR goes up, it’s highly likely that your interest rates (and your repayments) will increase, too. Conversely, if the OCR drops, your repayments will probably go down.

It is important to note, however, that not all lenders will necessarily reflect OCR chances in their home loan rates. With this in mind, before committing to a loan it’s critical to compare mortgage rates in New Zealand to ensure you’re getting the home loan that not only best suits you as a buyer, but also makes the most of current market conditions.

Happy learning and comparing,

The PocketWise Team

The post What is the Official Cash Rate and why should I care? appeared first on PocketWise.

While there are some pretty sweet benefits to buying your own home in New Zealand, sometimes it actually makes more sense to rent than purchase. Here are three reasons why renting can be superior:

1. Greater flexibility

When you lock yourself into a mortgage, it goes without saying that you sacrifice a little bit of freedom. Being able to meet your financial obligations and consistently make loan repayments often takes precedence over many other aspects of life.

In contrast, as a tenant you have relatively few commitments, enabling you to pursue other options such as travel, study and possible career changes.

2. Rent can be cheaper than mortgage repayments

Depending on market conditions, rental rates can be significantly lower than mortgage repayments. For example, the average Auckland house price increased by about $88,000 in the last year, while weekly rents increased just $1 across the same period, according to figures collated in the latest Trade Me Property Rental Index.

Of course, the real estate landscape is constantly shifting, making it important to compare New Zealand home loan rates to ensure you’re making a decision that best suits your financial circumstances.

3. No maintenance worries

Renting also eliminates most expenses associated with maintaining a property. As the New Zealand government’s Tenancy Services portal explained, landlords are responsible for repairing all damage caused by natural disasters, burglaries and fair wear and tear.

As a homeowner, guess who’s footing the bill if something breaks?

The post When does it make more sense to rent than buy? appeared first on PocketWise.

Tip 1: Get a Job, Stay in a Job

When banks lend you money to buy a property, they inevitably want to make sure you’ll be able to repay your loan. If you don’t have a consistent job, banks can’t be sure that you will be earning a consistent wage or salary to be able to meet your repayments. When you have consistent income, it not only makes it easier to assess how much you can afford, but also helps convince the bank that you will be able to make the repayments when they fall due. It also shows banks that you have the temperament and maturity to commit to something in the long term – which is exactly what your mortgage will be.

Tip 2: Reduce Debt

Another big factor which banks will consider is how much debt you owe to your creditors. You don’t necessarily need to have zero debt, but the less you have, the better. If you have credit card debt, or a loan on a car, it’s a good idea to try and reduce these as much as possible before applying for your mortgage. Not only will it improve your chances of getting approved, but might also increase the loan amount you can borrow. If you want a quick way to assess your finances and see where you can improve, take your free financial checkup now and start saving money today.

Continued below…

Tip 3: Know and Improve Your Credit Score

Reducing debt will also have a positive impact on your credit score. According to creditsimple.co.nz, “A credit score is a number between 0 and 1,000 that indicates how credit-worthy you are, and how likely you are to pay your bills on time. Most credit scores are between 300 and 850. The higher the score, the better your credit rating is.” Banks keep a close eye on your credit score when deciding if they should lend you money – it’s a good idea to keep track of your credit score, and try improving it where you can. Credit Simple is a great, free website that can tell you your credit score and how to improve it.

Tip 4: Save, Save, Save

LVR (Loan to Value ratio) restrictions imposed by the Reserve Bank mean that you generally need a 20 percent deposit for the the value of the house you want to buy. In other words, for a $500,000 house (this is still realistic in places outside of Auckland!), you would need a deposit of $100,000. Let’s be real – that is a lot of money, and saving that amount won’t happen overnight. But the earlier you understand these factors, the earlier you should start saving, and the better prepared you will be when it comes to actually getting a mortgage and buying your first home.

Hey, we never promised getting a mortgage was easy. The tips above won’t approve your mortgage overnight, but you’re better off acting on them now rather than later. With the right knowledge, a bit of preparation, and the right mindset, you can greatly improve your chances of getting your mortgage approved.

If you’d like to compare mortgage rates to see what you might afford, head over to our mortgage comparison now. If you’re ready to take the next step, as well as get the best mortgage deal for your first home purchase, submit a loan enquiry with a PocketWise partnered broker – absolutely free.

Cheers,

The PocketWise Team

www.pocketwise.co.nz

The post 4 Tips to Get Your First Mortgage Loan Approved appeared first on PocketWise.