01/12/2021 · Last update: 28/02/2023

• Lending Advice

How To Find The Right Loan Provider — Loans NZ

Mortgage lenders are at the front lines of the property buying process and are responsible for ensuring that borrowers are qualified for a loan and have sufficient income to repay it. Think of them as a friendly but firm Doorman standing between you and a large amount of money you need for your property.

Borrowers in New Zealand are devoting roughly 40% of their pre-tax income to mortgage payments under a normal 25-year mortgage contract with a 6.5% interest rate — so it’s vital you find a mortgage lender that fits you best.

Tips for Picking the Loan Provider

• Compare lenders before choosing one
• Get a pre-approval letter from a lender before you make any engagement.
• Hire a mortgage broker to help you with your mortgage lending process.
• Check for customer reviews about their experience with the lender before signing any contracts.
• Look for lenders that offer flexible payment plans and other tools like biweekly payments.
• Find out if they offer low rates on refinancing options when interest rates go down.

Let’s look at some of these in more detail.

Compare lenders before choosing one

Before you choose a loan provider, shop around and compare multiple offers to get the best deal. You will save a lot in the long run if you can get a loan provider who offers the best loan interest rate. Take into consideration also what loan best suits your current situation, your preferences, and your qualifications.

Another thing to consider is the loan term or the period for your loan payment. Most of the loan providers usually offer 15-30 year terms, but there are still other options available.

Get a pre-approval letter from a lender before you make any engagement.

Getting pre-approval letters from multiple lenders strengthens your hand. This is because if you get multiple inquiries for the same type of credit quickly, the credit bureaus will typically treat those as one inquiry and avoid hurting your credit score.

Hire a mortgage broker to help you

If you’re looking to buy your first home or refinance, it is important to consider a mortgage broker. Mortgage brokers can help you find the right loan provider for your needs and offer advice on other key property financial decisions.

Moreover, they should be able to advise you about other products that can be beneficial for your home life, such as getting insurance for your first house.

Check for customer reviews and read contracts thoroughly

Before committing to any contract with a loan provider, it is significant to check for customer reviews online to get an idea about their experience.

Online reviews are becoming an essential part of the house buying process. People rely on reviews when they want to buy something trivial in eCommerce stores, so why not do the same when they want to borrow money for a life-changing purchase? We recommend a good place to start is by looking through the winners of the 2021 New Zealand Mortgage Awards.

Look for lenders that offer flexible payment plans 

Flexible payment plans enable you to make overpayments, underpayments, and maybe take payment holidays to suit your economic situation.

If you prefer a personal loan that works for you and matches your specific situation, a flexible personal loan may additionally be a suitable option.

Many people take a flexible personal loan due to the fact that they permit you to make additional repayments and pay much less in interest overall.

Find out if they offer low rates on refinancing options when interest rates go down.

Refinancing your loan can lower your monthly payment and save you money in the long run. This is very beneficial, especially if the current interest rate is low. So before you make decisions, do your research and learn how lender’s refinancing works. You can also assess whether refinancing is the right option for you.

Conclusion

Choosing the right loan provider can be an overwhelming task. Many people have been burned because they didn’t do their research. There are so many factors to consider — interest rates, points, fees, and all those small details that make up your monthly mortgage payment. 

But choosing the right one can make all the difference whether you get approved for financing and how much it will cost you over time. The tips above are a great starting point to help you begin your journey on buying your first New Zealand property.

Looking for help with your second mortgage instead? For over a decade, we’ve been helping New Zealand homeowners use the equity in their homes to buy, extend, and consolidate second mortgages.

Contact us today and let’s see how we can help you.