Applying for finance? Read this first!
Navigating the process of obtaining a mortgage in New Zealand can feel like a complex and overwhelming experience. From understanding various loan options to deciphering legal jargon, there's a lot to consider. However, it’s surprisingly a lot easier than you think, especially when going through a mortgage adviser. You don’t need to spend hours and hours figuring out calculations – they’ve got the process streamlined so efficiently, that you’ll be pleasantly surprised at what a smooth, easy process it turned out to be!
Here's a typical outline of the lending process:
Assess Your Finances: Before you start looking for a home, assess your financial situation. Calculate your income, expenses, and any existing debts. This will give you an idea of how much you can afford to borrow and repay.
Pre-Approval: Getting pre-approved for a mortgage is a smart first step. It involves applying to a lender for a pre-approval, which gives you an estimate of how much you can borrow. This helps you narrow down your property search within your budget.
Property Search: Once you have a pre-approval, you can start looking for properties that fit your budget and preferences.
Making an Offer: When you find a suitable property, you'll make an offer to the seller. If your offer is accepted, you'll move on to the next steps.
Formal Mortgage Application: After your offer is accepted, you'll need to submit a formal mortgage application to your chosen lender. You'll need to provide detailed financial information, including income, expenses, and any outstanding debts.
Property Valuation and Approval: The lender will typically conduct a property valuation to determine its market value. Based on the valuation and your financial information, the lender will decide whether to approve your mortgage application.
Sale and Purchase Agreement: Once your mortgage is approved, you'll work with your lawyer or conveyancer to finalize the sale and purchase agreement. This legal document outlines the terms of the sale, including the purchase price, conditions, and settlement date.
Insurance: You'll need to arrange insurance for your new home. This includes both home insurance (covering the building itself) and contents insurance (covering your belongings).
Loan Offer and Acceptance: If everything goes smoothly, the lender will issue a formal loan offer. Review the terms and conditions carefully before accepting it.
Signing and Settlement: Prior to settlement, your lawyer or conveyancer will ensure all legal and financial aspects are in order. On settlement day, the property ownership is transferred to your name, and you'll make the payment to the seller.
Mortgage Repayments: After settlement, you'll start making regular mortgage repayments according to the agreed-upon terms. This includes both principal (the amount borrowed) and interest.
If you’ve been putting it off because you think there’s too much information to process or you don’t have enough saved up, talk to a mortgage adviser anyway. They can get you started on a long-term goal mindset to get your finances in order so that in a few years, you will be ready and prepared.
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