People with a less than stellar financial history may find mortgage brokers can help them.
People with a less than stellar financial history may find mortgage brokers can help them.
LOANS
Getting a mortgage isn't always straightforward. The answer for many buyers is to use a mortgage broker or adviser. The service is usually free, says Karen Tatterson, of the Professional Advisers Association. Although you may have to pay if you get a mortgage outside of the high street banks.
Herald Homes asked a number of mortgage brokers to give examples of how they have helped homeowners and investors buy property. Mortgage brokers say they can ...
Save on legwork: Lisa Meredith of Loan Market had a client who was tearing her hair out trying to get a loan on part-finished renovations. Lenders hate half-finished projects and the client didn't understand "bank speak". Meredith found that ASB subsidiary Sovereign was willing to lend. It saved the client much legwork.
Manage the application: Sue Tierney of Sue Tierney Mortgages says not all situations fit standard mortgage lending criteria. In a recent example, Tierney's clients had been told that an illegal bathroom in a property they wanted to buy at auction had to be removed, or the bank woudn't lend. Tierney knew another bank had different criteria and would mortgage the house providing the buyers could get insurance cover.
Argue your case: Annette Kann of Roost Mortgages had a client unable to borrow to buy a home because of a joint loan for his ex-wife's business and other debts incurred around the time of the split.
"I produced a mound of documentation to show what had happened, the legal tussle and the statements showing where he had repaid debt over time. Eventually the lady at the bank I was dealing with agreed that he was actually a good risk."
Negotiate: Lawrence Diack of Saving Kiwis Financial Solutions was able to negotiate 0.64 per cent off a six-month fixed rate for a client this month.
"I'm acting on behalf of the client, not the bank, so I'm negotiating each and every time for a better deal, without them necessarily having to change banks to get it," he says.
Brokers also know how to limit guarantees on children or other people's loans. Banks as a matter of course want to take unlimited guarantees.
Get more money: Geoff Bawden of NZ Property Finance points out that banks are not created equal. One client just couldn't borrow enough from his bank. Bawden suggested another bank he knew would lend more, and the client was able to borrow an additional $80,000.
People with a less than stellar financial history may find mortgage brokers can help them.
Get mortgage-ready: Kim Lyons of First Rate Mortgages had a client with good equity who wasn't bankable because of a large number of debts, which had late repayments.
The solution was to go to a non-bank lender and to borrow more to add value by recladding the home. Lyons' solution reduced the client's outgoings and improved repayment history. "It is expected that we will help clients refinance back to a bank in nine to 12 months," says Kim.
Restructuring advice: Wayne Lawrie of Mortgage Studio deals with clients who need to restructure their debt geared to their circumstances.
Sometimes a principal and interest loan over 30 years with one fixed portion isn't flexible enough. Clients may be able to afford more and manage their risk better by splitting the fixed-rate portion of the debt across different maturities, says Lawrie.
The downside
There are, of course, some disadvantages of using mortgage brokers.
Kiwibank doesn't pay commission to brokers, so isn't included in the line-up to be compared, and BNZ gives commission to only one broking firm.
However, most mortgage advisers use a wide range of lenders, including non-bank lenders.
