A property is one of the most expensive things you’ll ever buy. The amount you borrow and the interest you’ll pay over decades can be huge. So, whether you’re looking for a new mortgage or reviewing the one you have, it’s worth investing some time into getting the best arrangement for your current circumstances and future goals.
We have a free service that makes it easy to connect with a top mortgage broker online. It guides you through providing some initial information, so you’re a step ahead when you meet.
A mortgage broker (aka mortgage adviser) is paid a commission by the lender you eventually choose, which means there’s usually no charge for their services. With our brokers, the first consultation is always free.
A good broker can use their knowledge and experience to find and recommend the best mortgage options for you, but they’ll need your help to do this well. In this article we look at what a broker usually needs from you, and some questions you should probably ask them in your first meeting. Let’s start with the documentation.
Paperwork to have ready when meeting a mortgage broker
Legally, lending decisions have to be based on hard evidence, so don’t be offended if your broker doesn’t just take your word on things. To represent you well in lender negotiations and applications, here are some of the documents a broker will probably need. They may also ask for others, depending on your situation.
Identification
The law requires advisers and lenders to know exactly who they’re dealing with. You’ll need:
- Official photo ID, such as a valid New Zealand passport, or a driver licence and birth certificate
- Evidence of where you live, such as a recent bank statement or utility company bill with your name and address
There are other options for people who have recently arrived in New Zealand. If you’re applying with someone else, such as a partner, you’ll both need to provide ID.
Income disclosure
- If you work for an employer you’ll need a copy of your employment contract or your three most recent payslips
- If you receive irregular income, such as commissions or bonuses, you’ll need evidence of these over the last two years, such as an IRD income summary
- If you’re self-employed, you’ll need annual financial statements for the last two years
Debts and expenses disclosure
You’ll need to provide:
- Statements covering the last three months for any loan, overdraft facility, credit card, purchase you’re paying off and student loan (if you’ve recently cancelled or repaid any of these, be sure to provide evidence of that too)
- Bank statements for the last three (sometimes six) months showing your regular outgoings
- Information about ongoing expenses you’re committed to, such as rent, body corporate fees, leasehold property payments, and child or family support
It can also help to prepare a forward-looking budget, including likely mortgage repayments. Lenders will want to know about expected changes to your income and expenses over the next 12 months.
Assets
Gather evidence of:
- Any property you own
- Your savings and investments, including KiwiSaver
- The value of major possessions, such as vehicles, boats, furniture and personal effects (insurance cover can often provide an indication of these values)
Deposit
You’ll need evidence of the deposit you have. If any of this is a gift, perhaps from your parents, you will need a signed declaration from them stating the amount and that you don’t have to repay it. If it’s a loan instead of a gift, it may affect the amount a lender is prepared to let you borrow. In both instances your adviser will provide you with the details the banks require
Property information
If you already have a potential property in mind, it’s a good idea to include a link to the property listing online, so the adviser can research the details for you. A great place to instantly find this information for free, is with our friends at homes.co.nz
The advantages of automatic bank links
With your approval, many lenders and mortgage advisers can now use secure services to download your bank statements directly, even if they’re at different banks. These intelligent online systems can also sort your deposits and withdrawals into categories, such as wages, utilities, rent, groceries, loan repayments and so on. They’ve been widely used by banks, credit providers and top mortgage advisers for many years now, both here and overseas. Here’s why.
- Accuracy – removing the manual preparation of financials means there’s no chance that something gets missed or mathematical errors accidentally occur
- Efficiency – these secure online services can download and sort bank transactions in no time at all, which means you get a much faster indication of where you stand for conditional approval
- Trust – because automatic bank links have been in use for quite some time and the analysis is based on a direct feed (without human intervention) mortgage lenders have a high degree of confidence in financials and insights prepared this way.
If your adviser uses one of these secure services it can be a real advantage. They’ll let you know beforehand of course, and you’ll be asked to approve the statement downloads for each of your accounts.
Questions a mortgage adviser is likely to ask
Mortgage advisers are required to act in your best interests. That means doing more than simply shopping around for the best rates and lowest fees, then helping you put an application together. A good broker will ask quite a few questions to get a clear picture of your current financial situation and risk appetite around changing interest rates. They’ll also want to understand your immediate plans and longer term goals. This allows them to put together the best mortgage structures for you and explain why they suit your situation.
If you haven’t already done so, it can help to put some thought into what’s important to you, and where you see your work and personal life going. Sharing your dreams with a relative stranger can feel a little uncomfortable, but your broker can’t help to make them real if they don’t know what they are. There are all sorts of ways to structure a mortgage using combinations of loan types, interest rate terms and repayment options. Beyond rates and fees, a good broker knows what the different lenders have to offer and what might work best for you.
Questions you should ask a mortgage broker
In order to trust your mortgage broker with your financial future and life goals, you need to feel confident about their abilities. You also need to feel they’re someone you can work well with, even if things get a bit stressful before you draw down your mortgage and own your new home. Being able to share a laugh helps to ease the tension.
A good broker understands how important the mortgage is to you. They may deal in mortgages every day, but they’ll realise that you don’t. When you first meet, they’ll expect you to ask questions about them before choosing to continue. If they haven’t already provided the information, here are some things you might want to ask about.
- How much experience do they have, particularly with people in your situation?
- Which lenders do they work with?
- What commission or other incentives does each lender offer them?
- Will they include your current bank in the options they present?
- What fees could the broker possibly charge you?
- How does their process work, what do they do and what do you or others have to do?
- What happens if you don’t like any of the mortgage options they recommend?
- How long does mortgage approval usually take?
- Can you get a lawyer to check the broker’s agreement before you sign up with them?
Once you’ve decided to proceed, be sure to ask questions if there’s anything you don’t understand. There are no silly questions when it comes to choosing a mortgage. Your broker should explain all lender fees and charges associated with any recommended mortgage, including the total cost of the mortgage over its lifetime (approximate, because interest rates change). They should also explain why any mortgages they recommend are the best options for you, and perhaps the others they looked into and why they weren’t quite as suitable. If your broker forgets to include information you’d like to know about, be sure to ask.
Connect with a top mortgage broker online
To help get your mortgage application off to a great start, we have a free service that connects you with a top mortgage broker from our panel of award-winning advisers. It starts with a 2-minute online questionnaire to capture the basics of your situation, so your first meeting can get off to a good start. Your first consultation is always free of charge when you use our free online service to find a top mortgage broker.
