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Q and A: your big questions about loans answered

By Bob Mountfort

There’s a lot to know about loans, especially if you’re taking one out for the first time. So let’s knock over some of the common  ones, and hope they’re some of yours.

How much can I borrow?
Unfortunately, the answer to this one is ‘Depends’! It differs from lender to lender and can vary quite a bit (depending on their criteria, income, the type of property etc), so it’s really worth shopping around. How much you can borrow also depends on the size of your deposit and can change if you have equity in an existing property already.

What’s the length of a mortgage?
How long is a piece of string? The most common length is 30 years, however the shorter your loan period, the higher the loan repayments.

How is interest calculated?
Your bank will take the outstanding loan amount at the end of each business day and multiply it by the interest rate that applies to your loan, then divide that amount by 365 days (or 366 in a leap year). It will then charge the interest to you monthly.

Why do I need a conveyancer or solicitor?
Their job is pretty important and includes:

  • Checking the contract and the certificate of title to make sure your name is against the right property.
  • Preparing the paperwork for the property transfer.
  • Liaising with your lender and the seller’s conveyancer to oversee the rest of your payment for the property. This includes managing withdrawal from you Kiwisaver or any other grants such as Homestart.
  • Checking the seller has paid all rates and taxes.
  • Lodging the documents to ensure the property is officially changed from the seller to your name – the buyer.

This article was supplied by Bruce Patten, International Mortgage Broker of the Year 2006 – 2017.  Bruce is always on hand to answer any questions you may have about loans or anything else around the loan process. Feel free to get in touch with him anytime via phone (021 661 114) or email (bruce.patten@loanmarket.co.nz).

Click through for more information about Bruce.

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