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30 November 2021 | By Lending People

Simplifying the mortgage process for first home buyers

Getting your first mortgage can be daunting in more ways than one! We’ve broken down the home loan process, so you know exactly what to expect.

If you think you’re about ready to purchase your first home, congrats! That’s a big milestone. Right now, you might be feeling a bit uneasy about it—getting a mortgage is very “adult” and while it can all feel a bit overwhelming; the process is actually quite straightforward when you break it down, which we’re going to do for you right now…

First up, consider using a mortgage adviser.

Essentially, an adviser (or broker) helps you to navigate the whole home loan process. Aside from talking to you about your unique financial situation and helping you to figure out what is achievable, there are some other benefits of using an adviser:

  • They deal with lots of lenders, so they can save you time shopping around.
  • They know the interest rates and application criteria for different lenders and can negotiate on your behalf.
  • They can help you put a loan application together.
  • They may be able to find an alternative lender if a bank declines your application. It’s also likely that they’ll be able to get you a better deal than if you were to approach the lender directly.

All mortgage brokers are now required to be Registered Financial Advisers. That means they must have a complaints process in place and belong to a dispute resolution scheme. Before choosing a broker, check out the official Financial Services Providers Register.

Get ready to apply for a loan.

Your mortgage adviser will help you pull together all the necessary documentation to apply for your home loan, which could be:

  • Proof of identity
  • Marriage certificate
  • Most recent payslips
  • Your employment contract
  • Recent tax statements
  • Your full tax returns from the last two years (if you’re self-employed)
  • WINZ statements
  • Bank statements
  • Shares certificates
  • Statutory declaration (if all or part of your deposit is a gift)
  • Recent statements for your other loans
  • Documentation of any agreed construction you plan on doing to the house
  • A cheque for establishment fees

Now it’s over to the lender.

Once you’ve got your application sorted, your chosen lender will look through everything before making a decision. They’ll do a credit check, look at the size of your deposit, how much you’re wanting to borrow, what sort of repayments you can comfortably afford, whether you have any guarantors, and so on.

Decision time.

If you meet the lender’s criteria, you’ll be given conditional approval (also known as pre-approval). This means that you can bid on a house or make an offer with the conditions outlined by your lender. Conditions may be things like:

  • Providing a registered valuation of the property—this comes at a cost, which you will need to cover
  • Providing a copy of a signed sale and purchase agreement

At this point, some lenders may require you to get lender’s mortgage insurance (LMI), usually if you’re borrowing more than 80% of the house value. This is insurance that protects the lender rather than you, the borrower. It’s normally a one-off payment that you make at the time of settlement. If you need to get this, the lender will apply for it on your behalf.

Found a house? Make an offer.

After you make an offer on a house, your lender will issue a formal ‘Letter of Offer’. If this is accepted by the seller, your loan becomes unconditional, which means all systems are go! You’re legally obliged to follow through with the sale at this point.

The big step—settlement!

From here, your solicitor and lender will get together to iron out all the final details and schedule a settlement date. A settlement date is the day that money actually changes hands. Your first loan repayment usually comes one month after settlement.

Final bits and bobs.

You’re nearly at the finish line; there’s just one final bit of financial admin before you move in. It’s best to get insurance sorted at this point. Life insurance, income protection and home and contents insurance are all worth looking into. It’s possible that you will need insurance ahead of settlement—if so, your adviser will let you know.

Hopefully, the process feels a little less daunting now—we always try to keep things simple. Pretty soon we’ll be offering home loans as well. The initial process is a five-minute online application, then you’ll be assigned to an adviser who can work through the rest of the steps with you. If you’re keen to explore this option, sign up to our mailing list and we’ll be in touch when this service becomes available soon.

This blog is provided for general information purposes and is not a recommendation you enter into or exit any particular loans or insurance policy. Information on the website does not consider your particular circumstances, including your objectives, financial situation or needs. We recommend you seek advice from a financial adviser before taking any action as appropriate. The Lending People Limited (FSP240365) is a licensed financial advice provider and can provide advice on some types of personal loans. Find out more about The Lending People and how we may be able to help you

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¹Fees: We do not charge a fee to use our service (commonly referred to as a platform fee, broker fee, or referral fee) if you do not enter into a personal loan arranged by us. A fee to use our services is applicable in all other cases. See our Terms & Conditions for the applicable fees.

²Annual Interest Rate (AIR): The AIR offered by our Personal Loan providers ranges from 8.95% p.a. to a maximum of 28.95% p.a.

³Annual Percentage Rate (APR): Also known as the 'comparison rate', the APR is calculated by adding together the AIR plus any additional fees that may apply (like establishment fees charged by providers). New Zealand law does not require APR disclosure, but doing so can better highlight borrowing costs. The APR offered by our Personal Loan providers ranges from 9.80% p.a. to a maximum of 29.91% p.a. The APR is accurate only for the representative example given below and may not include all fees like early repayment fees (if any). Different terms, fees or other loan amounts might result in a different APR.

⁴Minimum and Maximum Repayment Terms: Repayment terms offered by our Personal Loan providers range from 12 months to a maximum of 84 months.

Representative Example of the Total Cost of a Loan: If you borrow $20,000 over a repayment term of 36 months at an AIR of 8.95% p.a., your total repayments will be $22,493 (made up of $20,000 principal, interest charges of $2,243, and an establishment fee of $250). This example assumes monthly repayments and does not include premiums for any optional insurances, fees for using our services (if any) or default fees.

⁵Terms and Conditions: Our services are provided in accordance with our Application Terms & Conditions. All approvals are subject to provider credit criteria and responsible lending requirements. The loan amount and interest rate offered will depend on your circumstances, the type of lending required, and the security (if any) provided will reflect the loan amount and interest rate offered by the provider. Provider establishment fees, terms, and conditions apply.