Almost all New Zealand mortgages are the repayment type of mortgage, where an increasing percentage of each payment is principal. Typically these are taken out over a 25 or even 30 year term, but a small increase in the regular payment can save you thousands of dollars in interest as well as reducing the time it takes to pay off the mortgage.
Please be aware that mortgage interest rates in New Zealand are generally several per cent higher than in the UK.
When you apply for a mortgage, the lender will look at:
The Loan to Value Ratio (LVR) which is how much of the property's value you're borrowing
Your income
Your existing debt
Your residency status
- Your overall financial situation
Different lenders have different criteria and formulas, and some lenders are happy to lend to self employed people, others less so; some lenders like recent immigrants, others like you to have been in the country for a while. I and my team of mortgage experts will find the lender that is best for you.
The interest charged on mortgages is pretty similar across lenders due to the highly competitive nature of the NZ mortgage market. There are two types of mortgage - fixed rate and floating. Floating rate mortgages are called that because their rate can change without notice as the bank determines. This is usually driven by the Official Cash Rate, which is set by the NZ Reserve Bank eight times a year. For the current rate, see www.rbnz.govt.nz .
The other type of mortgage is a fixed term, where you select a term and a rate, and your interest rate is locked for the term (up to 5 years). This is a good idea in times when interest rates are likely to rise, whereas a floating rate is better if rates are likely to fall. It is also possible to have part of a mortgage on the floating rate and the rest fixed, giving you the best of both worlds. This article was contributed by Jeremy Henderson from Broadbase International. Their UK website, www.broadbaseimmigration.co.uk, has a great range of up-to-date articles on life in New Zealand written especially for prospective migrants.