40% of New Zealand’s loans (NZ Mortgage Brokers Association - NZMBA statistics) are introduced by independent Mortgage Advisors, so we already know the demand is there. A huge part of an Advisor’s role is to help clients get their loans approved as easily as possible, and this means explaining what documents and forms are required and when, from the initial loan application to the signing of loan documents. I have decided to write a series of articles explaining the whole finance process from start to finish and what would naturally be expected of you. So if this is a daunting process, prepare to gain some knowledge.   

Whether it’s your first home or not, applying for finance or even talking to the bank can be a very scary prospect. It does not have to be that way, which is why many people are talking to independent mortgage advisors instead. 40% of New Zealand’s loans (NZ Mortgage Brokers Association - NZMBA statistics) are introduced by independent Mortgage Advisors, so we already know the demand is there. A huge part of an Advisor’s role is to help clients get their loans approved as easily as possible, and this means explaining what documents and forms are required and when, from the initial loan application to the signing of loan documents. I have decided to write a series of articles explaining the whole finance process from start to finish and what would naturally be expected of you. So if this is a daunting process, prepare to gain some knowledge.

PART ONE – THE INITIAL ENQUIRY

You are thinking about getting a mortgage, but you don’t really know where to start. What options are available to you?

1. You could call an Independent Mortgage Advisor – preferably an NZMBA advisor.

NZMBA is NZ Mortgage Brokers Association – if your advisor is a member then they must adhere to strict ethics and guidelines. To find a broker see www.nzmba.co.nz

An Independent Mortgage Advisor specialises in organising mortgages for their clients; you will be getting access to a specialised service.

Advisors are there to help you through the entire loan application process from collecting your information, making recommendations, presenting and submitting your loan to the chosen lender, and ensuring the process is smooth right through to the settlement of the loan.

Advisors have access to many lenders, so they can do the running around so you don’t need to.

BUT your advisor can be so much more, from helping with the whole purchase process, to budgeting advice, and making sure you are still happy with your chosen loan months and years down the track.

In most cases the Advisor gets paid a commission from the lenders so you don’t need to pay them.

2. Contact your bank.

Every bank will have either a personal banker or mortgage manager that can help you and some very skilled advisors as well, but the biggest difference is they will only know their own banks products.

3. Surf the net.

Time is critical for so many of us, that you may decide to go online and shop for the “best deal” this way.

Just remember that the cheapest interest rate doesn’t automatically mean the best deal. For instance, what about:

a) Bank fees

b) The ability to pay off lump sums

c) Ease of paperwork, and customer service

d) Access to your accounts

e) The ability to borrow again later for an investment maybe

Getting a mortgage could be the biggest debt you ever take on, why not give the decision the time is deserves… You could save thousands on the right advice.

So you have chosen who to contact… what next?

There are a few basic questions you will get asked by any of the above. If you know this information beforehand you will get a better quality answer from your enquiry. The information is:

1. How much do you earn? This can be quite a simple question, but for others it can actually be quite complex.

The main point to know is what is your annual income?

2. Do you have any other debts? If so what are your regular repayments?

3. Do you have any savings or a deposit to put forward? If you are purchasing a new house.

4. What is your credit history like? Or more to the point is your history clear? That is, you have not had any court judgments on previous loans or outstanding accounts.

5. Do you have a purchase price in mind, or a repayment that you think is affordable?

If you don’t have this information or not sure exactly what the answers are, again do not be fearful, your advisor will guide you through the whole process and explain fully how you can find this information.

So… you did it, you finally called and found out that it wasn’t that bad and guess what… you can actually go to the next step and either get pre-approved for a mortgage or actually buy a house.

Next; collecting the relevant information and documents.

PART TWO – WHAT DOCUMENTS ARE REQUIRED TO APPLY FOR A LOAN?

Hopefully by this stage you have found an advisor to help you through the application process. This will make applying for the mortgage easier.

To apply there are some standard documents that will be needed, I have broken this into three parts:

1. Mandatory Forms a professional NZMBA (NZ Mortgage Brokers Association) Mortgage Advisor will go through

2. The Standard Documents the lenders will need to approve your loan

3. Further documents lender may need to approve your loan.

One – Mandatory Forms from your NZMBA Mortgage Advisor

The NZMBA acknowledge that advice regarding someone’s financial commitment to large debt should be given the attention it deserves. NZMBA members are trained to ensure you can trust the advice given, and provide you the client with advisor information to confirm this.

a. A Personal Disclosure Statement. This will list details about the Advisor, their experience, qualifications, the memberships they belong to, how they are paid, the complaints procedure, a declaration regarding their financial history, and more.

b. An NZMBA Application form. This is what will be submitted to the lender for your loan approval. It will state your personal details and declare your financial position; it will also have the correct declarations and disclosures.

c. An Insurance Statement or Acknowledgement. You may ask why? If your advisor is helping you take on a large debt, then you also need to acknowledge the risk side to this. That is your advisor should discuss with you the ‘what if” questions, and get you to sign a statement that you have had that discussion.

d. Identification – your advisor needs to check that you are who you say you are. The lenders will do this as well in many cases, but it is still prudent for your advisor to check.

Two – The Standard Documents the lenders WILL need

a. Signed and dated Mortgage Application form. This can be either the bank’s form, or you can use NZMBA application form, and some other independent companies will have approved forms that can be used.

b. Confirmation of income. This can be recent pay slips, letter from employers, contracts, tax summaries, financial accounts, or other approved documents.

c. Confirmation of Account Conduct. If you are seeking finance from the lender that does not know you, they will request a minimum of three months personal bank statements to look at your account history.

d. Credit Report. This is generally a report run through Veda Advantage and checks records to see that you have not had any court judgments relating to previous accounts. Your advisor or the lender will run this report; you do not need to supply it.

e. Confirmation of Deposit. This is to show the lender that you do have the funds to complete the purchase (not required if you are getting 100% finance)

f. Sale and Purchase Agreement, signed and dated. This is provided if you are purchasing a new property.

g. Confirmation of Rent. If you have a rental property where you are earning a rental income, the lender will wish to confirm this via a copy of a tenancy agreement or property management statement.

h. The borrowing entity. Is this in your personal name or do you have a Trust or Company

Three – The Documents a Lender MAY ask for

a. Confirmation of your credit card conduct. Last three months credit card statements, they are seeing if you pay them off in full each month or not.

b. Bank statements. They may request the last six months statements rather than three months, or a different account to what you have provided.

c. A registered valuation on the property.

d. Income declaration forms, especially of you are self employed.

e. Confirmation of who your accountant is.

f. Any other information the lender may need to approve your loan.

NOTE – you do not need all of these documents to apply, it is very easy to submit an application with some of the information and then progress to submit the rest of the information at a later point. Your advisor can help you with what is needed and when.

Once the information is ready – Next the actual application

Coming Soon… PART 3 – THE ACTUAL APPLICATION PROCESS

Article by Tracey Munns

For further information please contact Connect Mortgages on:

1. 0508 more than mortgages

2. (09) 337 11 11

3. This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

4. www.connectmortgages.co.nz

Be first to comment this article

Only registered users can write comments.

Please login or register.