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For many of us, buying a new home is one of the biggest purchases we will ever make. And unless you’ve recently won the lottery, you’ll likely have to borrow some money.
Mortgages can be confusing, with many options available to suit a large range of needs and situations. We want to take away the confusion by giving you information to help you start looking for the best options for you, so you can enjoy the prospect of buying your new home.
- What type of mortgage should you choose?
Getting the right mortgage depends on your circumstances.
Nomey can help you:
- find which types of mortgages are available to you.
- pick the mortgage term you want
- find the best mortgage rates
- check which fees apply.
The amount of mortgage you can afford is based on your yearly income and any financial commitments you already have. If you want to see how much you could borrow, you can use our budgeting calculator.
It's easier and quicker find the best mortgage for you when you compare products with Nomey.
- Compare mortgage deals
To help you work out which one is best for you, look for one that:
Costs less: How much your mortgage costs depends the interest rate and any fees. Compare every deal that fits what you need to find the best mortgage interest rates, lowest fees and the right loan to value ratio (LVR).
Will accept you: Some mortgages are especially for specific types of borrowers, such as first-time buyers. Not all mortgage offers are suitable for everyone. Applying for the right types of mortgage can avoid wasting your time and damaging your credit record.
It’s important to remember though that the actual mortgage deals you’re offered when you go to make an application may differ because they will then be influenced by your financial situation and credit history.
- What type of mortgage do you want?
When you take out a mortgage, there are different types of interest rates available. Getting the right mortgage interest rate could save you money or give you a guarantee that your payments won't increase for several years.
With fixed rate mortgages, the interest rate is set at the start and stays the same until the fixed term ends. This means your mortgage repayments are the same each month. Generally, interest only mortgage rates are higher. But, if the Reserve Bank of NZ (RBNZ) increases the Official Cash Rate (OCR), you could end up saving money as your mortgage repayments won't rise with it.
At the same time, if the OCR happens to fall, you can't take advantage of lower interest rates without having to break your existing mortgage, and you may have to pay fees.
With a variable rate mortgage, rates are often lower at the start, but they could increase. This means your mortgage repayments can go up and down based on factors outside of your control, such as the economy and the OCR.
Our mortgage repayment calculator can help you work out the potential monthly payments, based on different interest rates.
- What is LVR?
LVR stands for Loan to Value Ratio and relates to the size of the loan available in relation to the value of the house or asset you are wishing to buy. When applying for a mortgage, regardless of whether you can afford the loan or not, there are restrictions on how much money you can borrow based on the value of the house.
Most banks will lend up to an LVR of 80% as standard, which simply means if the house is valued at $500,000 you can borrow $400,000. However, in rare cases and with certain restrictions and requirements being in place, you may be eligible for a higher LVR, up to 95%.
The more money you can save as a deposit, the less you’ll need to borrow as a mortgage loan – and having a bigger deposit can help you get access to more competitive mortgage rates.
- Should I break my mortgage for a new lower rate?
This is simply not a straightforward answer. When it is time to renew your mortgage, you should look at all the available rates in the market. If the rate is lower, you then need to do some research. Starting with “are the any fees for breaking my current mortgage agreement”. These can sometimes be rather large and negate the benefit of a lower rate. Outside of this, you may also want to consider how long you have left on your mortgage. If you only have a year or 2 to go, the change may be more trouble than the savings are worth. But if you have a full 20 years or so to go, the savings over time could well make up for any fees for changing.
- Save a deposit
The more money you can save as a deposit, the less you’ll need to borrow as a mortgage loan – and having a bigger deposit can help you get access to more competitive mortgage rates. If you have Kiwisaver and are a first home buyer you may be eligible to use some of this for your deposit. Check out the eligibility criteria with your Kiwisaver provider.
Applying for finance can sometimes be a confusing and stressful experience. As a consumer you want things to be as simple and as quick as possible. Whether it be for a holiday, new car or to buy that first home, we have some helpful information to make things a little less stressful.
- Be Prepared
Before applying to borrow money, make sure you can provide the following items:
- ID (Drivers’ licence, Passport etc),
- Proof of Address,
- Payslips or a Bank Statement (for income).
Lenders must prove who you are (ID and Proof of Address), and they must make reasonable enquiries about your income and expenses under Responsible Lending requirements. If you do not have these items readily available, it may delay the decision for your application.
- Finding the Right Loan
If you have a specific reason for needing to borrow money (like buying a car), make sure you look around. Most lenders will ask you what the loan is for, but this is not just to tick a box. Sometimes lenders can offer better rates based on the loan purpose, especially when it comes to auto loans. These loans may require you to offer security, in the case of a car loan it would be the vehicle you are buying, it’s a small request which may save you money in the long run.
- Retail Credit Cards vs Bank Credit Cards
Credit cards are not just available from your bank, some are available from smaller financial institutions. These cards are generally in relation to a retail purchase and contain potentially generous promotional terms. These can range from Long Term Interest Free to Deferred Payment options and are one of the best ways to get that new fridge now without a large added cost. Retail cards, like bank credit cards, can also be used for normal purchases in store or online, but make sure you pay attention to the interest rate. The interest rate can sometimes be much higher than a bank credit card to make up for the promotional offers that can be available.
- Retail Finance Promotional Terms
When taking a finance option for a retail purchase, you may be offered one of a few different promotional offers. While they can all have benefits to you as the consumer, you need to be aware on what each offer means so you don’t fall foul of any unexpected costs like fees or lump sum interest.
Interest Free: This term is as its sounds. Your purchase will be interest free for the specified term. At the end of the term, if you have anything left owing on your purchase, you will get charged interest on that remaining balance only. Payments must still be made every month towards the purchase. Whether that is just a minimum payment required like a credit card (3%) or fixed amount, you cannot just forget about it – Interest Free not Payment Free.
Deferred/Deferred Interest Free: There are 2 standard versions of the Deferred promotional offers. First is the straight deferred which requires no payments during the specified period. During this time, you will also not be charged interest, however you will begin incurring interest at the end of that term on any remaining balance. The second option which is even better for you is the Deferred and Interest Free option. This starts with a deferred payment period, followed by an extended interest free period once payments are required.
Equal Payment Options: Today most “Hire-Purchase” offers are done via credit card options – Gem Visa, Purple Card, Q Card being some of the main options. As such most offers only require a 3% minimum payment each month, which may not complete your purchase within the promotional term. But Equal Payment offers are designed to address this concern for some customers. Equal payment offers will split the cost of the purchase across the term to have it completed on time. Just make sure you check the terms, as these offers can be either interest free or interest bearing, meaning it could cost you more for the convenience of equal payments.
- Don't Over-Commit
Just because you can afford it, does not mean you should borrow money. A great example of this is the rise of the Buy Now Pay Later (BNPL) options on small retail purchases. They can be great for short term, interest free offers and are usually spread over 4-10 small equal weekly payments. But like all finance, you are still required to pay it all back and if things go wrong, or you take on too many finance options, you can get yourself into a debt spiral. This occurs when your income comes into your bank it is used to pay for that new outfit or TV. Then because you have started with less money to spend that week, you take another retail finance offer to replace your shoes that broke. And the cycle continues. Always make sure you have a clear plan to pay for any finance you take out, not just BNPL, but all finance options. Finance should work for you, not the other way around.
- Struggling with your finances?
If you’re struggling with your finances and you think you might not be able to make your repayments, you should call your lender as soon as possible. They will be able to discuss your options with you, such as working out a manageable repayment plan or making a 'Hardship Application'. You can find more information here about "Hardship Applications'.
Alternatively you could get in touch with MoneyTalks a free helpline available to provide free budgeting advice to individuals, family and whānau.
- What is AML?
When applying for finance you may hear the term AML or AML/CFT being mentioned by the provider in relation to having to send proof of address, or a copy of your ID. AML is the short for Anti Money Laundering and Countering Financing Terrorism Act which was brought into New Zealand in 2009. This Act means finance providers are required to verify all consumers who wish to take out finance with them, among other requirements. This requirement cannot be waived for new customers, so unless you are an existing customer and have completed this process previously, you will be required to prove who you are before you can borrow any money.
Your credit report is a summary of your credit application and payment history. It records when you apply for credit, the accounts you have opened, and whether or not you make your payments on time. This is all held securely by a regulated credit reporting company, or ‘credit bureau’.
A credit score is a rating calculated by the credit bureau from the information in your credit report. Your score reflects how likely people with a similar profile to yours are to be ‘good payers’ on their credit accounts.
Your score is typically based on how well you have managed your various credit commitments in the past. Your score is not fixed – it can go up or down, depending on your ongoing credit activity.
- Check your credit report
Nomey recommends that you periodically check your credit report for three reasons:
1. Unfortunately, mistakes happen, and incorrect information can appear on your credit report and drag your score down. If you see errors, dispute the information with the credit provider who has incorrectly provided the bad data to the credit bureau, to get it corrected right away.
2. You may have forgotten about an old debt with bills being sent to an old address – but this doesn’t stop the missed payments showing on your credit report, and impacting on your score.
3. Fraud - We all know someone who has been a victim of fraud. Whether that’s a stolen credit card or identity theft, your credit report can take a dive due to maxed out credit cards and false credit applications.
Monitoring your credit on a regular basis can help you spot inaccuracies or forgotten accounts before they can do damage.
Sign up to Nomey to check your credit report for free!
- Why your credit score matters
Having a good credit score can give you better options when it comes to applying for credit.
Because your credit score is a measure of how responsible you are with your financial accounts, the higher your score, the more likely you are to be offered cards and loans with cheaper rates and better offers, and you’re likely to be able to borrow more.
There are lots of reasons why your credit score may not be as high as you’d like. Having a poor credit score can be a result of mismanaging your finances in the past, perhaps due to a missed loan payment, an outstanding utility bill or a forgotten gym membership. If your credit score is poor, this can limit your options when it comes to getting credit, because a lender may see you as more of a risk.
- Nomey’s top tips to improve your score
Having a poor credit score isn’t the end of the world – here are our tips to boost that number up!
Pay your bills on time: Credit providers send your monthly payment data to the credit bureau. You can positively influence your credit score by paying all your bills on time as agreed every month. Paying late or settling an account for less than what you originally agreed to pay is likely to put a dent in your credit score. Try setting up direct debits and payment reminders to help you stay on top of it.
Contact your lender: If you have had an event that has resulted in you not being able to pay your bills, such as your pay being late then contact the lender before you miss your payment. They have a responsibility to listen, and to help if they can. Quickly addressing your problem can ease the negative effects of late payments.
Pay off your debts: A credit default will stay on your file for five years regardless of whether or not you pay it, but if you pay up this is very likely to reduce the negative impact and make you look more financially responsible. Over time the impact of old defaults will reduce, as long as they aren’t replaced by new defaults!
- What is Comprehensive Credit Reporting (CCR)?
Until recently, your credit report only included limited information like your identity details, credit application details and ‘the bad stuff’ such as any loan defaults or bankruptcy.
Under the new comprehensive credit reporting system positive data ‘the good stuff’ is able to be included on credit reports. This includes all of the times you paid your bills on time and provides lenders with a more balanced view of your credit history
- Why is my credit score different between providers?
There are currently three credit bureaus in New Zealand – Centrix, Equifax and illion. Each credit bureau has its own way of calculating a credit score based on the information it holds, which means your credit score can vary between the different bureaus.
Credit providers can use information and scores from any of the credit bureaus. For example, your phone provider might use Equifax and your bank might use Centrix. Those two reports may be slightly different. However, it should be noted that some lenders may check all three credit bureaus!
We believe that with a little bit of help, anyone can unjumble their money and be better off.
Nomey is a financial comparison website with a difference. Think of Nomey like your personal financial SatNav. When it’s not clear which way to go with your financial choices, tell us where you want to go, and we’ll help you know your position and point you in the right direction. The more information you share, the better we can customise your search results so you can easily compare the options that best match your personal situation and the providers that are more likely to say yes - so you don’t waste your time exploring dead ends or unrealistic options.
Because personal finances can sometimes be confusing, we have handy, unbiased tools, calculators, and tips to help you have a better understanding about the best options for you.
By signing up with Nomey you’ll be able to access your credit report and credit score for free to ensure that your data is accurate.
- How it works
We believe that with a little bit of help, anyone can unjumble their money. Nomey is a comparison website – with a difference. We use technology and the information you provide to identify the personal financial options that best suit your needs, so that you can compare and choose a product that best fits your personal situation.
Personal finances can be confusing, so we have handy, unbiased tools, calculators and tips to help you have a clearer understanding about the best option for you.
By signing up with Nomey you’ll be able to access your credit report and credit score for free to ensure that your data is accurate.
- No ads, no pop ups, no cost!!
Our site is ad free, there are no annoying pop ups to distract you.
Best of all it won’t cost you a cent to use.
- Do I really have to give you my data?
You can use Nomey to find and compare financial products without signing up, however, the better we know you, the more we can identify the financial products that best fit your personal situation and needs, assess the affordability and generate a chance of approval on search results.
There are only a few mandatory fields and beyond that it’s up to you as to how much or how little you want to share. Your personal information’s safety and security is very important to us, and we do everything we can to make sure you feel confident that your details will be kept secure when you use Nomey.
We use HTTPS protection on our site to encrypt your personal information and turn it into an unreadable code. This helps keep it secure as it’s sent from your computer or device to our website.
You can find more details about how we use your personal data in our privacy notice.
- Who are Nomey?
Nomey has been created by experienced Kiwi fintech innovators, Happy Prime. With over 100 years of combined experience within the New Zealand finance industry, we understand how finance works and how confusing it can be. We want to use our knowledge and skills to unjumble money to help all Kiwis be better off.