Finding the right New Zealand home loans is a process, and Info Credit Free wants to help readers along the way. Read these home loans in this article to find out how to get a mortgage.
In the previous post, we introduce to people about the no deposit home loans in Australia, the USA… The post today also offers information about home loans in another country that is New Zealand.
NEW ZEALAND HOME LOANS
Just like a lot of the previous posts about personal loans, credit card, insurance… the post today include some main parts. They are: What are New Zealand home loans?”, “The interest rates New Zealand home loans“, “Other home loan features” and “Some types of New Zealand home loans”.
1. What are New Zealand home loans?
A home loan is a loan that is given to you by a financial institution in exchange for the security of the property you are using the loan to buy a home loan, usually for a term of 25 or 30 years, with regular repayments – weekly or monthly – designed to pay off the loan during the term of the contract.
The home loan is secured against your property, so if you can not continue paying the loan, the lender can eventually ask you to sell the property to pay off the debt.
With property prices in New Zealand, a home loan is, in fact, the way most Kiwis will afford to buy a home.
2. The interest rates New Zealand home loans
2.1. What are home loan fees?
There are a number of fees which may apply to your home loan. Some common home loans are:
Account Keeping Fee: Account-keeping fee is a lump sum charge (usually monthly) to help cover the cost of managing the loan maintenance. It can be called a “service fees”.
Annual fees: Some lenders may charge an annual fee instead of continuous bank charge for certain mortgages. This can be a “package loan,” where some of your deposit and credit accounts, as well as your home loan, are “bundled” at an administrative cost.
Retirement Fee: If your home loan has a redevelopment facility (an agreement whereby you can redeem some or all advance mortgage payments), there may be a charge to do so.
Other special expenses may include loan application fees and valuation fees at the time of purchase of the property, deferred payment fees if you miss the repayment and discharging fee if you pay the mortgage early.
You should ask your lender for details of all applicable fees for your home loan.
2.2. What does a home loan cost?
| Home loan size at a commencement | Monthly repayment at 5.5% | Total cost over 25 years at 5.5% |
| $200,000 | $1,228 | $368,452 |
| $300,000 | $1,842 | $552,679 |
| $400,000 | $2,456 | $736,905 |
| $500,000 | $3,070 | $921,131 |
| $600,000 | $3,685 | $1,105,357 |
However, for purely illustrative purposes, this is a prime example of the nominal cost of a 25-year home loan with an interest rate of 5.50%.
2.4. Other home loan features
There are many different features that can be attached to your home loan. They may include:
- An account offset
- Base rendering
- The ability to pay extra
- The ability to split loan between fixed and variable
- The ability to switch to another type of loan
- The ability to pre-pay interest
- Online functions
- Lending terms, including LVR (loan rates and value)
- Ensure usability
3. Some types of New Zealand home loans
3.1 The fixed rate home loan
A fixed-rate home loan means “fixed” interest rates for a certain period of time – usually 1, 2, 3, 4 or 5 years. The fixed rate for home loans is currently low.
The main advantage of a fixed-rate loan is that it gives you the certainty of paying off a fixed-term loan; Because interest rates are guaranteed not to go up (or down) for a fixed period, it can be a way to budget your expenses.
The main disadvantage of a fixed-rate loan is not flexible: Usually, large additional payments cannot be made and you may have to pay a “breaking free” if you decide to sell before the end of fixed term.
3.2. The floating rate home loan
Floating rate loans means that interest rates will increase and decrease (very) throughout your home loan. This may react to movements at the official cash rate or may simply be the business decision of your financial institution.
The advantage of the floating-rate loans is flexibility. While people must meet the minimum monthly payment, people can usually pay more if people want to. People will not be penalized if they decide to sell the property and move. Read about potential cost penalties with other forms of home loan.
The disadvantage of a floating rate loan is that the minimum repayment amount can increase or decrease at any time. If people are on a tight budget, this can be a real problem for them.
3.3. The interest only home loan
A home loan is an interest-only loan, instead of interest and principal. This type of loan can be helpful for some investors who may claim this interest as a tax deduction, or the buyer only has a plan to hold the asset for a short time before the sale.
Home loans that are interest-only may not be a good idea for standard homebuyers simply wanting to pay less for their weekly repayments, as the smaller repayments are paid.
The greater the interest rate, the more you will probably pay the loan over the years. In general, interest-only home loans will have a short-term (1 to 5 years) before the loan is converted into principal and interest.
- From 3.55% to 5.44% per annum (p.a)
- APR: Max 8%/year
- A loan between 1-5 years
- Fees: Free profile and disbursement
Loan description table at Westpac NZ:
| Loan Amount |
Term of Loan |
Interest Rate (APR) | Expected Monthly Payment |
| $50.000 | 24 months | 5% | $2.291 |
Address Westpac and Call
- Address: Westpac New Zealand Ltd PO Box 934 Shortland Street Auckland 1140
- Call: 0800 177 277
3.4. The line of credit home loan
A line of credit is a loan based on the equity in your home. It gives you the ability and flexibility to access a loan at any time, up to the agreed limit and pay on a loan at any time. It is often not a loan that is set up to buy a property, but rather a set against the equity in an existing property.
To get more information about the home loans as well as mortgages loans in the New Zealand or other countries such as the US, Australia… the reader can read a lot of article in the category loans.
In addition, Info Credit free offered knowledge about insurance such as home insurance, travel insurance, as well as health insurance. To read more information about insurance, the readers can read a lot of articles in category Insurance of us.
Hillary (Team Content) – Info Credit Free