Tips and Insights

It might be helpful to get an indication as to what your borrowing capability is before going ahead with a building inspection or committing to a valuation.   Check out our calculators and look at your borrowing capability. 
 

You may need to budget for some upfront costs when buying a property. These may include inspection or valuation.  Make sure that you factor these into your budget. 
 

Banks will approve you for more than you can reasonably afford.  It is important to have a realistic budget and to plan on a higher interest rate.  This can avoid problems later. 
 

Although it’s called Character, the first principle has little to do with personality.  This really refers to reputation, reliability, credit history and track record to honour agreements and repay debt.
 
The Lender will access your background.

The Lender will look at your credit history and track record to date.  Other factors may include:

Your savings history and credit history
Your tax returns and financial history
Details of any previous loans you have paid off
Other factors such as your job, stability of employment, any reputational or legal issues
 
Tips & Helpful Information
Obtain a copy of your personal credit profile at:
 http://mycreditfile.co.nz/
 
Check your online reputation
 
 

Simplistically, this is the Borrower’s ability to repay the debt.  The Lender will assess the proposed Borrower’s ability to repay the debt by reviewing several items which will include:
 
        

Previous bank statements
Repayment of other loans
Details of your employment / self employed
Full details of your business, which are likely to include your profit and loss statements.

Note:  The Web Mortgages digital on-boarding system will greatly assist you in the above.  It will help present your situation in a positive and accurate format. 
 
It’s in the interest of both parties to ensure the Borrower can comfortably afford to repay the Loan without undue hardship.
 
Tips
Make sure you have all information that will be requested, including:

Three months of bank statements
Proof of income
Statement of Financial Position
If self-employed, Profit and Loss statements
 

Collateral is an item or asset of value that is typically used to secure the loan, such as property or business security. 
 
The Lender will typically take into account of the age and location and attributes of the Security offered.  

Typically for residential properties, the property itself will be the only security. 

You may be required to provide details of assets so the prospective Lender can determine its present and future value.

Tips

Create a balance sheet to identify your current assets and liabilities
Often a Registered Valuation is required, but not always
 

Lenders will look at the Borrower’s overall financial position including:

Assets and Liabilities
Net worth (assets after deducting liabilities)
Liquidity / cash flow
Details of any deposit or borrowers’ contribution they are able to make

Capital is the definition of security used if the Borrower finds they were unable to repay the Loan. 
 

Tip

Complete a budget/cash flow so that you can demonstrate for yourself that you are able to service the proposed repayments.