You can apply online now, or call us seven days a week on 0800 212 230. We can do everything over the phone, meet in our offices in Auckland or Bay of Plenty – or we’ll come out to see you.
What is a pre-approval?
With a pre-approval you haven’t borrowed any money or bought anything yet – it’s just the bank saying they’re happy to lend to you under a few conditions – normally this is a valuation on the house you’re thinking of buying. A pre-approval is a great way of getting ready to snap up the right house when you find it – you’ll know how much you can borrow and be in a better position to negotiate. Get pre-approved for your mortgage now.
How fast is it to get finance?
It normally takes less than three days to arrange finance but it pays to get organised ahead of time. Every now and then, the banks can be a bit slow, especially if the mortgage is over 80% of the property’s value. So, if you are borrowing over 80%, allow for 5-7 working days to get an approval. Bottom line is, the earlier you talk to us and get things rolling the easier it’ll be for all.
What paperwork is required?
Quite a bit, but we try and reduce it for you. First you have to fill out a form with all your assets, debts, income and expenses. You’ll need to prove your income, that you have a deposit saved and three months of bank statements. The bank and your Squirrel mortgage advisor might also run credit checks.
Will I be able to get a loan?
Short answer: probably. Lending criteria is different from bank to bank so we’ll help you shop around for the best deal. If you go direct to your bank you’ll have less chance of securing the right loan (or any at all) because they can only give you one solution.
Can I borrow over 80%?
Yes, if you have a good income and no other debts. Below 80% you can borrow 5x your income. At 90% you can only borrow 4x your income because the lender will make you pay off your mortgage faster.
Borrowing over 80% also costs more. The bank will either charge you a fee of up to 2.5% of the mortgage value or they’ll add a premium to your mortgage rate which will be 0.50%-1.00% more than a standard rate. The fee can be added to your mortgage so you don’t need to find the cash right away.
A registered valuation will also be compulsory, which will cost around $500 and you’ll need ongoing mortgage or income protection insurance. One of our insurance advisers can help you organise your insurance.
What if I’m self employed or a contractor?
If you’re self employed or a contractor there are a few more hoops you’ll have to jump through. To borrow over 70%, you need to have been doing what you do for more than two years and have a record of your earnings. If you have low expenses and work in an industry that regularly uses contractors, like project management, IT or film, the bank will be more flexible, but will still usually need a 15%-20% deposit.
How can I use guarantors?
If you have less than a 20% deposit your family can guarantee the difference. This is limited to a maximum of 20% so Mum and Dad won’t risk losing everything if you fall over. Read more about mortgage guarantees
How do second mortgages work?
Essentially it’s putting two mortgages in place. The first is for 80% of the property, with a small second mortgage for a further 10%. This can be a very cost effective (and flexible) way of borrowing. We still do second mortgages but the market has become a lot tougher.
What is vendor finance?
Vendor finance is where the seller leaves equity in the property (as a second mortgage.) It is a loan that you’ll have to pay back. Ideally the vendor finance is charged at a market interest rate. Vendor finance is trickier and only really works for people with no deposit but high incomes and no other debts. Read more about vendor finance.
How much can I borrow to buy an apartment, townhouse or bare land?
The maximum amount that can be borrowed for apartments, townhouses, and lifestyle blocks is 80% of the property value. With bare land it varies between 70% and 80% depending on the lender and location. Lifestyle blocks must be less than 10 hectares.
Building a new house
If you are building a new house you’ll find most lenders will only go up to 80%, but we can often sort you out with up to 90%. With a new build you should get a fixed price contract with a master or certified builder so their work will be guaranteed.
Before the mortgage is fully approved you will need to get a registered valuation. Then along with the builder and the lender, we’ll work out when progress payments will be made during the build. At each stage the bank may ask for an updated “as is” valuation. This is them checking that you haven’t blown the budget – you’ll need to stay below the lender’s loan-to-value cap (generally 80%) throughout the build.
Most banks lend against the project cost. Sovereign is a bit different and lets us use an acquisition price that makes allowance for “reserves” and interest capitalisation. This makes them a good choice for these types of mortgages.
What if I don’t live in New Zealand?
If you’re a non-resident you’ll only be able to borrow 70% of the property value. If you work in NZ but don’t have permanent residency your maximum borrowing will be 80%.