Questions you may have

Buying a new home is an exciting time … but along with the excitement you can expect to have lots of questions which need answers. We have attempted to answer some of the questions you may have below.

If you have a question which you would like answered, and it does not appear below, please feel free to contact us and we will be happy to answer it for you.

What is the cost for using Len Oughton Mortgage Services?

The lender pays the Financial Adviser a commission for arranging the loan, so there is no cost to you unless your proposal is a complex loan or a commercial loan, in which case an agreed fee will be charged. See Commercial Finance.

What are the benefits of using a Financial Adviser?

Mortgages can be complex and there are many different types of home loans available from a large number of competitive lenders. LOMS helps you to choose a home loan that is suitable and appropriate to meet your needs. We save you time and money by working with you.

What amount of deposit do I need?

Depending on where you live, your income and credit rating you will generally need a minimum 5% saved deposit. You are allowed family arrangements above this towards your deposit. LOMS has access to  lenders who will lend up to 90%.

How much will I be able to borrow towards buying a home?

Generally, you should only borrow what you can afford. Everyone’s circumstances are different, therefore difficult to calculate accurately. Only knowledge and experience will provide a sound assessment on how much you can borrow.
The best way to find out how much you can borrow is to get a loan pre-approval, even before you start looking for a property. It’s easy and the most stress free way to embark on your property purchase.

Having your loan approved before you find a property not only gives you peace of mind, and a limit to work with, but also gives you the power of a cash buyer, and is a great step toward buying the right house at the right price.

By arranging a loan pre-approval prior to looking for a home you could save a lot of time and money.

You may also wish to use our mortgage calculator to see what your estimated payments might be.

Are there any additional costs I should budget for when buying a property?

Listed below are fees you may incur, and others which can be avoided. This is dependant upon the lender and/or your own personal circumstances.
Solicitors Fees $1000 – $2000
Registered Valuation $500
Establishment Fee $0 – 2%
LIM Report $100 – $170
Builders Report $500 – $700
(Prices may vary between Industry Professionals)
Lenders may charge a “Low Equity Premium” or commonly referred to as a “Lenders Mortgage Insurance.” This simply means that if you borrow over 80 percent, most lenders require such an insurance which exclusively covers the lender’s risk.
In most cases this fee may be capitalised to the loan.

What are the different types of mortgages?

Fixed / Floating
Interest Only
Capped Rate Loan
Revolving Credit Home Loan
Conforming and Non-Conforming
Reverse Equity Mortgage

What is the difference between a Fixed Rate and a Floating Rate Mortgage?

A fixed rate mortgage is a loan where the interest rate is fixed and set for an agreed period of time, i.e.; 1 year to 5 years. This locks your monthly payments for this term.
A floating rate mortgage permits the lender to adjust the interest rate from time to time during the term of a loan. This means that the borrower pays the mortgage interest rate as it moves up or down based on changes in the market and economy. The mortgage rate generally changes when the Reserve Bank of NZ makes changes to the Official Cash Rate.

What is an Interest Only loan?

An interest only mortgage is when the payments required, consists of interest only.
The option to pay interest only lasts for a specified period, generally between 1 – 5 years. Borrowers have the right to pay more than interest if they so wish.
If the borrower decides to exercise the interest-only option, the payments will not include principal. The loan balance remains unchanged.

The “interest only” option is often utilised when purchasing a rental property, and do-up properties that are on-sold.

What is a Capped Rate Loan?

With a capped interest rate, the rate can’t go above a certain level for a set period – but it can come down.
With a capped loan you also have the flexibility to change your payments or to pay all or part of your loan back at any time with no costs to you.

What is a Revolving Credit Loan?

This challenges traditional thinking about home loans which puts financial control into your hands – hence you need to be disciplined, and if you are not disciplined, this loan may not be for you.

This loan combines all your transactional accounts into one i.e. mortgage, cheque and savings. This account often has the same functionality as with normal accounts.

What is a Reverse Equity Mortgage?

A reverse mortgage is an option for the elderly who no longer work yet own their own home. This loan is based on the value of a home, and requires no monthly payments until the owner moves or dies.

A reverse mortgage is relatively painless and requires no income. Borrowers who would not meet the criteria for many other loans would still be able to acquire a reverse mortgage.

The right type of mortgage depends on many factors including;

– Your financial status
– How long you intend to keep your home
– How comfortable you are with your mortgage payments changing periodically
– How you manage risk

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