Money, money, money: What to ask a lender when you want a mortgage
Buyers | 20 December 2018
By the settled.govt.nz team
Learn what you need to know about how mortgages are calculated and how much you can borrow when buying a home.
So you’ve been sacrificing that extra latte each week, your clothes are all ‘vintage’ and you haven’t upgraded your mobile phone in 10 years. Is it time to buy a house with all those extra savings? Check out our quick and basic mortgage calculator to see how much you could afford to repay each week.
Most mortgages involve an interest rate and a set loan period. You can use our mortgage calculator to work out how much you would need to pay back weekly, fortnightly, monthly or yearly.
How much you can borrow depends on several things. A lender will want to be sure that you can keep up with repaying a loan, so they’ll look at your current income (and expenses) before deciding how much they will lend you. They’ll also want to know about the property you’re keen to buy so they can assess whether it’s worth the money you want to borrow for it.
There are four main types of mortgages used by New Zealand home buyers:
There are two main types of interest rates: fixed and floating. You can do one or the other – or split your loan between the two.
You can fix the interest rate you pay for a period of six months to five years. At the end of the term, you can choose to re-fix again for a new term or move to a floating rate.
With a floating rate mortgage, the interest charged on your loan can go up or down as the market interest rates change – and your repayment amounts will increase or decrease accordingly.
Even increasing repayments by the equivalent of $25 a week may save thousands of dollars in interest – and take months or even years off your mortgage! Sorted.org.nz offers top mortgage strategies and excellent tips for managing your mortgage.
While interest rates have remained low over the last few years, it won’t stay that way forever. Consider the worst case scenario as well as current interest rates when using the mortgage calculator, to ensure you’ll still be able to afford your mortgage repayments, even if interest rates rise. Once you get your foot in the door, you’ll want to keep it there!