First Home Buyers

Buying your first home can be exciting but also confusing. We will help you through the process, dealing with the banks and paperwork. Read more for some of the most common questions asked by first home buyers to help you get a head start.

Q: What is a mortgage?
Q: How much can I borrow?
Q: How much will I need for a deposit?
Q: What level of income is required?
Q: What types of loans are available?
Q: What are different types of interest rates?
Q: Why do People use a mortgage broker?
Q: Why should I use a Mike Pero Mortgages broker?
Q: What does it cost to use a mortgage broker?
Q: Which banks do you deal with?

Q: What is a mortgage?

A: A mortgage is the amount of money borrowed (or loaned) against the security of a property or building. Home loans usually take the form of a mortgage.

The best way to find out all about them is to talk to a Mike Pero Mortgages broker. (They live and breathe mortgages - so you don't have to!)

Q: How much can I borrow?

A: It all depends on, the size of your deposit, whether you have any security in an existing home, your income and your credit history. Some home lenders will lend a maximum of 90-95% of market valuation of the house.

Q: How much will I need for a deposit?

A: Mortgage deposit requirements vary between lending institutions, types of loans, property types, and even location. For example, minimum deposits tend to be lower for owner-occupied properties compared with rentals and city properties compared with outlying areas. Revolving credit usually requires a larger deposit than other kinds of home loans.

Q: What level of income is required?

A: Most lending institutions require that your financial commitments (including your mortgage) shouldn't be greater than one third of your total income.

Use our mortgage calculator to help work out the possible size of your loan, based on current interest rates and a 25-year term. Please remember, this is only a rough guide - for a more accurate idea of your borrowing ability, talk to your local Mike Pero Mortgages broker.

Financial institutions will need to see proof of income to approve your loan. We can help you gather and present the relevant information.

Q: What types of loans are available?

A: There are lots of different home loan options available. Each has different structures, rates, and fees. Our goal is to find the best mortgage for your needs.

Some of the common ones are:

Table Loans: have repayments that remain constant at the level you choose. For the first few years, most of your repayment pays off interest and only a small amount is allocated to reducing principal. Over time, this changes so that later payments are mostly paying off principal.

Reducing Loans: your repayments change each payment period. Principal payments are constant, while interest payments gradually reduce. So your payments start relatively high and reduce over time.

Interest only: As the name suggests, on this loan, you only pay the interest - not the principal. Usually an interim measure, for example as bridging finance while another home is sold. Not advisable for most borrowers.

Transactional Loan: combines all your bank accounts in one - your savings and salary directly off-set your mortgage, reducing your interest.

Revolving credit: is a bit like an overdraft. Like a transactional loan, all your accounts are combined in one. Unlike a transaction loan, however, there is no forced reduction in your loan balance.

To discuss which loan type is best for your needs, call your local Mike Pero Mortgages brokers.

Q: What are different types of interest rates?

A: Floating Rate (or Variable Rate): Great for people who need the flexibility to make lump sum payments, or to repay the whole mortgage, without being committed to specific term or conditions.

Fixed Rate: Best if you like to know exactly what your mortgage repayments over a set period.

Capped Rate: This gives you the security of knowing what your maximum rate is, but if the floating rate drops below the capped rate, your interest drops too. And there's usually no penalty for paying off lump sums, repaying the whole loan, or for increasing re-payments.

Combination or Split Rate: Some people find this is the best of both worlds - the advantages of a fixed rate but with the option of making lump sum repayments if you want to.

Q: Why do People use a mortgage broker?

A: Because one size does not fit all, looking at the options and having some choice is an important part of getting the right mortgage.

Unlike a bank, we have a wide range of options to suit a wide variety of circumstances. Perhaps your bank has a good solution but you won't know that unless you compare it with some others. That's our job and we do it every day.

Our Mortgage Specialists can generally suggest a choice of options for you to consider but your bank won't sell anything but its own products tied to its own credit criteria. This might not suit you. Also, you don't want to be told at the last minute, "sorry, we can't help you". This can be very stressful, and it is unnecessary. Using a top quality mortgage broker is the answer.

A good mortgage broker should know whether an offer is competitive and will negotiate a fair deal, so you'll usually get a better deal by using a broker than you would by dealing direct. This won't cost you anything and the benefits of any negotiations are yours.

Q: Why should I use a Mike Pero Mortgages broker?

A:There are clear benefits to using a Mike Pero Mortgages broker:

1. We offer you a wider choice of home loans than the banks.

We analyse literally hundreds of loans from up to 21 lenders, if you go to your bank you will be limited to the bank's own home loan products.

2. Our service will save you time

We will save you time by doing the research for you, shortlisting the home loans that best meet your needs and completing the paperwork for you.

3. Whatever your situation we can help you arrange themost suitable loan for your situation.

Whether you are a first home buyer, investor or you are interested in refinancing we will help you find the loan that's right for you. At Mike Pero Mortgages we recognise that no two customers are the same, so we take the time to assess your individual needs and help you find the loan that works for you.

4. We will meet you at your convenience.
Let us do the legwork and meet you at a time and place that suits you, it's easy.

5. We are home loan specialists, we know how to help you.
Home loans is what we've been doing for over 16 years, with this kind of experience and focus you can be sure that you're in safe hands.

Q: What does it cost to use a mortgage broker?

A: There is no charge to use the services of a Mike Pero Mortgages broker - as our advice is absolutely free! We are paid a commission by the banks for providing you as a client to them.

Q: Which banks do you deal with?

A: We deal with most of the major lenders as well as number of second tier lenders. These lenders include: ASB, Westpac, National, ANZ, SBS, NZF, Sovereign.. to name a few.

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If you have a question you would like answered please ask us or ring us any time on 0800 500 123.