Getting a mortgage in New Zealand

Arranging a New Zealand Mortgage

The New Zealand mortgage market is pretty similar to the UK mortgage market – with a few interesting differences. Find out what you need to know before you apply for your New Zealand mortgage.

Almost all New Zealand mortgages are repayment mortgages, where your monthly repayment comprises interest and some principal. Typically these are taken out over a 25 or even 30 year term. Fixed rate mortgages have become very popular, and other types of mortgage (such as revolving credit mortgages) are also available.

Interest Rates

New Zealand mortgage interest rates are several per cent higher than in the UK. Interest rates both for borrowing and lending are based on the Official Cash Rate, which is historically higher than in the UK – New Zealand maintains a higher interest rate to maintain its competitiveness in international capital markets.

Lending Criteria

UK banks have traditionally relied on income multiples when deciding how much they will lend. Your income will still be taken into account by a New Zealand lender, but New Zealand banks also take into account a number of other factors, including:

  • affordability – how much income is available after a client has paid their bills each month
  • character of a borrower (what their past banking conduct has been like, credit checks etc)
  • the type of property
  • how much of a deposit the borrower is putting towards the property (banks prefer a 20% deposit)
  • whether the borrower has accrued the deposit by their own volition or if it is borrowed or gifted

Mortgages for New Zealand Migrants

New Zealand banks are generally still happy to lend to migrants with a short banking history in New Zealand. As ever, a good wodge of paperwork supporting your application may smooth the way – we suggest that you bring:

  • evidence of income (generally an employment contract)
  • copies of ID – passport, drivers licence etc.
  • bank statements (at least 3-6 months worth)
  • proof of deposit
  • if you don’t have a Permanent Residence visa be prepared to supply information on the progress of your application
  • some other evidence of your financial history – mortgage statements, credit card statements, credit check reports etc.

Above all, you need to make sure that this paperwork is on hand rather than stuck in your container on the high seas when you are applying for a mortgage! (Though you shouldn’t despair if you are in this position – there is often a good range of paperwork that you compile if you have set up internet access to your UK bank account.)

Get expert advice on your New Zealand Mortgage

There are a number of banks and other lenders who offer mortgages in New Zealand. Their rates change quite frequently and their products all have subtle differences – the kind of differences that can add up to significant amounts over the term of a mortgage. We suggest that you contact a specialist mortgage adviser when you are looking at taking out or renewing your mortgage.

A good mortgage adviser will have an in-depth knowledge of the mortgage market, a good understanding of your requirements and circumstances, and relationships with key lenders. This can save you time and hassle, and means that you will get the right mortgage for your needs. You may even be offered better terms than you would receive if you approached a bank direct.

We can introduce you to some fantastic mortgage specialists – professionals who we have worked with for years who you can trust to have your best interests at heart. Please contact us to find out more.

To find out more, request a free copy of our Financial and Pension guides for New Zealand.