Mortgage advice

Before you see an adviser, think about what matters most to you in a home loan. There are a range of options, features and characteristics of a loan that an adviser can walk you through and determine the best option for your circumstances. For example, do you simply want the lowest cost loan? Do you want specific features, such as being able to make extra repayments? How would you like to structure your home loan?

Thinking about your needs and what’s important to you beforehand will make the conversation with your adviser easier.

Ask questions. Lots of them. Ask them to explain how each loan option works, what it costs and why it's recommended to you. If you are not happy with any option, ask them to find an alternative.

Not all banks and lenders are the same, your mortgage adviser can explain the pros and cons of different options. You don't have to take the first loan you're offered. Taking out a mortgage can be a big decision, you want to ensure you get the best product that meets your needs and circumstances. Advisers often offer advice from more than one lender, you can ask them about the differences or why they have recommended a particular option for you.

A home loan is a long-term debt, so even a small difference in interest adds up over time. If you can get a lower interest rate from another lender, you could save thousands of dollars.

Be wary of short-term incentives such as cashback payments from banks – make sure the long-term fundamentals of the mortgage stack up. Incentives like these often have clauses requiring you as the borrower to be locked into a contract for a number of years. If you move banks or lenders you may have to pay some or all of this cash incentive back to the lender or the adviser.

Some mortgage advisers might also talk to you about KiwiSaver or insurance. Advisers may provide general information to you about KiwiSaver or insurance, but they can only provide advice on these products if they have the necessary knowledge, skills and competence. Advisers should advise you what their advice covers and what isn’t covered. If you need KiwiSaver or insurance advice and your mortgage adviser cannot provide it, they may refer you to another adviser who does specialise in these areas.

As your mortgage is a long term product, your adviser should clarify with you how often they will get in touch with you to review your circumstances. It’s important to get the most up to date advice on your mortgage, especially if something in your life has changed. Your mortgage adviser may review your situation from time to time to ensure the mortgage is still the most suitable for you. If you have questions or want a review of your situation you should reach out and contact your mortgage adviser to discuss.  

Most mortgage advisers work on commission. They usually receive a payment from the lender as a percentage of the total loan amount when you draw down on the loan, for example when you make your house purchase. They may also receive an ongoing periodic commission while you continue to hold the loan.

Sometimes, a mortgage adviser will charge you a fee directly — instead of, or as well as, the lender's commission, so it’s best to check this when you meet with them. Advisers are required to disclose to you how they are paid and how much you’ll need to pay and in what circumstances a fee (or an additional fee) arises.

Commissions can vary across lenders; some lenders pay higher commissions than others. This could influence the loans they recommend to you, however advisers should always prioritise your interests over their own when advising a loan product.

Generally speaking, most mortgage adviser do not charge an upfront fee to you if you are successful in getting a mortgage – as the adviser will be paid a commission by the lender. However, if your loan ends (or is moved to another lender) within a certain period, the lender may recoup some or all of the commission they paid to your mortgage adviser. In some cases, your adviser may then charge you a fee, where their commission has been ‘clawed back; by the lender. So you should be mindful of this and the implications of moving your loan. If there are situations where a claw back fee will be charged, your mortgage adviser must tell you about this up front, as part of their obligations to explain any fees and commissions that could apply if you decide to work with them.

You should note that cash back payments and commission ‘clawback payments’ are different, if you cancel your loan early or move to another lender early, you may be charged a fee for both of these instances.

If you're not sure whether you're getting a good deal, ask around or look online to see what other mortgage advisers charge. 

• Do you offer loans from a range of different lenders? 
• How do you get paid for the advice you're giving me? Does this differ between lenders? 
• Why did you recommend this loan to me? 
• Is this the most suitable option for me? 
• What fees will I have to pay when taking out this loan? 
• What features (options) come with this loan? Can you show me how they work? 
• Can you show me a couple more options, including one with the lowest cost? 
• What information do I need to provide for the loan application? 
• What happens if I close my loan account early or move to another lender, what fees might I have to pay? 

A written quote from a mortgage adviser should tell you about:

• the type of loan
• the loan amount
• the loan term (duration)
• the current interest rate
• fees you must pay (for example, broker's fee, loan-application fee, ongoing fees)

Make sure you're comfortable with what you're agreeing to. Ask more questions if there's anything you're not sure about.

Never sign blank forms or leave details for the adviser to fill in later. If you feel you're being pressured into signing, ask for more time to think about the loan. Or go to another adviser.