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loan-types

Revolving Credit

A revolving credit home loan offers you flexibility when it comes to your home loan. Essentially functioning as an overdraft on your everyday transactional account, a revolving credit loan allows you to access any available funds easily and gives you the flexibility to make one-off lump sum payments whenever you choose.

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Fixed Rate

A fixed rate home loan is just that: a mortgage rate that is locked in for a fixed term of between six months and five years and gives you the certainty of knowing exactly what your repayments will be over the life of the fixed term. Even if interest rates go up during this time, your rate and repayments will remain unchanged. It’s important to remember, however, that you may not be able to take advantage of any drops in interest rates during your fixed term without facing banks’ fees and any associated charges.


Floating

Like the revolving credit home loan, a floating interest rate also offers a lot of flexibility when it comes to your mortgage repayments. With this type of loan, your interest rate will rise and fall to mirror any major changes in the market. You also have the flexibility to pay off your loan as quickly as you wish without being stung by banks’ fees.

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LIM Report

A LIM (Land Information Management) report is a comprehensive report that gives you, as a buyer, all historical and current information available on a property. It includes details relevant to the property including Resource Consents, drainage, potential erosion or slippage issues, certificates or requisitions that may affect the property, valuation data and rates.

 


Tender

Buying a property by tender is the most common way of purchasing a property in New Zealand. This process involves you, as a potential buyer, putting forward a confidential offer via the seller’s agent for the seller to consider. You are able to attach conditions to the offer you submit, which may include a valuation, finance or a property inspection report if these have not been completed before your offer submission. There is no reserve price when it comes to a tender, however the seller has the right to reject all offers if he or she wishes to. It is possible for the buyer and seller to negotiate price once the tender has been submitted, which is usually done via the seller’s listing agent.

 


Auction

If you are thinking of buying a property via auction, there are a few things you will need to keep in mind. Unlike a sale by tender, all auction purchases are unconditional, meaning that if your bid is accepted the sale must go ahead. It is therefore crucial that you do all of the necessary research on the property you are interested in purchasing before the auction takes place, including organising any finance you may need.

 


Property Inspection Report

A property inspection report, or building report, is carried out on a property by a qualified building inspector, usually at the potential buyer’s request. This report will give you details around the condition of the property and its materials, any structural issues, and help you assess whether the property is a sound investment.

 


Title Search

In most cases a title search is carried out by your lawyer on your behalf. The agent listing the property should also have a copy of this report. It includes information such as the legal description and owner(s) of the property, and any restrictions on the property (for example easement, covenant and/or mortgage).

 


Private Sale

While in most cases a property will be bought or sold via a real estate agent and agency, it is possible to bypass this and instead arrange the purchase or sale of a property directly between the seller and buyer. Selling a home privately means no listing or other agency fees for the seller, but does require them to value their own property, set a sale price, advertise and negotiate price with any potential buyers.

 


Sale and Purchase Agreement

A sale and purchase agreement is a legal contract that outlines the agreed terms and conditions of the sale/purchase of a property. It will include any conditions of sale set out by the buyer/seller, the settlement date, details of the deposit to be made by the buyer, any chattels included in the sale and the price agreed upon by both parties.

 


Conditional vs Unconditional

Real estate agents and mortgage brokers often talk about purchase or sale going unconditional. This means that all or any conditions imposed by the prospective buyer at the time of submitting an offer have been fulfilled. Conditions that can be enforced may include the offer being subject to finance, a LIM or property inspection report, or subject to the purchaser’s home being sold. Once all of these requirements have been met, the purchase will go unconditional and be ready to settle.

 

Calculators

Find out what different interest rate strategies could mean for your mortgage and budget.

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