Easy Guide: How to Apply For a Home Loan

How to use a mortgage broker to apply for a home loan

Mortgage brokers are service providers that sit between lenders and borrowers. They can negotiate a loan on behalf of a borrower, and organise paperwork and other requirements for the borrower. There are a large number of companies and individuals operating in this space. Educational qualifications and industry experience can differ widely between brokers, so make sure to enquire about a broker’s qualifications and experience before engaging their services.

A mortgage broker must be an authorised Financial Advice Provider. You can check their credentials at the Financial Market Authority’s website.

It’s important to note that mortgage brokers usually don’t offer the full range of home loans in the market. Most are bound to a certain set of lenders. Mortgage brokers make their fees in a number of ways. So always ask what commissions or fees they earn from lenders, in addition to any charges you might be required to pay.

Typically, a mortgage broker will talk to you about your needs and your financial circumstances, and help you to determine what loan or loans could suit you. The broker then goes to the lenders (typically the ones on their books) and creates a list of options for you to consider. Once you choose a loan, the broker generally handles the application process (although you will most likely have to complete a number of forms and supply all necessary information). The broker will then also co-ordinate the financial settlement of your purchase.

What documents are needed when you apply for a home loan?

Different lenders require different documents. However, most lenders typically require some or all of the following:

Home loan document checklist

• Proof of identification – this will include a number of different types of ID, usually separated into primary and secondary ID. Primary ID usually includes a photo, such as a driver licence, or a passport. Secondary ID typically includes documents such as a birth certificate or marriage certificate. It could be a good idea to make sure you have:
  • at least one form of photographic ID, and
  • two or three secondary ID documents
• Proof of employment – this typically involves providing:
  • recent payslips,
  • and/or supplying bank statements of the account that your wage is paid into,
  • and/or a letter from your employer (especially if you are a casual employee, have an irregular income or are paid for piecework)
  • a lender can also ask to see tax returns (particularly if you are self-employed)
• Extra income and assets – this could include:
  • bank statements
  • share earnings reports
  • KiwiSaver
  • and any other proof of how your extra income is earned
  • a list of assets, which could include a car or house that you own outright. If you are a landlord, you may also be asked to provide a copy of any lease agreements you have in place
• Expenses – most lenders will also want to see what you spend, such as:
  • your household bills
  • what you pay in rent,
  • and to see your transaction account and credit card statements. If you are applying for a loan with a bank you use for most of your financial matters (such as transaction and savings accounts), they could source this information from your banking history
  • if you are renting, your lender may also ask for the contact details of your property manager or estate agent
• Debts – the lender will most likely do a credit check,
  • but will also require you to provide details of any loans you already have, such as car or personal loans
• What you want to buy or build – unless you are applying for pre-approval, the bank will need details of what you intend to buy or build. This is so the lender can perform a bank valuation (have its specialists take a look at the property to see if the amount you are paying is an acceptable risk to it).
  • if purchasing, they need a copy of the signed contract of sale
  • if building, they will need a copy of the construction contract and details of the land’s location and price.
• Insurance – some lenders may also require that you send them details of
  • any insurance policies you may hold, such as life insurance or home and contents insurance
• Deposit or grant help – if you’re getting help with your mortgage, the lender could also ask for details:
  • of your grant or KiwiSaver funds
  • if someone is giving you money to boost your deposit. For example, if a relative is gifting you funds for a deposit, a lender may require a letter from that relative detailing the conditions of that gift or loan (such as if you have to pay it back)
• Conveyancer’s or solicitor’s details – the bank or broker will also need to know:
  • who is doing your conveyancing – the legal work involved when buying a property. It could be a good idea to talk to your conveyancer about what level of involvement you need to have in the process, such as if you need to chase the bank or broker to find out if you have been approved, or if they will do that for you

As most loan approval processes are now handled online, it’s a good idea to have access to a document scanner or a smartphone with a high-resolution camera to allow you to send all documents to your lender or broker via email or their online application portals. It may be necessary, in some circumstances, to have a witness to your signature or copies of documents, such as a Justice of the Peace (the lender will likely have rules around this).

Usually, a lender will require documents presented in PDF format and photos in JPG (but they will let you know during the application process). Bank, share and KiwiSaver statements can typically be downloaded in PDF format from the organisations’ online portals.