by Paul McBeth
What a great response to our story "Mortgage for a single mother", which ran on Wednesday. As we've had so many replies, we've sent them all on to our reader in the United Arab Emirates and chosen a few to run below.
The first reply in - and the longest! - was from Peter Thornbury, Spokesman for WestpacTrust:
The main criteria WestpacTrust uses in any loan application is the ability to service the debt. When applying we would need information about her income, such as proof of level of child support payments and their regularity going back in time and any agreements on future payments: the more information the better.
Assuming there are no problems there and that she meets all our other usual credit criteria, then there are no barriers to getting a loan from WestpacTrust. Her high level of equity would be viewed positively by WestpacTrust, as a smaller loan is more affordable and gives her flexibility if any problems arise.
She can start arranging a pre-approval via our Telesales group while she is in the UAE: that will give her a good idea of how much she can afford. The easiest way to get in touch with Telesales is probably to visit our website at www.westpactrust.co.nz, click on Home Loans and enter the details for the Telesales team to contact her via email.
There are also calculators on the site which can give an idea of
affordability and interest rates. She may also want to check out the "Save 40 per cent" section as that will take her through the range of repayment options available to her that can result in her saving on her interest costs.
As to her eligibility for income support in New Zealand, she should check www.winz.govt.nz and the "Get Financial Assistance" section.
We would also encourage her to consider all the additional living costs she faces, especially as she is returning to NZ and may need to buy items like a car. There are also the items she will need to adequately furnish a home, moving costs, insurances etc plus ongoing rates and maintenance. These can add ten per cent or more onto the basic cost of a home so she needs to consider having a financial buffer. This may be in the form of a flexible home loan
which allows her to draw down money when needed or perhaps having a slightly lower deposit. WestpacTrust can advise what is the most appropriate in her circumstances.
She also needs to think about insurance - loan repayment, car, contents and building etc. WestpacTrust offers discounts on other insurances for customers who take home insurance with us. She may also want to consider life insurance.
She should also look at updating her will to ensure that her new financial and property situation is covered and that the people she wants to benefit from her estate are catered for. The same goes with insurance - make sure it is the right type (ie if she just wants it to pay off her home loan then get something like WestpacTrust Flexicover which is a mortgage repayment insurance. If she wants to leave money for her daughter then term life insurance may be more appropriate). Ensure that in any policy it is clear who the beneficiary of any insurance is to be.
And, before she returns, there are a number of real estate sites that she can use to research the range and prices of properties in Auckland. Sites include www.realenz.co.nz, http://nz.com/realestate, http://home.buyers.co.nz and www.realestate.co.nz.
Carolyne Saggers:
No problem.
I often do mortgage loans for single parents. Most would be in a less favourable financial position than yourself. There would only be one requirement, and that would be proof of your income, ie evidence of receipt of maintenance or part-time work income.
Gone are the days that banks would not consider solo parents for mortgage loans. I am a single parent, self-employed and have had mortgage loans for quite a few years!
Paul Lange, from mortgage bankers Cairns Lockie:
Cairns Lockie would have no problems lending to this woman based on the information mentioned. We have approved several loans for New Zealand citiznes living overseas or just returning to New Zealand.
We would have to be satisfied that the loan can be adequately serviced. At an LVR of 25 per cent, our risk would be minimal.
Lindsay Hore, National Manager Mortgage Services, Forsyth Barr:
I would suggest that she perhaps look at putting say 65 per cent into the purchase and the remaining ten per cent is offered to the lender (likely a traditional bank) as a term deposit with a deed of lien (or charge over the funds). This way, it is a carrot for the bank in that, if they had to sell the property, then the bank's interest and costs would be covered.
She would get the interest from the term deposit and, as long as she never defaulted, the money would remain hers.
As long as she has a history of her ex-husband's maintenance or a legal agreement from her ex-husband/lawyer, then it would likely be considered.
At the end of the day, by having a 75 per cent deposit, she is realistically zero risk to the bank.
Bevan Pierce, Accountant:
I have worked with The Mortgage Shop in Christchurch and they have a very good range of mortgage products that can be tailored to meet any situation whatsoever. Your query does not mention the anticipated level of income or spousal maintenance payments. This is relatively unimportant, as the lady mentions that she has good equity (I suppose that, coming from London, she will have an idea of the costs of property in Auckland when she mentions she will have 75 per cent equity).
Anyway, please contact Owen at The Mortgage Shop. I am absolutely certain he can make satisfactory arrangements even though your enquirer is in UAE and is returning to Auckland. I returned from the UK a couple of years ago and found Owen to be very good, extremely flexible and quite innovative in his suggested solutions to my own finance issues.