TONI DAWSON, a fully qualified Mortgage Advisor, with more than 15 years’ industry experience, shares her expertise.
Spring is just around the corner, and for many, that means the start of a busy selling season in real estate.
If you’re hoping to find your first home, your next home or maybe even a rental or holiday home, getting a pre-approval sorted now can make a huge difference.
Think of a pre-approval as getting a head start. It means you understand your budget clearly, so you can shop with real confidence.
Not only that, sellers and real estate agents know you’re a serious buyer, which can give you an edge when you find a property you love. Plus, it can really speed up the process once you make an offer.
Being prepared means you can act quickly and confidently when the right property comes to market.
Reach out to start your journey!
Loan to Value Ratio
Ever heard of a Loan to Value Ratio, or LVR? It’s a key term when you’re looking at buying and understanding it can really empower your property journey.
Simply put, your LVR is the amount you borrow compared to the value of the property. For example, if your home is valued at $1 million and you borrow $800,000, your LVR is 80 per cent.
Flipped on its head, it means you have a 20 per cent deposit or 20 per cent equity in the property.
The Reserve Bank of NZ sometimes uses the Loan to Value Ratio as a tool to cool down or stimulate the property market – in addition to the Debt to Income Ratio (DTI) and the Official Cash Rate (OCR).
The lower your LVR, the cheaper your home loan might be and the more bargaining power you might have. If your LVR is high (e.g. over 80 per cent), you may need to pay a Low Equity Margin on top of your interest rate, making borrowing more expensive.
- Toni Dawson, NZCFS Level 5, BBS, GradDipBusStuds (Personal Financial Planning) FSP1000506, phone 027 646 9269, at 38A Wakelin Road, Beachlands 2018.
- https://loanmarket.co.nz/toni-dawson/
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