It’s not often that acquiring a large mortgage is fun. In general, it’s no fun at all. But following our rule of working with people we like, we have the pleasure of introducing Chris Henry at this point. Chris is a financial consultant/business owner for NZ Home Loans.
Last time we had a mortgage, we went into the bank, met with a bank manager and generally tried to convince he/she that we were law abiding, responsible citizens. Since then, things have changed and banks have roving people who come to you. Before we started our build journey we met with a bank representative from our then-bank and confirmed that we could, again, borrow vast sums of money and pay it back over the next 30 years; by which time I would only be a youthful 70 years old and still working….
NZ Home Loans http://www.nzhomeloans.co.nz/ hooked us with their pitch of paying your loan back more quickly. Sounds too good to be true we thought, so with our scam-alert-radar set on high, we proceeded to explore.
New Zealand Home Loans is 100% New Zealand owned and operated and its parent company is Kiwi Group Holdings Limited (also the parent company of Kiwibank). New Zealand Home Loans works with you to develop personalised plans.
So, enter Chris, for his first and not last, long meeting over wine at our house. Long was our fault, not his. Valiantly he tried to explain how the loan structure worked and went into a great level of detail about the bucket system of borrowing. Essentially the mortgage is linked to all our bank accounts and instead of calculating the interest we owe based on the total amount we’ve borrowed, interest is based on the total amount borrowed minus however much is held in our linked accounts. This is all managed via a system called DebtNav – and currently our DebtNav shows us paying off our full loan within 11 years!
The NZ Home Loan structure for new builds follows the usual process, where the first step is to get a valuation from a registered valuer off the house plans. This is of course to confirm that you are not borrowing more than the house and land is worth. We selected a valuer recommended by Trevor, and nervously waited for the results. Worst case scenario then unfolded. The draft valuation was presented to us and it was less than the build cost. This could be the end of everything. Disaster.
What unfolded was an interesting exchange with the valuer. It was his view that we were under capitalising on our land by building a small but highly spec’d home. We explained that we were quite specific on those requirements, that we wanted to enjoy the land, that a smaller, architecturally inspired and high standard home was exactly what we wanted, and was consistent with high value builds elsewhere around the country. We also argued that having two mature rimu within the build site was valuable (a conservative $10k each), but his view was that they were simply a constraint. This was clearly not a marriage made in heaven and subject to the final valuation, our choices looked relatively bleak (a) finding another valuer who may have a different view, (b) redesigning. Both options would come at a cost and with no guaranteed outcome. Anyway, anxiously we waited on the final valuation.
To Chris, if you’re reading this, it’s okay 🙂 full professional valuation ethics were upheld at all times, and the end result was a valuation that matched our fixed price spend. According to the valuer, he had missed a few key components such as decking and the garage….we suspect a conversation with Trevor helped the situation, probably more so than had ours. Whatever the reason, 1+1 finally equalled two.
Now that our build is underway and we’re the proud parents of an ever-increasing mortgage, we have to give a huge shout out to Chris and the NZ Home loans team, the speed of the payments has been phenomenal, even two days before Christmas the team arranged a significant draw down (roof and framing!) so we could pay straight away.