Are You Smarter Than A Mortgage Adviser?

1. In mortgage terms, what does LVR stand for?

Low Value Residence

Loan to Value Ratio

Looking Very Ridiculous

Lending Via Relations

LVR stands for Loan to Value Ratio. It is the amount of your loan compared to the value of your property. So, if your mortgage is $400,000 and your house is worth $500,000, then your LVR is 80%.

Explanation

LVR stands for Loan to Value Ratio. It is the amount of your loan compared to the value of your property. So, if your mortgage is $400,000 and your house is worth $500,000, then your LVR is 80%.

2. Your client has a small, unpaid default on their Credit Report. Is it still possible for them to get a mortgage?

Nope. They're out of the market for life.

Their only option is to wait until their Credit Report is clear

Yes, if they are willing to pay a higher interest rate

There are lenders who, for a slightly higher interest rate, will lend to customers with bad credit. The interest rate will depend on how bad their report is. Buyers should automatically discount this. If they are buying sensibly, the additional interest can be worthwhile versus missing out on capital growth or a good opportunity.

Explanation

There are lenders who, for a slightly higher interest rate, will lend to customers with bad credit. The interest rate will depend on how bad their report is. Buyers should automatically discount this. If they are buying sensibly, the additional interest can be worthwhile versus missing out on capital growth or a good opportunity.

3. Your client is buying a house for $632,000. They tell you they have exactly 20% to use as a deposit. How much do they have?

$63,200

$126,400

$12,640

Not enough info

20% of $632,000 is $126,400.
A deposit can be made up of equity in a current property, cash savings, gifts from family, KiwiSaver (under certain circumstances) and the HomeStart Grant.

Explanation

20% of $632,000 is $126,400.
A deposit can be made up of equity in a current property, cash savings, gifts from family, KiwiSaver (under certain circumstances) and the HomeStart Grant.

4. A Mortgage Adviser should (choose 2 options)

Launder your ill-gotten gains into a tax haven

Reduce stress throughout the mortgage process

Guide you to the right bank for your needs

Contract bind you into inescapable debt

A Mortgage Adviser should reduce stress throughout the mortgage process by providing guidance and support to the client. They should also guide the client to the right bank for their needs, ensuring that they find the most suitable mortgage option.

Explanation

A Mortgage Adviser should reduce stress throughout the mortgage process by providing guidance and support to the client. They should also guide the client to the right bank for their needs, ensuring that they find the most suitable mortgage option.

Submit

5. Do you have to buy Life and Health insurance from the same bank you have your mortgage with?

Yes, this is a requirement of getting a mortgage from the banks

No, the bank does not require you to get Life and Health insurance

Life and Health insurance is a very good idea when you have a mortgage. However, it is not a pre-requisite to getting a loan (otherwise customers with existing health problems wouldn't be able to get mortgages). It is best to use an Insurance Adviser when you are getting a new policy to make sure you are going to the best insurance company for your needs.

Explanation

Life and Health insurance is a very good idea when you have a mortgage. However, it is not a pre-requisite to getting a loan (otherwise customers with existing health problems wouldn't be able to get mortgages). It is best to use an Insurance Adviser when you are getting a new policy to make sure you are going to the best insurance company for your needs.

6. Which type of apartment is easier to get a mortgage on?

Freehold

Leasehold

Apartments can be Leasehold or Freehold. Generally, if you are buying a leasehold apartment, you aren't buying the land and are required to pay rent to the land owner. This increases over the years and can lead to the apartment decreasing in value if that rent becomes too high. Leasehold apartments are therefore often cheaper than freehold but banks are a little more nervous to lend against them.

Explanation

Apartments can be Leasehold or Freehold. Generally, if you are buying a leasehold apartment, you aren't buying the land and are required to pay rent to the land owner. This increases over the years and can lead to the apartment decreasing in value if that rent becomes too high. Leasehold apartments are therefore often cheaper than freehold but banks are a little more nervous to lend against them.