Everyone knows that you can borrow money from the bank to buy a house. But there are lots of other places that you can go if you want to work with a financial institution.

This article will walk you through what grants and lenders exist and the pros and cons of each.

Mortgages from a bank

There are actually 15 banks from which you can get a mortgage from in New Zealand. Most get their mortgage from ANZ, ASB, BNZ, Westpac and Kiwibank. There is also Heartland, Co-operative, SBS, Kookmin, Bank of Baroda, Bank of China, China Construction Bank, HSBC, TSB and ICBC.

Banks typically offer five different types of loans:

  1. Table Home Loans
  2. Reducing Balance Home Loans
  3. Revolving Credit Home Loans
  4. Offset Mortgages
  5. Interest-Only Home Loans

Table Home Loans

Table Home Loans is what most people choose. It has a regular structure and terms of up to 30 years. You make both interest and principal payments at regular intervals. These are typically weekly, fortnightly or monthly. When you start, your payments mostly cover the interest. Over time, you cover more and more of your principal.

The advantage of table home loans is that it is easy to understand when you will pay off your loan and you can budget for your repayments. But the advantages may also be disadvantages for some people. For example, if you are a freelancer or contractor and have lumpy income, it can be hard to keep up with the payments. You can also be charged for over-payments or early repayments.

Before you sign up to a table home loan, you should consider your financial position. If you want more cash on hand in the short term, you might want to have a 30 year term. But the sacrifice you will have to make is that you will pay more interest.