Choosing the right lender can save you thousands of dollars over the life of your loan. Here are 9 must-ask questions to help get you started.

1. How much can I borrow?
This is the big question. First, consider how much you can afford to borrow. Sit down with your lender and calculate the total amount you can reasonably devote to mortgage repayments.

2. Fixed, variable or split?
There are three main choices when it comes to home loan interest rates. Most Kiwis prefer fixed interest rate loans as they offer greater certainty. Fixed rate terms usually range from six months to five years. Remember, however, that the fixed rate term is not necessarily the same as the loan term. So you might choose a 30-year home loan with the first five years on a fixed interest rate.

With a variable rate home loan, the interest rate rises and falls in line with movements in official interest rates. This can lead to savings when rates are falling, however borrowers also need to factor in rate rises.

If you’re unsure about rates, or if you want to take advantage of the different features offered by fixed and variable loan types, you can usually ‘split’ your total loan into a variable and a fixed rate portion.

3. What deposit will I need?
Lenders typically let you borrow up to 95% of the value of a property, which means you need a large enough deposit to cover the remaining value. How much you will be allowed to borrow will depend on a range of factors including your credit history, the value of the property, location, and your financial circumstances.

When calculating your deposit, don’t forget the costs associated with purchasing the property such as the loan approval fee and solicitor costs. These can be added to the loan amount or you can pay for them separately, thus reducing the total amount you need to borrow.

4. Can I get pre-approval?
Knowing how much you can borrow before you buy can be a big advantage. Does your lender offer pre-approval? How quickly can pre-approval be arranged and how long is it valid for? Knowing exactly how much you can afford is also a good way of narrowing your search to those areas that are realistically within your budget.

5. What features are available with the loan?
Sometimes the cheapest loans are unsuitable because they lack important features like Top Ups and loan repayment holidays. Ask your lender what features are available with the different loans on offer and how they affect the total cost.

Think carefully about the features you would use – now and in the future.

6. What happens if I move home?
Loan portability – the ability to take your loan with you when you purchase another home – can save you hundreds of dollars in re-establishment and early repayment fees. Ask about portability and any penalties that may apply if the loan is repaid early, particularly if your current loan is on a fixed interest rate.

7. Does the loan have redraw?
Redraw is a popular loan feature as it lets you make extra payments on some variable loans and then ‘reborrow’ the money when you need it. It is especially useful when family circumstances change, or when you want to renovate or purchase a new car. Ask your lender if redraw is available and what conditions or fees may apply.

8. What special packages do you offer?
Some lenders offer special packages for people borrowing reasonably large amounts. Review the package options to determine if they are beneficial for your financial situation.

9. Is the lender reputable?
Probably the most important question of all. How long has the lender been around? Are they a full-service lender? What other services do they offer to help you manage your money better? Is their location convenient to your home or work? What do other customers say about them?