Private lenders in New Zealand vary widely. Some fund loans from their own money, some arrange funds from investors, and some are brokers that pass your scenario on. These ten questions help you compare them on equal terms.
Question 1: Who actually funds and decides?
A direct lender makes its own decision and pays the funds itself. An intermediary may need approval from someone else, which can add time. Ask who signs off, and whether anyone else needs to agree before funds are released.
Question 2: How fast can funds really be paid?
Ask for the realistic timeline from a complete scenario, not the best case. Speed usually depends on documents, identity checks, legal work and any consent needed from an existing lender. HomeSec says funding may be possible in as little as 24 hours from a clean, complete scenario, subject to approval.
Question 3: What security is required?
Private business lenders usually take a first or second mortgage over property. Ask which property types are accepted, whether property outside the main centres counts, and whether a second mortgage behind a bank is acceptable.
Question 4: Is a valuation needed to start?
Some lenders require a formal valuation before they will even give an indication, which adds cost and delay. Ask what is needed for the initial assessment.
Question 5: How does the lender treat credit history?
Credit checks are irrelevant to HomeSec’s decision and a bad credit history is generally not an issue. Other lenders weigh it heavily. Ask how it affects the decision and the terms.
Question 6: What is the total cost?
Do not compare a headline rate alone. Ask for every fee, how interest is calculated, whether interest can be prepaid or added to the loan, and what the total payable would be over the realistic time you will hold the loan.
Question 7: What are the repayment terms?
Ask whether the loan has scheduled payments, whether there is a period with no scheduled payments, and how the loan can be extended if a refinance is delayed.
Question 8: Can I repay early?
Check for early repayment fees and minimum terms. An open-term loan can usually be repaid at any time without being locked in.
Question 9: Who will I deal with?
Ask whether you will speak with the decision-maker or a call centre, and who looks after the loan after settlement. Brokers should ask whether the lender will let the broker keep the client relationship.
Question 10: What happens if the exit plan changes?
Every loan needs a plan for how it will be repaid, such as a refinance, a sale or incoming funds. Ask what the lender does if that plan is delayed, and what it expects from you.
A simple comparison table
| Question | What a good answer looks like |
|---|---|
| Who decides? | The lender itself, with a named contact |
| Speed | A realistic timeline from a complete scenario |
| Valuation | Clear on what is and is not needed to start |
| Cost | All fees disclosed and total payable explained |
| Flexibility | Open terms and no lock-in on repayment |
Property offered as security may be at risk if a loan is not repaid. Read the loan documents and consider independent legal advice before you sign.