What does a lender check on my property?

Once a lender knows a property is involved, the conversation shifts from “tell me about your business” to “tell me about the property”. Mr’s advice: get ahead of it. Nearly every delay in property-secured lending comes from a missing piece of property paperwork, not from the lender being slow.

What does a lender check, and why?

Check	What the lender wants to know	What you can have ready
Title	Who the registered owners are; what mortgages, caveats or other interests are registered	Title reference or a recent copy of the record of title
Ownership consent	Whether every owner (including trustees) will agree	Names and contact details of all owners
Value	What the property is worth today	Recent valuation if you have one; recent nearby sales
Existing lending	Balance and lender of any current mortgage	Latest mortgage statement
Rates	Whether rates are paid	Current rates notice
Insurance	Whether it’s insured, and for how much	Insurance certificate or schedule
Property type and condition	How easy it would be to sell	Photos, building or seismic reports for commercial property

Why does the title matter so much?

The record of title is the source of truth about who owns the property and what’s already registered against it. A lender needs to know:

• who must sign — every registered owner;
• what ranks ahead — existing mortgages, caveats or other interests;
• whether anything blocks registration — for example, an existing caveat that needs to be dealt with first.

Land Information New Zealand’s guidance explains that a caveat is a notice that someone claims an interest in the land. If one is already on your title, raise it early; it may need to be withdrawn or consented to.

How is the property valued?

For most property-secured business loans, the lender relies on a registered valuation or its own assessment. Valuers look at:

• recent comparable sales nearby;
• the property’s size, age, condition and features;
• for commercial property, the lease, rent and yield;
• any issues that would put buyers off.

Your own estimate is useful, but expect the valuation to be a little more careful. That’s normal. See how much equity do I need? for how value turns into a loan amount.

What about property owned by more than one person?

If you share ownership with a partner, sibling or business partner, each owner will need to agree and usually get independent legal advice. If the property is in a family trust, the trustees must agree — read using property owned by a family trust.

Want to know what a lender would make of your property? Ask a specialist — there’s no credit check involved.

What can slow things down?

• An owner who’s overseas or hard to reach.
• A trust deed nobody can find.
• An existing caveat or second charge that wasn’t mentioned.
• Insurance that’s lapsed or doesn’t cover the full value.
• Unpaid rates.
• Valuers in high demand in your area.

Most of these are fixable in a day or two once you know about them. The problem is discovering them at the last minute.

Mr’s pre-application property pack

Put these in a folder (paper or digital) before you apply:

1. Title reference for each property.
2. Names and contact details for every owner or trustee.
3. Latest mortgage statement(s).
4. Current rates notice.
5. Insurance certificate.
6. Any valuation from the last year or two.
7. For commercial property: leases, building reports, seismic information.

Pair it with the business documents on what documents will a lender ask for? and you’ll be one of the best-prepared applicants a lender sees all week.

An illustrative example: the two-day fix

This case is made up.

A small manufacturer in Timaru applies for a property-secured loan against the owners’ home. Everything looks straightforward until the lender’s solicitor checks the title and finds an old caveat lodged years ago by a builder over a disputed invoice that was later settled. Nobody remembered to have it withdrawn.

Because the owners had applied early and kept their paperwork handy:

• their lawyer contacted the builder, who confirmed the matter was settled;
• the caveat was withdrawn within days;
• the loan settled on time.

Had the same thing surfaced a week before a deadline, it could have caused a costly delay. Mr’s lesson: get a current copy of your title before you apply, and read every line registered on it.

How valuations can surprise you

Owners are sometimes surprised by a valuation. Common reasons:

• Recent sales were softer than the owner thought.
• Condition — deferred maintenance, dated kitchens or bathrooms, or weathertightness concerns.
• Unconsented work — an extra room or sleep-out without consent may not be counted.
• Location quirks — busy roads, flood zones or limited buyer demand.
• Commercial lease terms — short leases or weak tenants reduce value.

If a valuation comes in lower than expected, ask the lender how it affects the loan. Sometimes a smaller amount still does the job, or a second property can make up the difference.

Ask Mr about your property

Tell us what property could support your loan and roughly what’s owed on it. There’s no credit check to ask, your enquiry isn’t sprayed out to multiple lenders, and a real person will tell you which checks matter most for your situation.

Accurate ownership and mortgage details on the form are worth their weight in gold — they let us match you to the right lender first time. See if your business qualifies.