MORTGAGE FINANCE

Dominion, Volume 28, Issue 284, 28 August 1935, Page 9

MORTGAGE FINANCE

Advice For Corporation Borrowers VALUATION FEE SCALE Two booklets have been issued by the Mortgage Corporation, one to assist intending borrowers in ascertaining the procedure in applying for mortgage finance, and the other to indicate the purpose of the general reserve fund it is proposed to establish and the function this will serve In securing longterm interest rates on favourable terms for borrowers from the corporation. The booklets are published in the form of question and answer. It is explained that no procuration fee is payable in respect of any loan granted, and that it Is illegal to demand, charge or receive such fees. Valuation fees are payable in accordance with the following scale: Town and suburban, £l/1/- up to £5OO, thereafter 10/6 for each £5OO or part; rural, £2/12/6 up to £lOOO, thereafter 10/6 for each £5OO or part The further charges payable in connection with the obtaining of a loan are the legal charges and disbursements incidental to the preparation, completion and registration of the necessary securities. A special scale of charges for corporation securities has been accepted by the New Zealand Law Society.

While the decision as to the fixing of the term rests with the board of the corporation, the applicant is invited to Indicate on his application form the term of years he desires. Each case will be considered on its merits, and the board will examine carefully each proposal. The amount of the instalments will depend upon the rate of interest to be charged. At the rate of 4J per cent, per annum, the half-yearly instalments of interest aud principal on loans of the undermentioned terms are: 20 years, £3/13/11; 25 years, £3/4/6;.30 years, £2/18/5; 35 years, £2/14/3; 40 years, £2/11/3; 45 years, £2/9/1. Every borrower from the corporation is required to contribute to a reserve fund to the extent of 2 per cent, of the amount of the loan. In the case of new loans, the borrower has the oi>tion of paying the contribution in cash or having the amount added to tlie loan, When the 2 per cent, contribution is not paid in cash but is added to the loan, the increase in the annual charges depends upon tlie term for which tlie loan is granted by the corporation. Taking for purposes of explanation the following terms, the small addition to the annual charges because of this contribution to tlie reserve fund will be; On a term of 25 years, 2/7 per £100: on a term of 30 years. 2/4 per £100: on a term of 35 rears 2/2 i>er £100; on a term of 45 years, 2/- per £100; while the rate of interest is at 4J per cent. This amount, added to the interest rate on which the loan was granted, will be seen to compare favouwibly with any interest rate obtainable for long-term finance.