Ask a mortgage broker: How will banks respond if houses have been damaged by flooding or cyclones?

Monday, 6 March 2023

Volunteer firefighters in Te Karaka, Gisborne, had to move their small town to higher ground during Cyclone Gabrielle, despite communication across the region going down

Glen McLeod is director of Edge Mortgages. He will answer readers’ questions about home loans, whether you are a first-timer just getting into the market or someone who already has a loan and is wondering about the best way to manage it. If you have a query, email susan.edmunds@stuff.co.nz

How will banks respond if houses have been damaged by flooding or cyclones?

Our thoughts go out to all those affected by the flooding and cyclone Gabrielle last month. It truly has been a heartbreaking experience for a large number of New Zealanders.

Whether the damage happened inside your home or in the surrounding areas, it certainly can’t be an easy feeling when faced with such destruction. I’m sure that you’re wondering how on earth you are going to get through. House and contents insurance are there to help alleviate some of the pain, however what about the lenders? What can your bank do?

* Support package to help people affected by Cyclone Gabrielle in Tararua

* Will the banks ever lend on flooded Auckland homes again?

There have been devastating scenes around the country.

Glen McLeod, director of Edge Mortgages.

The banks have responded extremely well, offering a range of different packages to assist those affected. It is also fair to say that it is in the banks’ best interests to assist you, as helping you get back on your feet long-term also alleviates their risk. Some examples of what is out there right now:

Suspension of principal repayments for up to three months
Overdrafts up to $10,000
Grants of $2000
Hardship support for customers facing significant financial challenges
Access to term deposit funds for individuals suffering hardship

The banks all have specialist teams set up to assist those affected. They are dealing directly with customers so advisers such as myself are not able to be involved.

That being said, most advisers have a strong relationship with their clients and can offer assistance to help deal with any questions or issues. Your adviser can help talk you through next steps, guiding you on how to manage going forward. Some of their guidance may include:

Getting a council process under way – whether you have a white, yellow or red sticker on your property. These are a quick assessment. If you need one please contact your council.
Getting the insurance claim under way – You will need to make a claim. An assessor will need to be arranged. They will determine what is required to remedy. They may also contact EQC on your behalf
You may need to contact a structural and geotechnical engineer to complete a formal risk assessment of your property. What are the long-term risks to your house and/or land.
Discussing the options proposed by the bank – advice on what is in your best interests and help provide a better understanding on what has been offered

Just remember everything should be done as a step-by-step process so you don’t get overwhelmed. It is hard enough to be in a situation where you have lost precious items and faced trauma of floodwater waste in your house. You’re not alone and I’m certain that your mortgage adviser would be more than willing to assist, providing you with someone to talk to that is there for you and on your side.

CORRECTION: An earlier version of this column said that people could contact EQC directly. These claims should be made via your insurer. Corrected March 27, 10.10am.