A Gold Coast holiday now or a Porsche at retirement?

Say you have a mortgage of $350,000 over 25 years, at 6% interest, that’s $1,040 payments per fortnight. Now let’s look at some options.

1. If you refinance to a lower rate such as 4.8%, and maintain your current payments, that brings the loan period down by 4 years to 21 years and saves whopping $129,000 in interest!  At 6% you would have paid $326,000 in total interest over the 25 years, but at 4.8%, this becomes $197,000 over 21 years.
2. Let’s say you have now reduced the interest rate to 4.8% and at the same time, add $50 a fortnight to your payments. Amazingly, this small extra payment brings the debt down by a further 2 years to 19 years, for a total interest saving of $146,000.
3. Additional payments, such a bonuses you might receive and adjusting payments upwards when you receive a pay increase can also make a massive difference.

This is why you should review your mortgage regularly. Keeping repayments low and not reviewing interest rates regularly means that you might enjoy a slightly better lifestyle now. But regularly reviewing it as the example shows, could mean $100,000+ more (in saved interest) at your disposal at the end of the loan. Ask me to run through options for you.

8 ways to overcome the 20%/40% deposit required

The restriction of 20% deposit required on your own home and 40% for investment properties looks to preclude many wanting to buy, however there are many ways around this.

1. If you are applying to build a new investment property, the loan is exempt from the new 40% deposit restrictions.
2. Similarly, if you are purchasing a new home to live in, (or is less than 6 months old and purchased from the developer), the 20% deposit doesn’t apply.
3. If you want to re-finance an existing low-deposit loan from one lender to another (perhaps to get a lower interest rate), the new lender can do this for you.
4. You can shift an existing loan from one property to another, provided the total value of the new loan does not increase.
5. You can get bridging finance to complete the purchase of a residential property on a date prior to the sale of another property with no LVR restrictions.
6. You can borrow to fund extensive repairs or remediation, such as the results of a fire, earthquake or other natural disaster, or to bring a property up to new building codes. This applies to rental properties and includes weather tightness issues and earthquake strengthening.
7. If you qualify for a ‘Welcome Home’ loans for your own first home, no restriction apply
8. The restrictive deposits only the major trading banks. We are able to help you arrange a mortgage through companies such as Resimac Home Loans and Liberty Finance. These boutique lenders specialise in the not-so-ordinary circumstances or special requirements of clients.

So don’t think you or family members are excluded from the market. Ask me about any of these options or to discuss others that may work for you.

House prices getting unrealistic for you?

All over the country, the Auckland house price issue is having a ripple effect. Hamilton, Tauranga and Wellington are seeing increases for this reason. Christchurch is not left out of this. From an average of $375,000 for a house in 2012, to just a tad under $500,000 last month, the jump has been huge in our fair city.

If you are eyeing up a new home, remember that you are buying and selling in the same market. So the home you want may have jumped $100,000 in value, but your current one probably has grown by a similar percentage. So all is not lost. Before you look to buy, the two things to seek advice on are firstly, the current market value of the home you are in (ask a reputable real estate agent) and how your existing mortgage will be affected or the amount you can add to it. I can help with that. Pre-approved finance puts you in a must stronger position.