$3,000 cash if you take out a mortgage with us!

$3,000 cash if you take out a mortgage with us!

Remember these headlines? Banks offered large number of incentives to gain your business. But that was when mortgage rates were 7% or so. But now, with rates just over 4.5%, the profit margins are simply not there anymore for the banks. In saying that, there is still one offering $1,000 and another offering FlyBuys with mortgages.

Are these incentive based mortgages worth pursuing? Maybe. But the interest rate or the cash incentives should never guide your decision. It’s how you structure and manage the loan that really counts. Which is where I come in.

It’s not the size but how you manage it that matters most

Following on from the item above about incentives, this is why how you manage it matters so much. Consider a 30 year $400,000 mortgage at 4.8%. This will cost $755,600 in total repayments over the 30 years. That’s $355,600 in interest! Anything you can do to reduce that enormous interest bill must be worth it.

Regular reviews of the mortgage is what I can help you with. For example, your income will rise due to promotions or a new job. This should always trigger a review. Let’s say your pay rises by $500 per month, then if you direct half of that into additional payments off your mortgage i.e. $250 per month, then that brings the total time in debt down by six years and you would pay $81,000 less in total interest!

This is just one example of how I can help you manage your mortgage such that you substantially reduce the interest paid and time in debt. Complications come in with fixed term debt if it is at higher interest rates, but these are also worth exploring.

What if you live or work overseas?

Recent changes to rules for offshore borrowers affect both foreign buyers and kiwis living and/or working overseas. The changes are based on where the income is generated and where you predominantly live. If the loan repayments rely in part on offshore earnings then you are affected.

A quick summary for kiwis living offshore or within NZ, using offshore earnings to service debt:

A maximum LVR of either 60% or 70% is applied, depending on the lender.

Facilities are restricted to owner occupied properties

No interest-only lending will be available

Can borrow for standard residential property only and will not be available for the purchase of bare land or construction

Lending is only available to individuals (no company or trust entities)

Foreign income from self-employment is not considered at all.

These rules vary slightly between lenders and are not the full list, so it is very important to check with me if you are wanting to re-finance, buy a new property or a good part of your income is generated offshore.

Some thoughts on money

“Mum, can you lend me $30?”

“No! Do you think money grows on trees?”

“What is money made of?”

“Paper”

“And where does paper come from?”

Want to make money from Facebook? It’s easy. Go to settings, delete your account and go to work!

Some people are so poor, all they have is money.

Money may not buy happiness, but isn’t it better to cry in a Ferrari than on a bicycle.

Please contact us with any finance requirements you may have as we’re happy to help.