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Mortgage Advice Blog

Get the latest news and tips about mortgage finance and the property market. Scott Miller, mortgage broker from Advanced Mortgage Solutions comments on housing and lending.

Mortgage Holiday packages and updated Insurance information

Published by Scott Miller on Friday, November 18, 2016 in

Updates to House Insurance and Mortgage Holidays in the South Island and lower North Island.

 

      Mortgages:

Lenders have now come forward with their assistant packages for those caught up in the recent earthquake events in and around the lower North Island and Upper South Island.

These assistance packages include mortgage holidays, which allows exiting clients to put a temporary hold on their mortgage repayments. Also available are temporary overdraft facilities to help individuals and business with cashflow. Although handy there are some things that people looking to complete this should be aware of.

Mortgage Holiday - The interest that would normally be charged is capitalised and added to your mortgage balance. This means at the end of the mortgage holiday period, the money you owe the bank has increased.

Overdraft facilities - These initially will have no to low interest components, however they will need to be paid back, so it pays to keep an eye on your spending if using one of these facilities.

NB: Please note these facilities are only available to those in the affected areas and is not available as a matter of course to those outside the affected areas.

Insurance:

I just wanted to give you a quick update on the Domestic Insurance front, following this week’s events.

The Insurance situation today is best described as ‘Cautiously Optimistic’, as Insurance companies are now allowing existing policies on homes to be transferred to the new purchasers.

Although the embargo for new  Insurance policies remains in force, this is an encouraging sign.  We are hopeful that the insurance market for greater Christchurch will be unlocked in the near future enabling new policies to be approved and issued.

As ever, please don’t hesitate to contact me for any assistance or advice.  

Call Scott on 021 343 648, or email scott@amsnz.co.nz 

Call Jason on 021 018 9178, or email jason@aisnz.co.nz

If you would like to discuss anything about Mortgages or Insurance, contact one of our friendly Mortgage Brokers today. Remember, we work for you and our services are always free.

Important updates relating to "House Insurance" in the South Island and lower North Island.

Published by Scott Miller on Tuesday, November 15, 2016 in

Important updates relating to "House Insurance" in the South Island and lower North Island.

I thought it would be a good idea to provide an update on the domestic insurance situation, following the large earthquakes earlier this week.

At this point, there is an embargo in place on new domestic insurance applications across our region. This applies to new house, contents, vehicle & boat applications and applications that have been approved but are not yet in place.

Please note that existing policies that are in place are unaffected and remain in force.

This embargo is expected to remain in force for the next few days while the risk assessment is completed. After this time we are hopeful that things in greater Christchurch at least will revert back to normal.

Because the domestic insurance market is temporarily locked it is paramount that existing policy holders do not let their cover lapse, so if you are a home owner please make sure of this.

For new home purchasers, we are confident that these restrictions will soon pass provided nothing further occurs locally.

All other insurance cover remains unaffected – in fact this is a great time to make sure your "Life & Mortgage Protection" cover is in place and that you have the right protection at the best possible price.

Please feel free to contact me if you have any questions at all or if I can be of any assistance.

Call Jason on 021 018 9178, or email jason@aisnz.co.nz

November's Property Gazette

Published by Scott Miller on Wednesday, November 02, 2016 in

Which is better? A bank or a broker?

Should You Choose a Bank or a Mortgage Broker?

How do you choose between working with a mortgage broker or a bank when it comes to your home loan? Does one have an advantage over the other? Who is more likely to get you approved for your loan? We believe it a mortgage broker and here is why…

Working with a Mortgage Broker

A mortgage broker works for you and not a bank. A mortgage broker works towards getting you the best home loan for your individual needs. They’ll do all the work for you, approaching the banks and other lending institutions on your behalf, hunting for the best deal possible. 

A mortgage broker specialises in their area. They know about which lenders offer which packages and how to get a mortgage if you have a low deposit or poor credit rating. You also don’t need to pay a broker for obtaining a loan for you, that comes from the bank! So, you end up saving time and money just by working with a mortgage broker.

Working with a Bank

It would be considered the traditional way of securing a mortgage, however things are changing. Approaching a bank directly is not the best way of getting a home loan nowadays. In fact, it is often more than one bank you’ll need to meet with and who has time to talk to all the banks?

Work with Advanced Mortgage Solutions

We’re mortgage brokers. We work for you, not for a bank. Our team of brokers have access to hundreds of products and dozens of lenders. This allows us to find the best possible fit for you. A mortgage is not only a sharp interest rate – the structure of the loan, allowing extra repayments with no penalty, or having a loan structure that best protects you from increases in interest rates are the way to go. Contact us today and let us make things easy for you by arranging your next home loan.

Insurance

We all need it, and we can all benefit from having expert advice.

Like mortgage brokers, insurance brokers are here to help you, and like mortgage brokers they have access to hundreds of products and dozens of insurance companies.

How much do we need? What are the best products for our situation? Are we paying too much for our existing cover... it can be very complicated!

That’s why we are now offering all of our clients the opportunity to get the right cover at the right price via our In-House Insurance Adviser, Jason Haskins

With more than 25 years in the Finance industry, including at Senior levels both Overseas and in New Zealand, Jason is very skilled at understanding what is important to the clients he meets, and is able to save you both time & costs.

For several years Jason was also responsible for training new financial advisers across New Zealand, and is able to give you advice on all aspects of Insurance.

Call Jason on 021 018 9178, or email jason@aisnz.co.nz

October's Property Gazette

Published by Scott Miller on Thursday, October 13, 2016 in

Yes! You Can Borrow with a 5% Deposit.

We’re excited to announce that our clients can now access 5% deposit mortgages for owner occupied builds! This means that if you have ever thought that building is for you, there is no better time than now. With the Reserve Bank requiring banks to approve lenders with 20% deposit or more, this has left many would be homeowners stuck renting or flatting. The shortage of available properties on the market has only continued to fuel rising house prices, with many first time buyers becoming discouraged at the huge competition when making an offer on a property. This has made building your own home more appealing.

New builds were not often seen as viable choices for many buyers, especially first home buyers. Many people were unable to pay both the rent where they were living and the repayments for the mortgage as the home was being built. However, if you are a first home buyer, you can utilise both your KiwiSaver and HomeStart Grant funds to make up your 5% deposit. This leaves you with the cash to pay your rent and mortgage costs until your new home is built.

Investors need not fret about obtaining the required 40% deposit needed to purchase a property, as we also have access to 20% deposit investment new builds too.

If you would like to discuss how the LVR changes affect you, or start applying for a new mortgage, contact one of our friendly Mortgage Brokers today. Remember, we work for you and our services are always free.

September's Property Gazette

Published by Scott Miller on Friday, September 02, 2016 in

Understanding New Loan to Value Ratio Changes

Recently the Reserve Bank (RBNZ) has tweaked NZ’s Loan to Value Ratio in an effort to stop rising property prices. As a result, they have set in motion a few new directives for banks which are compulsory from 1st September 2016. Other lending institutions such as credit unions are not affected.

Loan to Value Ratios and What They Mean

Loan to Value Ratio or LVR, is the percentage of money a bank will lend based upon the value of the residential property. A high VLR is being discouraged by the RBNZ for both owner-occupied and investment properties, in an effort to slow the housing market. That means:

·         Only 10% of the bank’s residential mortgage lending for owner-occupied properties within NZ, are allowed to have an LVR greater than 80%. This means that a deposit of at least 20% is required by the majority of buyers.

·         Only 5% of a bank’s lending for investment properties within NZ can have an LVR above 60%. This means investors now need to have at least a 40% deposit to buy a new residential property.

There are some exemptions to the LVR changes, where a lender may allow a higher LVR for a property, including the construction of a new property or a short term bridging loan. We are more than happy to chat with you and see if your plans qualify for an LVR exemption.

Get a Low Deposit Home with a Mortgage Broker

One of the key advantages of using a Mortgage Broker is that we are not a bank. We don’t make decisions about who can or can’t have a mortgage. Rather, we work for you and help you to get the right mortgage for your situation and often at a lower than advertised rate. This is also true for buyers who have less than the required 20% or 40% deposit to buy a home.

As we work with banks and other lenders every day, we know which ones are willing to lend on lower deposits and which aren’t. We approach those lenders on your behalf and explain why your mortgage should be approved. Occasionally a high LVR loan adds a low equity premium or low deposit insurance to your mortgage. If this is the case, we may also be able to negotiate a lower rate for you.

Finally, we are also able to help you get your foot on the property ladder with a low deposit home loan if you meet criteria for either the Welcome Home Loan, First Home Buyers Subsidy or use savings from your Kiwi Saver. You can find out more about the assistance for owner-occupied buyers with less than 20% deposit here. We also have a free First Home Buyers guide, which is proving exceptionally popular with our clients.

If you would like to discuss how the LVR changes affect you, or start applying for a new mortgage, contact one of our friendly Mortgage Brokers today. Remember, we work for you and our services are always free.

July's property Gazette

Published by Scott Miller on Friday, July 01, 2016 in

          It’s early days yet but economists agree that Brexit has upped                  the odds for the Reserve Bank to cut the OCR in August.

There has been a lot of news around Brexit and how it may affect the New Zealand economy. In my humble opinion the truth is nobody really knows what affect (if any) the exit of the UK from the EU might have on our or the world’s economy.

The best advice I can give is contact Advanced Mortgage Solutions if you feel the time is right for you to take advantage of record low interest rates. I am not saying interest rates are about to go up, but I am saying there is a little uncertainty out in the market place.

Typically, in times of uncertainty the cost of funds (the price the banks purchase money) go up as the cash wholesalers around the world build in a little buffer to protect themselves. It is predicted this may happen if the uncertainty continues, however it is also predicted that (largely) this should only be a flash in the pan as the full impact of the UK’s exit is fully understood and digested.

Please find an article below courtesy of mortgagerate.co.nz around their thoughts on Brexit and the affect it could have on the New Zealand economy.     

News that the UK has voted for Brexit has shocked commentators and rocked financial markets globally.

Investors and KiwiSavers are being urged not to panic, but what could Brexit mean for New Zealand’s interest rates?

While economists warn it is far too soon to tell what the broader financial impacts might be, most are united in the view that an OCR cut in August is now much more likely.

ASB economist Daniel Snowden said the US Federal Reserve may now pause for thought on its next rate hike and, instead of potentially moving in July, it may wait till later in the year. 

Doing so would keep the NZD elevated against the USD for longer and increase the pressure on the Reserve Bank to cut again in August. 

“This reinforces our view of a 25bp rate cut in August, followed by a final cut to 1.75% in November,” he said.

“Prior to the Brexit vote, we had become less confident of the second cut. 

“However, the global outlook is now marred by uncertainty and we expect to see declines in global commodity prices, further adding to the global deflation impulse.”

The Reserve Bank cut the OCR in March for two main reasons, BNZ senior economist Craig Ebert said.

They were falling inflation expectations and worries about the world economy amid market turmoil at the time.

Ebert said that, to date, currency has not done its job as a monetary buffer to global risk and, for this reason, the Brexit vote must increase the odds of the Reserve Bank easing the OCR further.

“We already forecast two more OCR cuts from the RBNZ – partly premised on global risks.

“Today we up the odds of an August cut to 75%, from 60%, while nudging the odds of a further cut by November up to 60%.”

New Zealand’s relative economic strength should serve it well through the current period of uncertainty.

ANZ chief economist Cameron Bagrie said New Zealand has excellent momentum, which is a big difference from prior to the Asian crisis and GFC when the economy was already losing speed.

“We believe the domestic growth impact will be minor, although it is certainly a moving feast.

“Nevertheless, it does of course increase the odds of an August OCR cut, at a time when we were wavering on whether a further cut was even required.”

However, while the odds are on for further OCR easing in the near future, that may not necessarily translate into lower mortgage rates.

Westpac chief economist Dominick Stephens agreed that Brexit has upped the chances of an August rate cut from the Reserve Bank.

“Markets pricing has moved decidedly in favour of an OCR cut to 2% in August - and a chance of the OCR falling below this.”

But New Zealand is likely to feel the impact of Brexit most immediately through exposure to international financial markets, he said

“To date, the NZ dollar and New Zealand interest rates have fallen, and credit spreads have risen, which will push bank funding costs higher.”

In his view, this means that although two-year swap rates are falling, mortgage rates and business lending rates are unlikely to fall as far or may not fall at all.

Courtesy of http://www.mortgagerates.co.nz/article/976504343/brexit-means-august-ocr-cut-likely.html

 

Kind regards

Scott Miller

Advanced Mortgage and Insurance Solutions Ltd
P.O. Box 27243
I Shirley I Christchurch 8640
DDI: +64 3 980 4541
Toll Free: 0508 4663 5626 (0508 HOME LOAN)*
Fax: +64 3 980 4571

 

June's Property Gazette

Published by Scott Miller on Tuesday, June 07, 2016 in

Last month we welcomed Jo Henderson to the team as Office Manager – a role previously undertaken by Lauren Timblick. Lauren is now working for herself and we wish her all the best in her new venture.

Jo has worked within the banking sector for over 20 years. The last 10 years in a Senior Lending position with SBS bank. With a wealth of financial banking knowledge and a strong understanding of the entire mortgage application process. Jo will happily guide you through what can seem to some a daunting process.

Jo is thrilled to be working alongside Scott and his team, she will assist in making your dream of home ownership a reality.

Outside of work Jo is married and has two adult boys and two grandchildren. Jo has a passion for travel and the next great adventure is never too far away.

Jo can be contacted on 03 281 8590 or email jo@amsnz.co.nz

A farewell from Lauren.

Hi everyone,

After 3 and a bit years of working at Advanced Mortgage Solutions I am moving on to concentrate on other endeavours (i.e. my new online store).

I have enjoyed assisting you with your home loans and interest rates and will miss the fun times I have had beating up the banks on your behalf.

I may pop in from time to time, so may talk to you again in the future.

Kind regards

Lauren Timblick

May's Property Gazette

Published by Scott Miller on Monday, May 09, 2016 in

What's happening in the property market?

Auckland house prices are showing no signs of stabilising – March saw a 9% rise in Auckland’s raw median house price. We are now seeing Hamilton, Tauranga and as far away as Wellington and Dunedin grabbing the attention with Corelogic reporting a rising percentage of sales in provincial cities are going to Auckland buyers, mostly buying rental properties.

 
All this heat in the property market is putting the Reserve Bank in a difficult position. Its main task is to target inflation at between 1-3% over the medium term, but it is failing to do that. Annual inflation was 0.4% in the March quarter and has been below 1% for six quarters in a row. Inflation has been below the 2% mid-point specified in Reserve Bank Governor Graeme Wheeler’s Policy Targets Agreement with Finance Minister Bill English for more than four and a half years. That’s uncomfortably close to the medium term.
 
However, the Reserve Bank is also tasked with monitoring asset prices and keeping the financial system stable. It has been worried enough about the risks to financial stability from a possible fall in Auckland house prices to introduce two sets of controls on Loan to Value Ratios in the last three years.
 
Economists expect the Reserve Bank will have to cut the Official Cash Rate twice more in 2016 to 1.75% to meet its inflation targets, which would push fixed mortgage rates well below 4% and pour more fuel on the fire in that ‘halo’.
 
That’s why economists began talking in April about the possibility of a third round of lending restrictions later this year. They could include extending the 70% limit for rental property investors beyond Auckland and/or lowering the limit for Auckland investors to 60%. The Reserve Bank will have its first chance in a while to talk about this when it publishes its half-yearly Financial Stability Report on May 11.
 
Banks may not find it so easy to refuse to pass on all of further cuts this year, possibly as early as April 28. Those funding costs have dropped sharply through March and April.
 
The bottom line:

  • Inflation remains weak and deflationary headwinds continue to blow from the rest of the world, pushing down on interest rates.
  • The Reserve Bank is expected to cut by a further 50 basis points this year, possibly starting as early as April 28, and certainly from June 9.
  • Auckland’s housing market roared back with a vengeance in March and the ‘halo’ effect is spreading double digit house price inflation around the country. Economic growth is solid at 3% and net migration is at 100-year highs.
  • The Reserve Bank may choose to bring in a third round of lending controls to stop future rate cuts from adding fuel to the house price inflation. It may suggest or announce them on May 11.

April's Property Gazette

Published by Scott Miller on Monday, April 11, 2016 in

Investor lending picks up

Article sourced from www.mortgagerates.co.nz, written by Miriam Bell

In line with other recent data, the Reserve Bank’s residential mortgage lending statistics for February 2016 indicate the housing market’s summer slowdown is over.

There was a noticeable pick-up in lending across the board – including investor lending – following several months in which it trended downwards.

Total new bank lending came to $5.1 billion in February, according to the RBNZ data.

This was a jump up from the $4.1 billion total lending in January, although well short of the $6.4 billion mark hit in November last year.

Of the new lending in February, investors accounted for $1.7 billion. This was up on the January figure of $1.3 billion.

The biggest group of borrowers was other owner-occupiers, who accounted for $2.7 billion of new lending in February. This was up on $2.2 billion in January.

First home buyers accounted for $591 million of new lending in February. This was up on the $459 million they borrowed in January.

This suggests that market may have adjusted to the government’s new tax measures, which came into force last October, and the RBNZ’s new LVR ratios, which came into force last November.

Investors’ share of higher than 80% LVR lending rose to $34 million in February, from $26 million in January.

However, the investors’ figure was significantly less than the amount of higher than 80% LVR lending that went to first home buyers ($195 million) and other owner-occupiers ($207 million).

In the RBNZ data, total lending to investors is also divided into two categories: higher than 70% LVR lending and less than 70% LVR lending.

Higher than 70% LVR lending to investors came to $622 million in February. This was a noticeable increase on the $438 million loaned in January.

But the bulk of lending to investors in February was, again, less than 70% LVR lending. It came in at $1.1 billion.

The RBNZ data also shows that banks have continued to stay within their 10% threshold for lending to borrowers with less than 20% equity.

In February, 8.5% of new loans fitted into that category. This was up on 8.3% in January.

March's Property Gazette

Published by Scott Miller on Monday, March 07, 2016 in

Thinking of building? Look into your finance options carefully

You may be wowed by builders’ 5% deposit options, which is common in the market place. However it is slightly misleading. Although they (the building company) may only require a 5% deposit you will be highly unlikely to secure finance for only 5% especially on a build. Ask yourself the question where is the shortfall coming from?

In reality you will likely need between 10 – 20% deposit depending on your situation. We recommend talking to us before you begin looking for builders so you are armed with a pre-approval from the lender and know what your budget is for the build.

Working out your finance options

When you build, your home loan is approved for the full amount, but you draw it down in instalments as the building work progresses.

Therefore, it is essential to get a fixed priced contract which sets out a progress payment schedule.

Building is a very exciting process when armed with the right information and realistic expectations on not only what you can borrow but the whole build process.

Advanced Mortgage Solutions have helped hundreds of people secure the finance to build their new home, call us today to find out how we can help you.


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