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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.

July's Property Gazette

Published by Scott Miller on Wednesday, June 27, 2018 in

Brighter Days Forecast for Home Buyers


It’s official; the shortest day has passed us by and the days are getting brighter. This is also the case for the property market, with a positive future on the horizon for home buyers. With interest rates remaining low and house prices stabilising, now is the perfect time to purchase your first home or an investment property.

Understanding Reverse Mortgages

It’s natural that as we age, we want to relax and spend time doing things which make us happy. With plenty of capital gain in our properties, one way to access this extra money is through a reverse mortgage. A reverse mortgage can provide you with the cash you need to take that overseas holiday, help your children purchase their first home, private surgery to avoid the public waiting lists or make the necessary renovations to your home so you can remain living in it.

Also known as a home equity release loan, a reverse mortgage gives you the cash when you need with, without the worry of a regular repayment schedule. Instead, the loan is fully repaid, including interest, when you die or sell your home.

Like any mortgage, there are pros and cons to be considered. We’re happy to chat with you and should you decide to release some of your home’s equity to enjoy your retirement a little more, we can help you find the best product to meet your needs.

Who invented Trauma Insurance?

Trauma Insurance or critical illness insurance was conceived by Dr Marius Barnard, the surgeon who performed the first human heart transplant.

Dr Barnard writes that he was motivated by the financial hardship many of his critically ill patients suffered.

He started talking to South African insurance companies and convinced them to introduce a new type of insurance to cover critical illnesses.

Barnard argued that, as a medical doctor, he can repair a man physically, but only insurers can repair a patient’s finances.

Since 1983, Trauma Insurance cover has become a highly sought after insurance policy for New Zealanders of all ages.

The Risk:

You suffer a major illness, such as cancer, heart disease or a stroke, can be sudden (and traumatic) and will definitely have a huge impact on the way you live.

You will require time off work, you may need special equipment and expensive readjustment costs.

Critical questions:

If you suffered a trauma condition how would you and your family cope with the financial impact?

If you were to suffer a major health condition how would this affect your ability to work and to afford a living for your family.

How would an illness affect your ability to meet your mortgage, bills, and other fixed commitments?

Peace of mind:

Trauma Cover pays a lump sum if you suffer a condition covered by the policy.

A good trauma policy will cover over 50 major health conditions, with most claims coming from “the big three” (cancer, heart disease & stroke).

This lump sum payment will help you survive financially while you take the time you need to recover. You can choose to use the money for example to pay off your mortgage, make alterations to your house to improve access and mobility or explore alternative treatment options and expensive treatments not funded by Pharmac.

Contact the team here at Advanced Mortgage and Insurance Solutions today. We’re here to help and there’s no cost to use our services!

May's Property Gazette

Published by Scott Miller on Tuesday, May 01, 2018 in

We’re Predicting Housing Market Stability!

There’s no need to man the lifeboats and start paddling away from your dream of home ownership just yet. Nor do you need to be concerned with rising interest rates. In this month’s newsletter we discuss our Official Cash Rate predictions, the benefits of a well-structured home loan and using line of credit facilities.

Stability in Official Cash Rate Likely till November 2019

The Official Cash Rate set by the Reserve Bank has been at 1.75% since November 2016 and looks set to stay there until at least November 2019. The RBNZ governor signalled that while GDP was weaker than expected in the fourth quarter, industry growth was expected to continue to strengthen. They see the CPI inflation to rise upwards, with long-term expectations sitting around 2%.

Therefore, if you have a floating interest rate, there’s no immediate need to fix your mortgage. However, if you prefer certainty, chat with us about finding you a great low fixed interest rate for your loan.

Why a Good Loan Structure Wins Every Time

The way your home loan is structured can either save or cost you thousands. Fixed, partially fixed, floating or revolving, there are plenty of ways to structure your home loan. While it’s believed that a low interest rate is what’s important, we don’t believe it’s the most important consideration. After all, borrowers cannot control the interest rates and are subject to whatever the lenders offer us.

However, what you can control is the structure of your home loan. For instance, channelling your savings and income into your mortgage can save you a heap on interest. If you owe $450,000 in your mortgage account, but have your income (say $2500) paid directly into it, then you are paying interest only on the $447,500. You can also shrink your interest repayments by even slightly paying more than the minimum repayment amount each fortnight too.

Give us a call and let us so our magic with your home loan structure to save you some money!

Should You Use Line of Credit Facilities?

A line of credit home loan, also called a revolving credit mortgage, is an approved credit limit which has been set in advance. It uses a floating interest rate and the aim is for you to decrease the amount of interest you pay by having all your savings and income directly paid into that account. You can draw from that account though and that is where it can become a problem.

Line of credit facilities are great if you are disciplined and deliberately continue to lower the debt balance each month in your account. In this way you will continue to lower your interest payments, saving you money. However, what many borrowers do is see it as a bank account from which they can withdraw money up to their credit limit each time. They still end up paying interest but fail to reduce the principal and grow their property equity.

If you are unsure if a line of credit will work for you, have a chat with us. We can talk through the pros and cons in detail with you. Book a time with us now and we’ll even see if we can get a discounted rate for you too!

HAVE YOU CONSIDERED TRAUMA COVER?

Becoming temporarily disabled has the highest percentage for keeping people out of work than and other event 27%, the following is some interesting research that has been done on Trauma Cover. The research covered information in China, Hong Kong, Malaysia, Singapore & Australia

Here are some interesting facts and figures:

  • The first Trauma policy was sold in South Africa in October 1983 by Crusader Life and only covered heart attack, cancer, stroke and coronary artery by-pass surgery (now up to 50 events)

  • Females purchased more Trauma policies than males, with the exception of Australia

  • Female Trauma Claims – Cancer makes up more than 80% of claims in every market, with Breast Cancer the most common type, 32% of cancers in China & 61% in Australia

  • Stroke was the second most common reason for a Trauma Claim, with China having a higher claim rate than the other areas.

  • For males, Cancer was leading cause of claim, with Prostate Cancer accounting for 37% of all cancer claims, followed by claims for a Heart Attack

 

Here are the facts about Trauma Cover:

  • Trauma Protection pays a lump sum cash payment that you choose how to use. With Trauma cover in place you won’t need to rely on government health and compensation schemes alone.

  • You can use your payment for anything you choose, such as covering costs of extra medical treatment, home help, or mortgage repayments.

  • Pays out the full Trauma Cover if the insured person requires life-support treatment for three or more days OR requires intensive care treatment for five or more days regardless of whether or not the trauma they suffer is a covered condition

  • Children get up to $50k of free trauma cover. They can also get additional paid for cover from 3 months to a max of $200k with the only exclusion being congenital defects

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

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.


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