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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.

June's Property Gazette

Published by Scott Miller on Wednesday, June 05, 2019 in

OCR Drop Results in Lower Rates

We are happy that we called the Official Cash Rate reduction correctly: the OCR has lowered again from 1.75 to 1.5%, which is a record low for New Zealand. This drop led to many lenders reducing their interest rates, which is a win for borrowers. With interest rates likely to remain low until late next year it could be a good time to increase your loan’s minimum repayments. We’re more than happy to discuss this and other options with you, so give us a call.

Less Than 20% Deposit? No Worries

Good news: if you have less than a 20% deposit, you can still own a home. There are currently plenty of low equity loan options available from the lenders we work with. This is great news for first home buyers who are seeking a foothold into the market. We can also help you navigate the process of using your KiwiSaver balance as all or a part of your deposit too. We’ve put together a handy guide which explains this, plus the HomeStart Grant and Welcome Home Loan. You can also book a time to come and see us for a chat, where we can discuss the best option for you and your family.

Planning on Building? Get Started on the Right Foot

The way lenders approach the building process has changed and the days of on-site progress inspections have long gone. Nowadays, there are two main options: construction loans and land and build packages (also known as turn-key builds).

Construction loans are the more traditional of the two but has a more complex application process. The information required by the lender considerably greater, such as a fixed price contract, council approval and consent, a registered valuation and your builder proving they have Builder’s Risk Insurance in place. 

 Land and build packages are less complicated as the builder organises most of the building process. Applying for a loan is simpler, and a registered valuation is still required. Check out our handy guide Loans for Turnkey Homes or Construction Loans – Which is Best? For further information, and then book a time to come and see us.

Insurance in New Zealand is changing

This headline appeared in the local paper last month, the focus was on the rapid change in the way home insurance is being offered. Highlighted was the pricing model for house insurance called “risk-based pricing” which has seen premiums on house insurance increase in some suburbs by four hundred percent.

"Risk-based pricing means if you buy a home that is considered a risk (usually by its region and then suburb) there is no longer a rite of passage to get insurance cover for the property. And if you do get cover you may be paying a substantial percentage higher than for a similar property across the other side of town.

We do the Homework for You

When you arrange a mortgage through us, we can assist you with what to look out for when you are considering a property, e.g. knowing what the technical categories mean, lining up the paper work from earthquake claims (and confirming repair work is complete) and if local flood zones will affect the property.

But there is more than just the property insurance that you need to consider when getting a mortgage.

Your Greatest Asset A Low Priority

This heading may seem like an oxymoron i.e. something is great but at the same time is a low priority, here we are referring to the greatest risk which is you and your ability to meet all your financial commitments. When you consider the value of your life and the ability to pay your way compared to the value of property would you be prepared to take the risk and not protect it?

Unlike property insurance where claims events have heavily affected the current market, cover for life, income and mortgage are still a rite of passage.

If we can assist you in this important area please let us know.

May's Property Gazette

Published by Scott Miller on Tuesday, April 30, 2019 in

Will May Bring Us Any OCR Movement?

In March, Reserve Bank Governor Adrian Orr implied that any future movement in the OCR is likely to be downwards. With domestic growth slowing and a weaker global economic outlook, economists are therefore predicting:

  • There is a 50/50 chance of the OCR dropping .25% on May 8th 2019
  • A further drop to 1.25% is possible in August or November

Economists noted that the RNBZ Governor did not refer to his past statements of keeping the OCR stable until the end of the year and into 2020.

While in the past, many drops in the OCR have led to a reduction of interest rates; this may not be the case this time. The capital requirements held by the lenders are rising, making it highly unlikely that full savings will be passed onto mortgage holders.

It’s not all bad news though. Interest rates are still at record lows, and we can help you access them. Get in touch with our team today and let’s work together to get you the best rates.

Tips on Buying a Home During the Colder Months

Should you be looking for a home during Autumn or Winter? We say yes! While the warmer months have the advantage of longer days and balmy weather, now is an ideal time for house hunting.

Traditionally there are fewer homes on the market during the cooler months. On the plus side, there are usually fewer people searching for homes, which means less competition. Eager sellers are ready to sell now, and this puts you in a great place to negotiate the price.

There are some challenges though, and these are often weather-related. You may be reluctant to view the exterior of a home in poor weather. Crawling in the ceiling space or under the floor won’t be high on your priority list. You may also be unable to view a property during daylight hours, seeing it only after dusk. These challenges have the potential to cause trouble down the road for you if you purchase a home without seeing fully what you’re buying. As well as making time to visit the property during the day, we also recommend you contact a property inspection professional who can perform the necessary inspections on your behalf.

 For personal advice and support when purchasing a property, you can rely on us. Give us a call today.

MEET THE THREE TYPES OF INSURANCE BUYERS

In our digital world, people are increasingly comfortable purchasing almost everything online. However, before you press ‘buy’ on a complex product such as life insurance, we recommend you get advice from a registered financial advisor like us 😊. When it comes to how people approach buying life insurance, research conducted by Australian Securities and Investment Commission identified three types of insurance buyers:

Methodical Buyers

Methodical buyers research insurance on the internet to learn about different policy types and brands. They use comparison sites and sometimes insurance providers’ sites, make one or two phone calls to providers, focus on one brand and think about their needs before buying. They like being able to ask specific questions and appreciate a call back — but don’t like repeated calls,  they’re also conscious of the fact that policies are different, and they fear that there is going to be some little trap that they miss.

Pragmatic Buyers

Pragmatic buyers want to ‘get it over with’. They take a brief ‘look and see’, sometimes using the internet, decide how much they can afford to spend and then approach a provider. They are more likely to change their mind about their policy choice during the sale process. 

A typical comment came from a buyer who chose the cheapest policy: ‘It’s better than nothing. It will be enough.’ 

Emotional Buyers

Emotional buyers are often influenced by emotional appeals during the sales process. They are often anxious that they are not doing enough for their family. They want to ‘leave something for the kids’, enjoy interacting with a salesperson and feel an obligation to them — they ‘can’t say no’. They often spend a long time in the sales call and buy in a single call. 

What Type Of Buyer Are You?

Whether your are methodical, pragmatic or emotional it doesn’t really matter as long as you’ve taken steps to protect your financial future.

Talk to us today we’d value giving you face to face advice.

April's Property Gazette

Published by Scott Miller on Monday, April 01, 2019 in

Bank Wars, Slow Lending Assessments & Looming Rental Shortages

There’s a bank war heating up, and it’s looking good for home buyers! The major banks have one by one been dropping their fixed one and two-year rates to a record low of 3.99%.

If you haven’t yet taken advantage of these extremely low rates, call us now. We can make obtaining the home of your dreams easy by talking with the banks on your behalf and get you the best deal possible.

These rates are also available for those looking to re-fix their existing loans that are about to rollover.

Slow Lending Assessments Stall Home Buyers

Due to the high levels of applications the lenders are receiving the banks turn-around times are a little stretched at the moment. This means it is taking 4-5 days to have our applications accessed.

Having a preapproval completed before purchasing can simplify the process and reduce waiting times due to having an approval in the system. There is no need to wait for the full assessment process, and you are likely to hear back quickly on the outcome of finding a property.

If you don’t have mortgage pre-approval, acting quickly to secure a loan when you’ve had an offer accepted is critical. We can help with this: book a time to meet up now.

Looming Rental Shortages in Christchurch

If low interest rates haven’t tempted you to purchase your first home, perhaps higher rents will. As residential rental property shortages appear, Christchurch tenants will see rents beginning to rise. Why pay more rent to your landlord when you could be using it to pay off your home loan instead?

If you are looking at purchasing an investment property, now is the right time for you too. Low interest rates coupled with rising rents are a landlord’s dream. We can help you gain a foothold into the rental market to allow you to reap the rewards of becoming a property investor.

It Really Pays To Count The Cost.

Committing to a mortgage is for most the biggest financial commit that is made during a life time, so it really does pay to count the cost so you can reduce the risk of financial hardship.

What should I count?

Suggest you start with the basics the day to day cost of living, if your under financial stress when life does go out of shape if you can pay the bills that’s a help.

Ask the following:

  • What is the risk I would be insuring against? This could be death, a fire at home, or the car getting stolen. Or getting sick and not being able to work.
  • What are the chances of it occurring? There’s probably a small risk of a fire in your home, but it will cost a lot if it happens. The chance of your car being damaged or stolen is much higher, but the costs probably won’t be as high as losing your home.
  • What would happen? Would your family be able to pay for funeral and legal expenses in the event of your death, and how would they manage without your income? If there was a fire in your home, would you be able to replace the house (if you own it, that is) and all your possessions, or would you lose them completely?
  • How much would it cost? Would you have enough money saved to cover the cost and would you want to use your savings for this? (Would you be forced to dip into your retirement savings?)

If you can’t afford for something to happen, you should seriously consider taking out insurance.

Statistics:

Income/Mortgage Cover

-      The average household expenditure is around $1,300 per week

-      In 2018, the Jobseeker Support Benefit was $215 per week for a single person aged 25 + or $358 for a couple

-      24% of the general population in NZ have a disability

-      In 2017 the average weekly household mortgage repayment expenditure is $436 per week

Disability Cover

-      During the June 2018 quarter, there were 92,642 people aged between 18-64 in receipt of Support Living Payment.

-      There are an estimated 60,000 stroke survivors in NZ; many are disabled and in need of significant daily support.

We have seen the benefit for Advanced customers who have the above policies and have needed to claim.

The financial options it gives them during a time that is difficult is a positive helping with recovery and protecting the home and loan.

Give us a call on 0508 466 356 and let’s meet up for coffee to discuss buying your dream home.

March's Property Gazette

Published by Scott Miller on Wednesday, February 27, 2019 in

And the winner is……….

Were Celebrating Our Latest Award!

We are thrilled to announce that at the New Zealand Financial Services Awards, we picked up 3rd place in the Overall Business of the Year Award for the Southern Region. Its wonderful to receive external recognition of the talented team we have. A huge thank you is also needed for all the support we have received, which has made it possible for us to receive such a high accolade from the New Zealand Financial Services Group.

To work with our award winning team, give us a call on 0505 466 356 or send us a message via our contact page.

The Royal Commission

With the recent Hayne Royal Commission report on Australias banking sector calling for an overhaul, its likely well see changes occurring rapidly at our neighbours over the ditch. However, business remains as usual here in New Zealand. As for whether changes will occur locally, time will tell, but should there be any, you can be assured we will fully support them.

One of the recommendations calls for changes to the commissions received for insurance products, including declarations. Our company has always declared the income we receive from commissions, even though we are not required to by law. We will continue to provide full disclosure in regards of what we do and receive. If youd like to learn more, get in touch with us to arrange a time for a chat over a cuppa.

Understanding Industry Jargon When Buying a Home

When you begin looking for your first home, you are thrown into a world with a completely new vocabulary. Youll hear agents talk about exclusive authority, lawyers discussing caveats, and financial providers discussing market value. We pride ourselves on ensuring our customers understand exactly what we say but know that others may not. So, weve created a great list of industry related jargon which explains the most common terms you will come across when purchasing your home. Check out our Jargon Buster on our website today.

Advice or No Advice (Is this the question?)

Recently the government made a surprise announcement from the release of a report from the Financial Market Authority and Reserve Bank that they would be further regulating the industry. This could have the flow on effect that reduces the quality of advisers in the industry.

The noise lasted for approx. 3 days before the dust settled from the actual and implied criticism.

The life insurance sales process is complex, and the New Zealand market has its own, unique idiosyncrasies such as ACC and other government entitlements. Adding to this New Zealand has a significant problem with under insurance which, coupled with relatively low financial literacy, makes it all the more important that sound advice is given when taking up a mortgage.

We are encouraged that our regulators have expressed a desire not to worsen the under insurance gap which exists in New Zealand, something that we certainly agree with.

We are committed to being part of a robust advice industry which is independent of any one product provider and can therefore offer consumers not only individualised personal advice, but also product choice.

If you havent talked to us already feel free to give us a call today.

October's Property Gazette

Published by Scott Miller on Friday, September 28, 2018 in

Get Ready for the Summer Rush!

As we welcome daylight saving and warmer days, we also begin to see an increase in the number of property listings within the Christchurch market. Vendors are wanting to move and buyers to settle in before Christmas, which results in plenty of fresh listings over the spring and summer months. If you’ve been waiting for the perfect home, chances are it’s recently been or is just about to be listed.

You can expect to be busy chatting with agents and visiting open homes shortly, and we are already receiving plenty of inquiries from both first home buyers and those looking to purchase an investment property, organising their financing. The advantage of having your finance sorted early is that the pressure is off you, and you’re ready to make that offer before someone else does! For a chat on how we can help, give us a call on 0508 466 356 today!

Is a Builder’s Report Necessary?

You’ve found your dream property; it couldn’t be more perfect! While the pressure is on to make an offer which is better than everyone else’s, in both price and conditions, there really is one thing you can’t skimp on. A builder’s report is an absolute necessity and should be listed in the conditions you make when presenting your offer.

As you will be aware, many properties were damaged during the earthquakes and their aftershocks. While major damage is easily spotted, dodgy repairs and structural issues are not so easy to see. Hiring a professional house inspector or registered builder ensures that you find out all the problems and potential problems before you sign on the dotted line. While it’s possible to purchase damaged properties, it’s better to go into the agreement with eyes wide open as to how much repairs will cost, plus identify any potential issues you may need to fix in the future.

Cashbacks – What you need to know.

In the competitive mortgage industry, banks often offer incentives to get your business. One of these incentives is a cashback. A cashback is when a lender gives you back a set amount of money upon your signing up with them. Traditionally this has been advertised as a contribution to your legal costs.

The benefits obviously include the cash you will receive upon completion of the deal. Some lenders also sweeten the deal by including additional bonuses by giving you discounts with their other products.

But don’t forget the Clawback period!!! – Most lenders have a provision that allows them to clawback the cashback given to you if you pay the loan off in full or leave the bank within a 3-year period. This is done on a pro rata basis, so the longer you are with the lender the less the clawback becomes. After 3 years there is no clawback.

If you are at all unsure about whether you should be accepting a cashback or not, give us a call! We’d be happy to help you find the right finance for your unique circumstances, whatever they may be!

Carry on moving, and you're out.

This heading appeared in a newspaper Column I read recently, the article spoke about standing still financially and how this is not usually an option when there are bills to pay.

The analogy comes from the children’s party game “Musical Statues”, in the game when the music stops everyone freezes, carry on moving and you’re out. In reality standing still doesn’t work, when the financial music stops the silence is deafening, you want move but find it difficult to do so.

So how do you stack up if for example if you had to stop work, you lose your job or a contract is not renewed?

Here are some suggestions to enable you to keep on dancing:

  • Keep the main costs the main costs .e.g. rent, food, rates, insurance are some examples.
  • Eliminate unnecessary ongoing costs .e.g. credit card repayments, hire purchase or habit cost tobacco, fast food etc
  • Have an emergency fund to cope with minor cash crunches
  • Have a safety net to spread the risk if you stop work (mortgage or income protection)

Before the music stops make sure your prepared, come and see us we loved to talk with you.

September's Property Gazette

Published by Scott Miller on Saturday, September 01, 2018 in

It’s Time to Cut Thousands Off Your Mortgage Repayments!

Spring is in the air, and there’s great news on the horizon. The Reserve Bank has recently indicated that the current Official Cash Rate of 1.75% will remain unchanged until late 2020. Having had the OCR remaining at this low level since October 2016, borrowers have been enjoying lower interest rates, and many have paid more than the minimum mortgage repayment, capitalising on the RBNZ’s decision.

Interest Rates Have Changed, But Will They Drop Anymore?

In August, the RBNZ said, “The Official Cash Rate (OCR) remains at 1.75%. We expect to keep the OCR at this level through 2019 and into 2020, longer than we projected in our May Statement. The direction of our next OCR move could be up or down.”

This offers borrowers the stability in knowing that in the short term, interest rates are most probably not going to rise in the short-term, but that a future rise is not off the cards.

We’re suggesting to many of our clients that they consider taking advantage of the low one and two year fixed rates. Not only does this give them the stability of a set repayment, but also can let them slightly increase their payment above the minimum repayment amount. Doing so can save you thousands of dollars of interest payments and take years off of your mortgage.

Deciding if you should fix or float, or how long you should fix for, will depend on your personal circumstances. Having a chat with us about your borrowing needs is free. We’re more than happy to help you decide if now is a  good time to break and refix your mortgage, restructure it or simply pick the best-fixed interest period for you.

We can also offer advice on rapid mortgage reduction, helping you save thousands over the period of your loan. Give us a call on 0508 466 356 now or send a message through our website today.

What about Air BNB?

Opening up your home to Airbnb guests can be an amazing experience. But it will only be that way if you:

    • keep good accounting records
    • provide accurate information to the IRD
    • ensure you have sufficient funds on hand to pay your outgoings such as GST, rates, insurance and interest repayments on time.

Lending: Lenders treat the provision of visitor accommodation differently to a long term rental

Rates/Consents: Local councils may impose additional requirements for visitor accommodation for which you may need to register

Insurance: Standard house and/or contents insurance does not cover Airbnb-type rental. Talk with your insurer so you have appropriate and sufficient insurance

The following headline in the NZ Herald on the 27th August highlights an experience you don’t wont:

“ Airbnb Auckland Home Trashed by Aussies on Bledisloe game night”

Even though homes that are dedicated to short term leasing are capable of being insured under Personal Insurance home policy, the potential issues for owners are:

    • Methamphetamine Contamination (the benefit only applies to tenanted homes, or Owner occupied homes where owner is away)
    • Loss of Rent, Malicious Damage or Theft, or Landlord’s Furnishings (the Optional Additional benefit - Landlord’s Extension is only effective for tenanted homes)
    • Fire or explosion following malicious or deliberate acts (standard exclusion is waived only where the person renting, living, staying at the home is a tenant)

EQC may view the occupancy of the home as commercial use and potentially decline a natural disaster loss, meaning the owner will miss out on

Statutory Liability (protection from fines or penalties for unintentional breaches of most laws in New Zealand, there is no cover provided for this under our Home policies).

Talk to us today if we can assist you.

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!


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