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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.

March's Property Gazette

Published by Scott Miller on Thursday, March 02, 2017 in

What’s up with rising interest rates?


As we begin to welcome the cooler weather during March, we are also starting to see higher interest rates creep into the market. This has happened even though the Reserve Bank has kept the Official Cash Rate unchanged. This year alone interest rates have gone up 5 times and although in small amounts, we are now seeing the 5 year interest rate up around .75% from their lows.

Why Are Interest Rates Rising?

Economists have stated that the Reserve Bank’s stance on requiring a 40% deposit for investors, as well as a general 20% deposit for owner-occupier home buyers, is the reason why the housing market is slowing down in some areas. Banks are also struggling to attract deposits from New Zealanders. This resulted in a monthly drop in bank deposits for the first time in three years. Thus, banks have had to head overseas for more funding to be able to continue to offer their borrowers money. This had led to borrowers being charged higher interest rates.

There is hope on the horizon however. As mortgage brokers, we can approach lending agencies on your behalf to get the best interest rates for your unique circumstances. It is this bargaining power we have which sees our clients getting lower rates when borrowing, compared to borrowers who approach banks directly.

You can find out more about the five ways we help you get the best interest rates for your home loan here. You’ll be amazed at how easy and quick it really is when you work with us!

Looking to Purchase Your First Home?

The Welcome Home Loan package is well known amongst first home buyers. But is it really that good? The problem is that it has been designed as a one-size-fits-all kind of package and as we know, that doesn’t work for everyone.

Here at Advanced Mortgage Solutions, we don’t use a cookie cutter approach with our clients. Instead we work with you to obtain the best borrowing rates and offers from multiple banks and lending institutions on your behalf.  We’ve created a free guide for first home buyers and this explains how you can buy a home with just a 10% deposit. We can also help you with alternative products to the Welcome Home Loan or help you with this loan package if it proves the best deal for you.

Who owns your Insurance?

Recently, two separate events have highlighted the importance of not just having the right insurance, but making certain the money gets to the right people when the worst happens.

In the first situation, a separated policy owner was critically injured, but his policy was still owned by his ex-partner, leading to a complicated & fractious situation as it was his ex-partner who was the recipient of the Trauma policy pay out and was the only person legally able to make the claim.

In the second case a divorced woman was also critically injured, and had recently removed her ex-husband from her policy. However, she had also gone a step further and instructed her lawyer to prepare a Power of Attorney document naming a relative as being able to act for her in the event she was incapacitated.

Unfortunately, she was badly injured in a car accident. Had she not appointed a Power of Attorney, it would have been very difficult for her to make a claim and receive a payment due to her incapacitation, which her relative was able to do for her to help financially with her long recovery process.

So – with Insurance, having it is crucial, but so is getting the right advice around ownership so that the money gets to the right hands when it’s needed.

As Autumn brings with it a slight change in the weather, we continue to look forward to helping you achieve your homeownership dreams.

Kind regards

Scott, Jason and Jo.


February's Property Gazette

Published by Scott Miller on Friday, January 27, 2017 in

How did it get to be February already?


Welcome to 2017, a year we are hopeful will be even better for you and your family! Whether you are buying your first property, an investment property or planning some renovations during the year, we are here to help you with all your mortgage needs. We’ll take the legwork out of finding the right mortgage solution for you, with our friendly service and jargon free advice.

Interest Rates Are on the Rise

We’re already seeing rising interest rates, with many banks increasing their fixed rates over the last few days. This goes on top of the rises towards the end of December, which now see banks offering fixed term rates higher than 5%.

Even though they are large lenders, most banks are unable or unwilling to negotiate on interest rates with their customers on an individual basis. However, they are more willing to provide competitive interest rates to the clients of mortgage brokers. As our client, we will negotiate on your behalf to achieve the lowest possible interest rates for your mortgage. Talk with us today and we’ll hunt out the most competitive interest rates for you.

10% Deposit for First Home Buyers

First home buyers are now able to purchase a property to live in with as little as 10% deposit. We work with lenders who participate in the Welcome Home Loan scheme to help you purchase your first home. As well as finding you the most suitable home loan for your circumstances, we can also help you with your loan application process. If you are considering applying with or are ready to purchase your first home, head over to our Welcome Home Loan information page to find out about the eligibility criteria and how much you can borrow. We also offer a free 1st Home Buyers Guide, so please get in touch and we’ll walk you through the application process.

Life Insurance – are you sorted for 2017?

Life Insurance is the cornerstone of a strong risk protection plan – nearly everyone needs it, and there is more to it than you may think.

Did you know for example that a good life insurance policy will pay out immediately after diagnosis of a terminal illness?

Did you also know that an increasing number of New Zealanders are using their life insurance pay outs to fund alternative therapies and treatments as well as to repay debt, travel and leave funds for their loved ones?

There are many benefits to having a discussion with us about Life Insurance, including that we work with the main Insurers to get you the top independently rated Insurance. We work to provide solutions at the best prices as well as giving you good advice.

If you have Insurance already we may be able to save you money on your premiums, and if you don’t have Insurance we can certainly help you identify how much you may need and what the best cover is for you.

Get in touch with us to make sure that your Life Insurance is something you won’t have to worry about in 2017.

To find more info, head over to our Life Insurance page, or contact our in-house Insurance Specialist Jason Haskins on 022 0189 178 or jason@aisnz.co.nz

We look forward to working with you over the coming months of 2017.

Scott, Jason and Jo

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.

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.

February's Property Gazette

Published by Scott Miller on Thursday, January 28, 2016 in

Interest rate outlook for 2016

We are hearing murmurings that the Official Cash Rate (OCR) is set to drop again during the second half of 2016, possibly taking it to a new low of 2%. This will put pressure on banks to reduce floating and short-term fixed mortgage rates. With this in mind we want to make sure you are in a position to take advantage of these reductions.

Although the one to two-year fixed rates are the cheapest rates at most main banks right now, around 1% below the floating rate, they may be a little too long to take advantage of the forecasted reductions in the OCR. So borrowers can create some certainty, and obtain a lower rate by fixing for short terms rather than floating. If the RBNZ cuts rates further this year, there is some scope for floating and some short-term rates to be lower later this year. However, if the RBNZ does not cut interest rates further short term rates may rise from these levels.

When choosing a mortgage, it’s not just about finding the cheapest rate. To ensure you are getting the best out of your mortgage it is wise to have a mixture of all the options available from NZ lenders. One characteristic of a floating mortgage is borrowers can enjoy a certain amount of flexibility with the loans repayments, allowing for a minimum monthly repayment or a larger repayment if you are having a goods month. Splitting the mortgage into different terms, or a mix of fixed and floating mortgages, are strategies that allow some flexibility while locking in some interest rate certainty.

With the downward trend of interest rates we are getting a lot of enquiries about breaking loans. Many customers believe they can save money by breaking their existing loans, unfortunately in our experience this is seldom the case. We urge you, your friends and family to contact us first before looking to break any of your existing home loans, so we can negotiate with the lenders before making a decision.

For more information, contact us today.

 

November's Property Gazette

Published by Scott Miller on Thursday, November 05, 2015 in

Mortgage Brokers . . . the right choice

Why choose us over the banks?

Good question. The easy answer is we are unbiased, we research and present multiple options.  The result is - YOU WIN!

Here are just a few reasons why Advanced Mortgage Brokers can be the key to your financial success:

  • Unbiased research to present you with options and products that best suit your needs.  This can mean;
    • better interest rates, saving you thousands
    • less penalties, like exit clauses for early payouts
    • waived admin costs
    • repayment options

  • Personal and better service - our business depends on you, you’re not just a number.  You get to skip the tiers of call centre options and talk to a human being, you even have access to our mobile, how refreshing is that.
  • Higher skillsets – we are skilled up to know the full process, minimising the frustration of call centre staff that are inadequate in servicing your needs.
  • Experience – this is all we do.

The benefits are many and easy to realise.

So moving forward: Mortgage Brokers vs The Banks

There’s a clear winner, but what is critical, is that you perform your own due diligence, check us out, ask for referrals and decide if we best suit you.

At the end of the day what you receive is:

  • Value
  • Service
  • Experience
  • A Solid Win

A good mortgage broker will become an ally and confidant, we are specialists in our field.  So whether you are looking for a first home loan, investment property loan or refinancing. Clever research and engaging Advanced Mortgage Brokers can save you time, money, and best of all deliver you an exceptional financial outcome.

You deserve it, contact us today

August's Property Gazette

Published by Scott Miller on Monday, August 03, 2015 in

To break or not to break…

There has been a lot of media attention on interest rates lately, with another cut in the Official Cash Rate to 3.00% people are beginning to question their mortgage decisions, specifically whether or not to break out of their fixed term rates and either float or fix at a lower rate.

Fixed rates are a good way to budget your mortgage however you cannot always make extra payments or pay off your loan without generating a ‘break fee’. It has been very attractive for home owners to fix for longer lengths of time. Fixed rates have been a way to lock in a perceived ‘good’ rate for a longer period of time. Hopefully riding out any increases along the way.

With this continued reduction in rates those on longer 3, 4, 5 year fixed terms are now looking at other options, especially as the floating rate is around the 6% mark which may be less than the older fixed rate.

Although floating rates change depending on the Official Cash Rate (OCR) they are a lot more flexible than a fixed rate. You can pay off more of your mortgage without any financial penalties that would occur on a fixed rate. For instance if you wanted to add an extra $100 per month to your mortgage payments, you can do this on your floating rate and enjoy the interest you will be saving in the long run.

A structured mortgage that has a mix of floating and fixed rates can ride out the interest rate changes. Although you may end up paying a bit more to float your loan, you can still take advantage of the floating loans ability to make extra payments should you wish to pay more off and save in the long-term.

Breaking a fixed mortgage

For those that have signed up for a fixed rate and want to ‘break’ this mortgage to take advantage of the lower rates, you would want to make sure that the savings are substantial enough to warrant the break fee. Banks use a complex formula to work out break fees and I recommend you give us a call to discuss this.

As an illustration Westpac have the following scenarios on their website:

18 months ago John and Mary had a $200,000 home loan with 25 years left in its term, and they signed a contract for a fixed rate of 7% for 3 years. Their regular repayments are $1,414 per month. They now have another 18 months left to run on their fixed rate home loan.

If they break their home loan now the fixed rate break cost will be approximately $14,500.

Scenario 1: Paying off their loan

John and Mary decide to pay off their loan in full because they sell their home, and do not repurchase. The break cost will need to be paid immediately.

Scenario 2: Switching to a lower interest rate

John and Mary decide to break their fixed rate home loan because they want to go to a new lower rate of 18 months at 5.85%. The break cost will need to be paid immediately.

Their monthly regular loan repayment will reduce by $144 per month and they will save approximately $2,592 in interest over the next 18 months.

Scenario 3: Switching to a lower interest rate and adding the break cost to the loan

John and Mary decide to break their fixed rate home loan because they want to go to a new lower rate of 18 months at 5.85%. However they can't afford to pay the break cost upfront, so they decide to increase their loan to cover the cost.

Their monthly loan repayment will reduce by $52 and they will save $936 in interest over the next 18 months. However, at the end of 18 months their loan will be almost $14,500 higher.

The above scenarios are demonstrative examples and do not take into account your personal situation or goals. Every loan transaction differs, so please feel free to contact us to review your specific loan situation.

To see if it is worth breaking your loan please contact us and we can approach the lender to ascertain whether it’s mathematically worth it or not.

 

Commentary by Bernard Hickey

Published by Scott Miller on Wednesday, June 17, 2015 in

June 2015 News - By Bernard Hickey

Welcome to our June Referrer News, continuing on with our series of market commentary from one of New Zealand's top financial journalists, Bernard Hickey.

June was a great month for borrowers and for home owners, particularly in Auckland.
 
The Reserve Bank surprised most economists and at least half the financial markets by cutting the Official Cash Rate (OCR) by 25 basis points to 3.25% on June 11. It also forecast another 25 basis point cut later in the year, with some expecting it as early as July 23 and others seeing a third cut in early 2016.
 
Governor Graeme Wheeler argued the 55% fall in dairy prices and the 60% fall in oil prices in the last year were dragging on demand and inflation in a way he could not have expected last autumn when he put up the OCR by 1% to 3.5%. He denied he had made a mistake last year, saying others had also incorrectly forecast a rebound in inflation.
 
Banks began passing that June 11 cut on in full to their floating mortgage rates almost immediately. By the third week in June banks were cutting their six month to two year mortgage rates by anywhere from 20 to 50 basis points in anticipation of more rate cuts. Some cut their advertised mortgage rates below 5% and there is now a real prospect of the lowest rates for the best customers being closer to 4% than 5% by the end of the year.
 
Inflation for consumer prices remains well below the 2% mid-point of Reserve Bank's 1-3% target range and Governor Wheeler reiterated in his news conference after the bank's June quarter Monetary Policy Statement that he had to focus on meeting his CPI target first, even though he remains concerned about financial stability risks inherent in Auckland's housing boom.
 
Meanwhile, inflation for asset prices in Auckland continued to run rampant and real estate agents reported stellar sales volumes and prices in May. Finance Minister Bill English described it as a "feeding frenzy."
 
REINZ reported that Auckland's median house price rose NZ$30,000 in May to a record high NZ$749,000, while the median price excluding Auckland fell NZ$4,000 to NZ$349,000. Annual inflation in Auckland rose to 19.8% while national inflation excluding Auckland was 2.6% from a year ago.
 
Both REINZ and Barfoot and Thompson reported there were few signs yet that the Reserve Bank's new LVR limit in Auckland for rental property investors and the Government's two year 'bright line' capital gains tax test were having much impact on the market, although they were only announced in mid-May and do not formally apply until October 1.
 
However, there were signs that property investors were spreading out from Auckland. REINZ reported a 40.8% rise in the seasonally adjusted volume of house sales in Waikato/Bay of Plenty in the three months to May from a year ago as the buying started to spread out from Auckland. Auckland volumes rose 27.4% from a year ago.
 
There were also anecdotal reports that some foreign buyers were pulling out of deals to buy apartments off the plan after the Government's announcement they would have to declare their passport and home country tax details when buying properties here.
 
The bottom line
  
Auckland's annual house price inflation rate ran at 15-20% in May, but it was the exception rather than the rule. Wellington prices fell 1.7% and Christchurch fell 3.6% from a year         ago, although Tauranga prices were up 16.5% from a year ago.
Most economists now expect the Reserve Bank to cut the Official Cash Rate by as much as 0.5% to 3% by the end of the year as inflation remains well below the bank's 2%                 target.  Some expect another cut to 2.75% in early 2016.
The Reserve Bank said it was gathering data on house price to income ratios, but downplayed any move to adopt a UK-style 4.5 times multiple, saying it was complex


 
The Team at AMS

April's Property Gazette

Published by Scott Miller on Wednesday, April 01, 2015 in

As of today (1st April) changes to the KiwiSaver first home buyer packages come into effect. The KiwiSaver First Home Deposit Subsidy has been replaced with a KiwiSaver Home Start Grant. 

Put simply eligible first time homebuyers will now be able to withdraw all of their KiwiSaver savings except the $1,000 kick-start from the government. 

There will also be greater alignment with the KiwiSaver Home Start Grant and Welcome Home Loans for house price caps. The table attached shows the changes.  

 For more detailed information please click here to go through to the Advanced Mortgage Solution Website. 

If you want to talk to us about how we can help first time home buyers, give us a call on 0508 466 356.


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