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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.

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.

August's Property Gazette

Published by Scott Miller on Tuesday, July 31, 2018 in

We’re Welcoming August with a New Vehicle Finance Product

August is a great month to be purchasing your first home, moving your loan to a new lender and buying a new vehicle!

Introducing Our New Vehicle Finance Product

Winter is not the time you want to have car troubles! Dark, cold and wet, there’s nothing worse than having an unreliable vehicle. We understand that not everyone has the ready cash to purchase a new or used vehicle, which is why we’re adding a vehicle finance product to our services range.

We can assist you with obtaining the required finance to replace your existing vehicle or purchase an additional one. For an expanding business, an expanding family or the expanding number of drivers within your family as they reach 16 years old, let us help you get the vehicle you need.

With competitive pricing for the financing of both new and used vehicles, contact us first!

HomeStart Grant News

The HomeStart grant offers KiwiSaver members who have been contributing for three years a cash grant when purchasing their first home. Administered by Housing New Zealand, to be eligible, you need to:

  • have made the minimum contributions for three years
  • be building or purchasing your first home
  • have a single income of less than $85,000 or double income of $130,000 per household
  • have at least a 10% deposit
  • be planning to live in the house for at least six months after buying it

The HomeStart grant is per dwelling, up to a maximum of $10,000 for the purchase of an existing property, or up to $20,000 for the purchase of a home which is less than six months old, or the land to build one on.

To learn more about how we can help you buy your first home, contact us for a copy of our free 1st Home Buyers Guide today!

Sick of Your Existing Lender?

Are things just not working out with your existing lender? Don’t put up with getting the run-around, poor communication or just plain bad service. We’ll give you some options around the refinancing of your current borrowing with a new lender – one who’ll appreciate you as a customer and an individual! Contact us today for a chat, and we’ll put together a plan to help you move forward.

Trauma Cover Part 2

To recap from last month article lets ask a couple of questions:

What is Trauma Cover?

Trauma Cover is designed to help alleviate the financial impact of a serious health condition, originally conceived by Dr Marius Barnard, the surgeon who performed the first human heart transplant. Barnard argued that, “as a medical doctor, he can repair a man physically, but only insurers can repair a patient’s finances.”

(Trauma cover is basically a dread disease cover, it is not a disability cover it pays out on the diagnosis of a covered condition not the prognosis).

What is its Purpose?

As stated by Dr Barnard “Trauma cover exists to repair a patients finances.”

Trauma Cover Types

  • Essential – fewer conditions with limited definitions covered
  • Comprehensive – more conditions with higher definitions, multiple claims benefit
  • Severity based – pays out when a condition reaches a level of severity
  • Major Trauma – offers a level of cover for more severe conditions

How much cover do you need?

The worst case financial scenario is the true need,  a realistic measure might be as much as you can afford.

You can balance this cover with Income or Mortgage repayment cover and insure the percentage of income not covered by these policies, times this by the years need to age 65.

This may sound like a lot but depending on your circumstances you may need a lot, consider the following:

  • How long will I potentially need cover?
  • What financial protection is realistic for me?
  • What financial reserves do I have at hand at short notice?
  • What other cover do I have?
  • What other commitments (family or business) do I have?

To find out what cover is best for you contact me on 03 662 9058.

 

Kind regards

Scott, Shane and Jo

Advanced Mortgage and Insurance Solutions


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