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June 2019's Property Gazette
Published by Scott Miller
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.