May 2018's Property Gazette
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 work 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
If you are interested in Trauma Cover, get in touch today.
Scott was always friendly and professional, and seems very knowledgeable about all the different lending institutions.John and Anna Sinclair - 05 May 2016
Scott is always available to answer any questions we had either in person, via phone or email.Paul and Chrissie James - 7th November 2013 - 07 November 2013
Scott and Jo demystified the whole process and helped us buy our first investment property.Neil and Brigitte Glasson - 17 January 2017