September 2018's Property Gazette
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.
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.
As a visual person, I found the steps/diagrams illustrated by Scott extremely easy to follow.Divya Nair and Abhijith Sukumaran - 10 April 2019
Scott is the ultimate professional.Mark and Clare Mateara 1st May 2011 - 01 May 2011
Awesome. We couldn't be more thrilled with our experience and have nothing but high praise for Scott Miller and AMS.Simon Thrupp and Sandra Paterson - 14 August 2018