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What is an offset mortgage?

An ‘offset mortgage’ is a home loan account that gets linked to your savings and everyday transactional accounts. This enables the total balance in your savings and transactional bank accounts to reduce the amount of interest you pay towards your home loan....

Ongoing costs of owning an Investment Property in New Zealand

Property investing has been the 'investment class' of choice in New Zealand for the last three or so decades where many kiwis have gained substantial wealth through capital gains. However, what people don’t talk about enough is the ongoing costs of owning an investment property. These costs need to be carefully considered as the rental income may not cover all these expenses and therefore you will need to fork-out the shortfall from your pocket.Here's a breakdown of the main expenses you could...

Three Common Mistakes Home Owners are Making with their Mortgage

There are three mistakes we commonly see that you are likely making with your mortgage, causing you to pay thousands of dollars more than you need to and ultimately slowing down your progress....

Why you shouldn't keep all your properties with one bank!

If you have multiple properties with the same bank - you should consider 'Split Banking'.Split banking basically means that you spread your property porfolio across multiple banks.There are three major reasons for why you should consider split banking:...

What are swap rates and how do they affect your Mortgage interest rates?

An interest rate swap is essentially an agreement between two parties (usually banks, financial institutions, corporations and investors) who swap their cash flows.For example ->  Party A has fixed-rate debt liabilities but wants floating rate obligations, and Party B has floating rate debt liabilities but but wants fixed rate obligations.In this example, Party B is called the ‘fixed rate payer’ and Party A is the ‘floating rate payer’.In New Zealand, the floating rate used is th...

Ideal 'account conduct' for First Home Buyers for the bank to say yes!

When you apply for a home loan as a first home buyer, the bank wants to see if you are 'lendable'. One of the ways they do this is to assess your 'account conduct'.There are three ways that account conduct gets assessed:Bank statementsDebt managementCredit history...

How much can I borrow for a home loan? (Part 2)

To keep this article to the point - we are going to assume all other criteria is met for lendability such good credit history, account conduct and you have the minimum deposit required. See Part 1 of this article to understand factors that makes you more lendable.To understand how much you can borrow, banks measure your UMI (Uncommitted Monthly Income) or an equivalent metric. ...

How much can I borrow for a Home Loan? (Part 1)

There are a variety of factors that can influence how much you can borrow to obtain a home loan. Each bank has its own specific criteria and calculations to determine how much they can lend you.Ultimately, all banks want to see how “lendable” you are.The following factors play significant roles when it comes to determining how lendable you are:...

2024 Housing Market Predictions and Outlook

Happy New Year! Hope you had a great break and ready to rip into 2024 (even though we are at the end of January).2023 was a difficult year for alot of households and businesses. High relative cost-of-living due to post-covid inflation and increased interest rates put strain on the economy. The RBNZ (Reserve Bank of New Zealand) ended 2023 with a hawkish outlook on interest rates. The OCR peaked at 5.5% in May 2023 and headline inflation decreased slowly through 2023. Median property prices ...

Refixing your Mortgage in the Current Interest Rate Climate

With headline inflation moving in a downward direction, it’s widely predicted amongst NZ’s major banks, that the OCR is unlikely to increase further. As a result, OCR cuts are expected to occur in the second half of 2024 to early 2025. With this is mind - how do you approach refixing your mortgage?The ‘best’ mortgage rate/ term chosen, should be tailored to your own needs and goals. A good mortgage strategy considers the following:Your tolerance for uncertainty.Personal/ household c...

Why you need a bank pre-approval before shopping for your house

Many people make the mistake of shopping for their home without getting a pre-approval from the bank. They usually find a house they like then try to get the loan. This is a big mistake and we will discuss why....

Tips to avoid pitfalls when buying property at an auction

Auctions are a popular way of selling houses - especially in a rising market or a market in which there are more buyers than sellers. It’s an awesome way for sellers to get the best sale price possible. However, it can be a daunting process for you as the buyer. One of the biggest risks when buying  house at an auction is that the house goes ‘unconditional’ once the auction is won. This means that you are now locked into an agreement and cannot withdraw from the contract without dire ...

Key Dates – CPI (Inflation) announcements for 2024

CPI stands for Consumer Price Index. The CPI measures the average change of prices for goods and services over time. It’s a widely used indicator for inflation. By tracking changes in the prices of these items over time, the CPI provides insights into the overall inflation rate. The RBNZ (Reserve Bank of New Zealand) closely monitor CPI as part of their decision-making process around monetary policy decisions. For example, if OCR should be increased, decreased, or stay the same.  In ...

Key Dates - OCR (Official Cash Rate) Announcement for 2024

The OCR stands for Official Cash Rate. The OCR is the interest rate set by the RBNZ (Reserve Bank of New Zealand) and is a key tool used to achieve monetary policy objectives such as maintaining price stability (inflation) and sustainable employment. Changes in OCR impact interest rates (lending and borrowing) throughout the economy. As a result, changes in OCR influence spending, investments, and inflation.  When the RBNZ announces OCR, it signals its intentions on the overall economi...

Should you get Private Health Insurance for your kids?

With GP visits FREE to children under 14 years old, getting private health insurance for your healthy, active children may seem unnecessary. Well that was a more of a case until, of course, COVID-19 came along and change the dynamics of our public health system. Since COVID has entered out lives, we have seen record breaking public health system wait times - not just for adults, but now also for children. This is only for urgent ad routinely care - the elective public health care has got ev...

5 Common Mortgage Mistakes to Avoid in New Zealand

Purchasing a home is a significant milestone for many New Zealanders. As the real estate market continues to evolve, it's crucial to be aware of potential pitfalls that can accompany the mortgage process. In this blog post, we'll discuss five common mortgage mistakes people make in New Zealand in 2023. By understanding these mistakes and learning how to avoid them, you can make informed decisions and navigate the mortgage journey more successfully....

How do increasing interest rates affect mortgage repayments?

According to a recent article publish by NewsHub NZ, 60% of home owners mortgage interest rates are coming up for renewal in 2023. If your interest rates are about to renew, this article is for you.Below is an example as to what the numbers look like for a household looking to refix their interest rates today (Note: don’t get caught up in the interest rates used - the example is to highlight the increase in mortgage repayments due to increased interest rates)....

What is interest rate averaging?

Interest rate average (IRA) is a risk management strategy used to hedge against interest rate fluctuations. IRA effectively splits your mortgage into multiple portions and allocates each portion to a different interest rates and durations. It’s an extremely valuable tool for first home buyers. However it works best when interest rates are rising and is less effective when interest rates are falling. IFA is a risk management tool and therefore you have to take both the pros and cons if you deci...

What are 'Fixed and Floating Interest Rates', and their differences?

Fixed and Floating interest rates are two different types of interest rates that can be chosen when obtaining a mortgage. In this article we will highlight the difference between the two structures and the pros and cons of each type....

How to get your first home with a 5% deposit

If you're a first-time home buyer in New Zealand, you may be eligible for the ‘First Home Loan’ scheme, a government initiative that aims to help make home ownership more accessible. In this article, we'll take a closer look at what the First Home Loan is, how it works, and who is eligible to apply (at the time of writing this article).What is the First Home Loan? The First Home Loan is a government-backed initiative that aims to make it easier for first-time home buyers to get onto the...

Low Equity Fee / Low Equity Margin for First Home Buyers

Low Equity Fee (LEF) or Low Equity Margin (LEM) is very important to understand if you are buying your first home with less than 20% deposit.  Having less than 20% deposit on a home is seen as risk to the bank and as a result an LEF OR a LEM can apply. A LEF is is a one-off charge which is usually added to the mortgage and increases the overall cost of borrowing. This one-off charge can be anywhere between 0.25% to 2.0% added to the mortgage. The lower the deposit, the higher the ...

Life insurance for first home buyers

Getting your first home is exciting and a great milestone. However, it's also important to consider what would happen to your loved ones if you were to pass away unexpectedly. This is where life insurance comes in. Life insurance can provide financial security and peace of mind for first home buyers, knowing that their loved ones and financial obligations are protected in the event of their death. It's important to consider the benefits of life insurance and speak with a financial adviser o...

Costs to be aware of as a first home buyer

Buying your first home is an exciting milestone - however there are costs that you may not be aware of which you are likely to come across in your home buying journey. This article will outline the potential costs for you to keep in mind so there’s no nasty surprises.  It's important to budget for these costs and have a clear understanding of your financial situation before buying your first home. It's also recommended to seek advice from a financial adviser / mortgage broker to ensu...

Two important things to look out for when considering Health Insurance

Riskinfo NZ reveal that more younger Kiwis view health insurance as an important part of their financial and overall wellbeing. Approximately one in three customers with health insurance are under the age of 30.  However, there are two key aspects to health insurance that most people don’t know about which should be factored in when considering which Health Insurance plan should be chosen.  Factor 1:...

So you’ve Started EARING MONEY - WHAT’S NEXT?

Without your income, you will not be able to maintain your current lifestyle or expand your wealth in the future. It won’t be long until you need to sell your belongings if your income suddenly stopped. Hence, protecting your income with Income protection ( a form of insurance), will ensure that you and your lifestyle are protected, if anything unfortunate happens preventing you from earning. And YES! We have helped with several income protection claims, in thousands of dollars,...