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The #1 MISTAKE people keep making...

If the first thought you have when you think ‘mortgage’ is ‘interest rates’ – you might have made that one simple mistake many people make when considering a lender. Most people look for the lowest rate and think – “Great I can get a deal!”

The reality is you may very well end up paying more interest than the person who chooses a different rate and different FEATURES. Features that can work in your favour and that you need to be aware of can include:

FEE-FREE EXTRA REPAYMENTS - Paying just an extra dollar a day off your loan will result in significant savings in interest and see you mortgage-free far sooner. That makes increasing repayments (at no extra charge) a feature worth having.

PORTABILITY - This allows you to sometimes transfer your existing loan to the new property when you move house, meaning you could avoid having to pay break costs for your old loan or establishment fees for a new loan. However this may not be an option or may be a more costly alternative when all factors are considered.

REDRAW FACILITY - Provides access to any additional repayments you’ve made. Handy if you’re short of cash in an emergency, but it will put you behind in terms of interest savings.

MORTGAGE OFFSET OR REVOLVING CREDIT - An offset or revolving credit account lets you put any savings to work to reduce your loan interest charge. The balance of your savings is deducted from the loan when interest is calculated, so you pay less interest, with more of each repayment reducing the loan balance.

MORTGAGE HOLIDAY -  This feature offers a complete holiday from repayments or a period of reduced interest only repayments. This can be especially useful during career changes, ill health or breaks such as maternity leave. Ideal to include if you are just starting out and having a family.

So before you or someone you know makes this mistake – give them this newsletter or tell them to head to our website and get in touch with us so we can help them.



Banks on a roll!

They are at it again! Yes, the banks are hungry for customers, with many being aggressive in contacting home owners trying to tempt them into refixing by offering discounted rates – the catch seems to be that these ‘special’ rates are only available for 24 – 48 hours.

Be wary of anyone being pushy and offering a time limited offer – you are the customer providing them with years of repayments – so STOP, take a deep breath and tell them you will call back later, or better still that you work through Wayne – then call us for the following very good reasons;

a) We will negotiate the best discounted rates available with your lender and know what is available from other lenders as a comparison. If the rate is not good enough we will go back and renegotiate on your behalf.

b) Always remember banking personnel work for their employer (the Bank) whereas we are working in your best interest and will advise you accordingly.

HOT TIP : You have to ask yourself – how likely am I to see this same person in 2, 3 or even 5 years time and are they really employed to look after my best interests?



Have you ever been encouraged by a bank to fix your interest rate for longer terms (3, 4 or 5 years) when interest rates are clearly moving down?

Had we been advising you, we would have suggested fixing for a shorter term – anything from 6 – 24 months instead. Once you are locked in for longer terms break costs become very expensive if you want to terminate your fixed rate contract.

When this is the largest investment you will likely make, and these calls come in, it can be tempting to just accept the interest rate offered. We know what it’s like- we all lead busy lives and can be distracted and just say yes without realising the consequences.

IMPORTANT TIP : Consider this - do they get you to confirm your requirements by email? If not, where is the documentary evidence of your request?

Again, be wary. Tell them you will call back at a more suitable time – and then call us so we can see if the hooks outweigh the catch! 07 856 2960



The Age Old Decision... to Fix? or to Float?

As a business, this is something we are asked by most people we talk to. Generally, as consumers, we look for certainty in our purchases – will the car we buy today last into the future? Will the phone I buy today last until next year; before a new model comes out? Will the mortgage I fix work for me in 2 years’ time?

There is significant disparity between floating and fixed rates in the current falling interest rate market. We are currently recommending shorter term fixed rates between 6 -24 months. We believe interest rates will fall further over the remainder of this year and into 2016.

For anyone re-fixing onto a lower rate, this is an ideal time to re-consider your repayment amount.

A minor increase can substantially reduce the mortgage term and effectively save a considerable amount in interest.

For example, an increase of $30 per week in loan repayments on a $350,000 mortgage over a 30 year term @ 5.00 % pa interest rate will reduce the loan term by 4 years! More significantly, this will save $50,000 in interest costs.

If you would like to know how to implement these changes so that you can take advantage and save, please give us a call.

 


Waking Up to the Banking System

Banks don’t stop. In fact, they are continuously contacting (some suggest pestering) our clients who have fixed rates expiring, with offers of:
  • A specialised team – of people you know and trust?
  • Good rates – compared to?
We applaud that banks have finally realised that they serve consumers, customers and clients. However, we still need to highlight the obvious differences between what we do and what a bank simply cannot offer.
  1. We know what is available within the market – not just within a single bank
  2. We know what different offers are on the table and what will suit you. We spend time to find out what your needs are, as opposed to what we have to offer.
  3. We listen to what you need. We say what we believe, drawn from listening to your needs, coupled with our vast experience and training.
  4. We don’t focus on meeting KPI’s or Sales Targets. We look in-depth at the market’s behaviour and how different scenarios may impact you if you fix or float.
  5. We are free to you – there is no cost built into our service.
  6. We are comprehensively aware of what’s happening in both local and overseas financial markets and economies.
The reality is we give you options and financial information which provide you with knowledge!

Call the team who can help!

Wayne

PLEASE READ...
All borrowers should use the service of a mortgage adviser to ensure they obtain the best impartial advice on all aspects of their mortgage, at no cost to the client. This means you or the ones you love and care about.


Winter Warmer with a little Money Business thrown in!

This winter warmer newsletter will definitely provide interesting discussion in the coming weeks. We see many of you coming off fixed rates; looking to secure some of the tempting low rates being advertised. It’s a consumer’s market and as the consumer we suggest that you start calling the shots. To do that, you need the right information and advice. If you have any questions after reading this, feel free to get in touch – we are happy to help!

Quick Notes

Petrol price drop – making it easier on the average household. Would be great to see transport costs come down to reflect the drop.

Fixed interest rates falling – how far is yet to be seen – however with a belief they will remain around this level for the next 2 years we would be suggesting fixing for up to 24 months to take advantage of the low rates without risking a sudden rate rise.

Milk Payout has decreased – although not great for our farmers, it is slightly balanced against the lower lending and lower petrol costs.

Rock Star Economy – our experience is ‘steady as she goes’ and that the so called “Rock Star” economy mentioned by the media is not reflected in the bottom-line profit of businesses outside Canterbury and Auckland. Most are no more profitable now than they were in 2007.

Seven years on from the onset of the Global Financial Crisis (GFC) in most countries the debt to Gross Domestic Product (GDP) ratio is now higher than it was before the GFC. A report by consultants McKinsey & Co titled “Debt and (not much) De-leveraging” says that between 2007 and the second quarter of 2014 global debt grew by US$57 trillion, or 40%, to US$199 trillion – sobering and frightening stuff.


Stay Out of the Mortgage Jail

With interest rates continuing to fall, many banks are offering seemingly great deals on long term fixed rate options
for people wanting finance for:

• Refixing and refinancing
• Property purchases
• Alterations and home renovations

On the surface taking advantage of a low rate long term seems sensible – but our take on this is that with uncertainty still playing out in the marketplace and possible further rate reductions, taking on a long term option may not be the best decision.

The mortgage lending market is dynamic. Locking in a 5 or 10 year option doesn’t make sense. Your life is as dynamic as the market. Once you have signed that 5 or 10 year seemingly low rate long term fixed rate contract, extracting yourself from this is a costly exercise with early repayment fees charged.

Recent feedback from people we have been seeing is that there is considerable focus from banks on this option with little regard to people’s best interests and circumstances. Be aware Banks can only provide one product – theirs.

As a broker we have access to the majority of reputable lenders throughout NZ. This means we can consider MORE options giving you MORE choice. There is no fee for our service and we save you time trying to search out the best deal yourself – we talk daily with lenders and know just what is available in the marketplace any given day and know what we can negotiate and secure on your behalf.

So if it’s time to..

• Refinance
• Refix
• Buy another property
• Get the renovations done

Call us to evaluate your situation and ensure that you:

a) Aren’t locked into an unfavourable situation in the near future
b) Have the best possible rate
c) The flexibility that suits your needs
d) A mortgage that works for you and helps you get ahead.

Finally contact us when you want to refix your interest rate – it costs you nothing except a phone call. We will negotiate the best rates 

for you and most importantly advise you on what we see happening in the financial markets and therefore what may be your most suitable option at the time.


How do you know you have the best rate and most appropriate fixed rate term if you go directly to your lender?

You don’t!

Call anytime – I’m here to help!

Wayne

3 Tips to Choose the Right Interest Rate

Now there is always discussion around Interest Rates – in fact it seems to be, for many, the single most important criteria that is considered when choosing a lender.

Generally one of the first questions I am asked when I meet with someone to discuss lending is – “Where do you see interest rates going?”

That is not always easy to predict, however I do believe that Interest rates will remain lower for longer. Of course things change, and I could be wrong, although I’d like to think that some of the volatility has been removed from the marketplace. But when it comes to securing finance for a property there are 3 tips that will hold you in good stead:

  1. IGNORE THE INTEREST RATE that the banks promote. This may sound illogical as typically this is the very first item to consider- HOWEVER - what a bank offers direct to you and what we as Advisers can often secure may in fact save you THOUSANDS of dollars. TIP #1 – If you want to save money and get an interest rate that is more than just ‘competitive’, TALK TO US FIRST.
  2. IGNORE the temptation . Whilst rewards and gifts may seem very tempting and just what you want, the reality may mean an interest rate that actually ADDS to the amount you will pay in the long term. So while an IPAD may be just what Santa forgot, we suggest that you IGNORE the temptation and just buy one with the money you can be saving from a lower interest rate. TIP #2 – If paying off the mortgage faster is important to you, TALK TO US FIRST.
  3. TAKE CONTROL. As a consumer you have a great deal of power. More often than not, most of us simply don’t realise it at the time. By engaging us to act as your ‘Pseudo Bank Manager’, you will find yourself with a great deal more control as we act on your behalf. It is our job to negotiate, advocate and manage the lending process, removing you from some of those possibly challenging discussions. Tip #3 – If you are keen to avoid unnecessary stress,TALK TO US FIRST.

A recent example of just how our service is of real value has highlighted when a client on re-fixing their home loan went directly to the bank. They got the off-the-shelf interest rate. It wasn’t until I caught up with them that they mentioned it. There were some changes in the couple’s personal situation which meant the lender requested a great deal of additional information. Even as a client of the lender for over 10 years, there was no special offer or reward for their business. Loyalty means something – well it does in my book - and I believe that loyalty should always be acknowledged. If not… well as the consumer you have control!

Finally the biggest TIP I can offer as someone that has been in the industry for more than most, is to pick up the phone, organize a coffee with me and let’s see what we can secure for you. 

Refixing / New Home / Interest Rate Changes / Additional Lending / Investment Property Funding 

Call anytime – I’m here to help!

Get in touch

 

Our advice comes supported by many years in the mortgage and insurance industries. So contact us today!

0800 800 333  wayne.oliver@sharenz.com
 sarah-jane.reay@sharenz.com

07 856 2960  
07 856 2962    

This website is for general information purposes only. We encourage you to
call us or email us in confidence with specific questions.
 

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