Tag Archives: Mortgages

How to get the most out of your home loan

SMART BORROWING: It makes the most financial sense to use your existing home loan to access the money you need for things such as renovations or a new car, as unsecured personal loans can have much higher interest rates.

SMART BORROWING: It makes the most financial sense to use your existing home loan to access the money you need for things such as renovations or a new car, as unsecured personal loans can have much higher interest rates.

From Stuff.co.nz:

Home renovations can be a daunting proposition, but accessing money for improvements around your property is usually a far less stressful task.

Vince Clark, head of home lending and deposits at ASB, says there are a variety of different ways homeowners can obtain funds for their renovation plans, with personal loans and home loan top­-ups just some of the options available.

Because higher interest rates usually apply to unsecured forms of borrowing such as personal loans, Clark says it makes the most financial sense to use your existing home loan to access the money you need.

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Battle of the Banks: Merger Fuels War over Mortgages

At the New Zealand Herald:

Banks are dropping mortgage rates and offering cash sweeteners, loaded credit cards, payment of legal fees and tablet computers as they go to war for customers.

High on their target list are disillusioned National Bank customers, whose bank is to be merged with the ANZ, which owns both brands.

While it is time to say goodbye to the black stallion that has held the head high of a true thoroughbred bank for many years (I remember it back in my farming years in the 1980s!), we can all be thankful of the very competitive mortgage rates on offer as a consequence. The revered black horse has held a market share that has been the envy of most banks and who now see it as an opportunity to lure those that are struggling to come to terms with the merger and dropping of the brand that has been part of the banking landscape for so long.

On the positive, money is so cheap at the moment and this must be one of the most favourable lending eras that we have had for years! While I know here in Christchurch there are more hurdles to jump and criteria to meet post-quake, in my opinion it is well worthwhile enduring the pain to secure a mortgage. Whether it is a first home or an investment property, I believe both fall into the category of “good debt” and will help you get ahead in the long run. With Christchurch already experiencing strong growth in the housing market, jumping onboard has got to be a good thing as demand for housing is set to look high for some time yet.

Go on, now is the time to do it – property is unlikely to become more affordable than it is today!

So what’s the big deal about needing a larger deposit?

Isn’t it a good idea that the Reserve Bank is making sounds about requiring higher deposits for bank loans? At the risk of sounding like an old codger, back in the day  when I bought my first home you needed at least 20 per cent deposit (some of which could be a government Home Start Loan that you had saved a portion of) and no more than a 1/3 of your income in debt servicing. Are we now allergic to saving money and has it just become the norm to buy everything on tick including houses?

Some sensible comments from REINZ chief Helen O’Sullivan:

Encouraging people to have a decent deposit when buying a property was a good thing, and that a loan-to-value ratio limit might help prevent future house price bubbles.

The reality for all first-home buyers is that it’s always difficult to get the deposit. But the less equity you have, the more at risk you are to variations in your personal circumstances.

One can either afford to buy a home or not and saving a decent deposit is the biggest step toward to affordability! And let’s not forget about the lessons learned from the US subprime mortgage crisis…

Get started now, it is never too late.