Engaging a Solicitor: More Than Words

A good solicitor can make the world of difference when it comes to saving yourself from painful property mistakes.

We all know the playground saying, “Sticks and stones can break my bones, but words will never hurt me.” However, injuries might be painful, but they’re also typically temporary. Conversely, words can hurt long after the fact, sometimes nagging us for years or decades. Words can have carry the pain in property.

The downstream effects from the words you write (or don’t write) on a Sale and Purchase Agreement could bring immense and ongoing financial pain to you, your immediate family and often your wider family.

The antidote to these negative side effects of our words, is today’s word of the day: solicitor.

Many believe that simply saying the word “solicitor” out loud can trigger fees to be automatically deducted from your savings account. But is this a good enough reason not to engage your friendly local solicitor early in the house buying process?

I have heard it said numerous times, “I will contact the solicitors after I get my offer accepted.” This is a crucial mistake, because solicitors are not magicians. If you have signed and agreed to something, it is pretty difficult and expensive to get out of it, and sometimes it isn’t possible to get out at all.

We all need solicitors to purchase property/land, and they are far more helpful to us when we use them prior to our seal being inked to paper. For a relatively small investment up front, they can prevent all sorts of painful mistakes in the future. 

Here are some things to consider with your solicitor prior to making an offer:

·      Do you know the detail of the contract?

·      What work has been done on the property and has it been consented?

·      What about the neighbouring properties? Do they have future work consented? And how will this affect you or the future value of your property?

·      Can you get insurance for this property? If not, then the bank will not be lending any money.

·      What are your rights regarding the builders report?

·      What should I or should I not circle, tick or cross out?

·      Can I get my KiwiSaver out in time?

There are far more questions to answer than this, and each property has its own quirks, but you get the idea of the things a solicitor can help you with. 

Also, if time is money, then having a solicitor read through screeds of documentation on your behalf will save you plenty. An experienced solicitor will know what to look for and will sum up the risks very quickly. Allowing you peace of mind when making your offer.

Lance Shearman is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

Is a Prefab Home Your Ticket onto the Property Ladder?

Prefab houses are cheaper, quicker to build and have fewer budget blowouts, but banks haven’t given them much love … until now. Kylie explains…

Imagine owning a patch of land and one day a truck backs up, plonks down your new home and, voila, you’re a homeowner. Although a prefab home can seem like a friendly and easy entry into the property market, your bank most likely has had a different opinion … up until now. 

Prefab houses have been notoriously difficult to fund because there has been no security for the bank to lend against in the beginning. You’ve been required to pay for the dwelling before it was delivered to the site. Historically, this meant that it was out of reach for most first-home buyers—unless parents had enough equity to pay for the dwelling up front against their property.

But there’s a glimpse of sunshine peaking out from behind the dark cloud hanging over the prefab home dream. Westpac have recently completed a successful nine-month pilot in both Albany and Invercargill on a new build product called Prebuilt—a dedicated mortgage product aimed at helping Kiwi’s get into prefabricated homes. They’ve just announced this product and are beginning the process of rolling it out to all of New Zealand.

So, watch this space.

The prefab home market is expected to grow over 200 per cent in the next year. So, with Westpac’s new product on offer, the prefab homes should be a hit with both buyers and builders.

But what exactly is a prefab home?

Prefab homes (prefabricated homes) are built under controlled conditions, usually in a factory, and are transported to their final location by truck.

This method of building provides several benefits above traditional building methods:

·      They can be cheaper and their costs are tightly controlled (so no project blowouts!).

·      The build time is also much quicker than your standard build, with some prefab homes taking just 18 weeks.

·      The overall cost is around 15 per cent less than a standard build.

The prefab home designs have also come a long way in the last few years, with trendy and modern options on offer.

So dream on … and chat to us about the options!

5 Daily Steps to Wellbeing

As financial advisers, we help guide people through our fair share of stressful situations. So, as a team, we’ve made a commitment to prioritise wellbeing. And here are five simple steps to help boost your wellbeing today.

I have worked for Velocity for a few years now and have slowly learnt the importance of looking after my wellbeing, both at work and at home. Life is rather hectic (juggling three kids, a full time job, and Brendon) so I’ve put in place some strategies to ensure I look after myself and stay sane in the workplace.

The Mental Health Foundation recommends we incorporate five elements into our daily lives to improve our overall wellbeing. So I’ve taken these on board and try to follow these every day.

So, here are my five daily steps to wellbeing!

5. Be Active

I get up at 5am and go to the gym each morning. Starting the day with exercise   leaves me feeling good for the rest of the day and I tend to eat better throughout the day too!

Then it’s yoga in the evenings to unwind and de-stress. I aim to do at least 10,000 steps a day on my Fitbit, too, which often means taking breaks to walk around the block throughout the day. You may find both myself and Stevie walking around the office, looking at our watches, to get our steps up!

4. Give           

Each week I aim to do two good deeds, whether it’s donating to the local food bank or dedicating my time to someone who needs help. I make sure it’s something I want to do and have time for, so that I don’t end up feeling resentful. Doing something for others makes me feel good.

3. Learn        

I’m always trying to learn something new, both at work and at home. I try to set myself a fitness challenge as well as a learning challenge each month. I’m currently trying to master the “side crow” pose in yoga. Not easy! According to mentalhealth.org.nz, adult learning (which includes goal-setting) is proven to be strongly associated with higher levels of wellbeing.

2. Connect    

I try and catch up with friends as often as I can—even if it’s just for a quick walk or a cup of coffee. In the past, I’ve been too busy to fit it all in, so I am making a habit of fostering relationships and ensuring I allocate them the time they need.

1. Take Notice

Each day I think of one thing I am grateful for.

For further information head to mentalhealth.org.nz

How much do Mortgage Advisers get Paid?

Let’s peel back the curtain to see what’s really going on inside your favourite mortgage brokerage: How do we get paid? How much do we get paid? Why do we recommend one bank over another?

We have hit the headlines this week. Banks, insurance companies and advisers (i.e. us) are in the spotlight in Australia and NZ. One of the issues raised was how and how much we get paid. It is fair to say there are some interesting conversations going on in our world at the moment.

At Velocity we pride ourselves in doing the best possible job for you and giving you advice that is best for you. Apparently that isn't that common in financial services.

We currently get paid a commission from the banks and insurance companies with whom we place your business.

When we first meet you, we disclose how much all our providers pay us, even though there is no obligation for us to do so. Yes, each provider pays us slightly differently, so all we can do is explain that. It is also up to us to give you solid reasons why we recommend each product and company we use. 

We've just done a quick tally up and below you’ll see the percentages of business we have placed at all the home loan lenders we use (based on numbers of new settlements).

As you can see, it is "horses for courses". We don't have favourites. All the banks have their place and all our clients are different.

We try hard to operate with maximum transparency. Always feel free to ask us to justify our recommendations, as we want you to have confidence that we are doing a good job and working in your interest.

ANZ: 34%

BNZ: 16%

ASB: 15%

Sovereign Home Loans: 12%

Westpac: 11%

TSB: 2%

The Cooperative Bank: 1%

Non-Bank Lenders (Avanti, Liberty, BlueStone, Resimac): 9%

Brendon Ojala is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

Fixed vs Floating: New Year, New Interest Rates?

Starting off 2019, interest rates are staying low but the Reserve Bank may have a trick up its sleeve that could have a downstream influence on the great fix versus float debate. Brendon explains.

There has been some post-Christmas sharpening of home loan interest rates. 

You will see a 3.99 per cent for one-year and two-year loans currently being advertised. This normally applies for "main bank", owner-occupied clients (in other words, not for low deposits or investor-only clients).

From an economic perspective, there doesn't seem to be any upward pressure on these rates for 2019. Interestingly enough, the only pressure that may come to bear is a potential Reserve Bank/government regulation requiring banks to hold more capital.

The Reserve Bank has suggested that the percentage of "money [that] banks have in hand per amount of loans outstanding" may need to increase to better protect the banking system from any economic shocks (known as capital adequacy ratios). If this is implemented, it will effectively increase banks’ running costs. Unless the shareholders are willing to take lower returns (??!!), then the customer will pay—at banks, this means increases in interest rates.

So, should you fix or float?

Securing an interest rate under four per cent isn't bad!

Up until now, most of our clients have been fixing for one year because that was the lowest rate and because the expectation was rates would stay low for another year, giving time to re-fix in a year for a still low rate. 

The only spanner in the works to this approach is the possibility of the above regulatory change, which still remains to be seen. The potential for changes introduces some uncertainty to the mix and some of our clients may choose to minimise that risk by fixing for two years, at what is now a great two-year rate.

Be aware that all clients won't get that exact rate, as it is case-by-case, bank-by-bank. If you have good equity, you should be getting close. Note also that everyone is different, so how long you fix your loan for may be different than the next person.

Also note that it is often wise to keep some flexibility. Channelling any cash surplus to your home loan in a smart way can surprise many with the difference it can make.

We can work that all out for you.

Brendon Ojala is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

October’s Market Turbulence: What Does it Mean?

By Amanda Chadwick (Authorised Financial Adviser of Forsyth Barr Wellington)

The share market took a tumble (or was it more of a stumble?) last week. Headlines

warned that KiwiSaver accounts could halve in value. Was it just media hype?

What are the experts saying? To answer these questions, we approached Amanda

Chadwick of Forsyth Barr to comment on the wobbly market and how we should

respond.

Between October 5th and 11th 2018, global sharemarkets hit turbulence, with

the MSCI World index (in New Zealand dollar terms) falling 6.2%, the Standard &

Poor’s 500 index falling 6.7% and the NZX 50 index declining 5.4%. While the fall

occurred sharply, given the same three indices were up 19.6%, 27.0% and 15.0%

over the preceding 12 month period, Forsyth Barr did not consider the pullback

to be unexpected. By the time things had settled a week later, the same three

markets had rebounded by 1.0% to 2.0% of their initial fall. In some cases,

market volatility can provide an opportunity to invest in quality companies at

more favourable prices.

Market behaviour (as with everyday life) is a combination of reality mixed with

emotion. It is not unusual to see an initial dramatic reaction to market news or

events, often presuming the worst, rather than taking the time to understand the

cause or context of the situation. Human nature has a knack for focusing on

negative news and amplifying its impact through isolation, which is why it’s

valuable to have an Authorised Financial Adviser providing much needed

perspective and strategy. One of the first questions to answer in response to any

sudden market movement is “what’s the cause?”

When reflecting on last week’s correction, the main contributors to the sell-off

were largely a mixture of:

•  the United States Federal Reserve signalling potential interest rate rises;

and

•  continuing trade tensions between the United States and China.

Investors with their own investment portfolios, should seek advice from an

Authorised Financial Adviser they can have regular contact with, who provides

proactive updates and communication and is readily available to ‘chew the fat’ in

response to market events. An Authorised Financial Adviser’s real value is not

just managing a portfolio to generate returns, but in navigating the client’s

investment experience. It’s important to consider everything from personal life

goals and objectives, portfolio expectations, the economic landscape, and how to

position the portfolio at any given time, given both the client’s needs and risk

appetite (or lack of it), as well as the stage of the market cycle.

Amanda Chadwick is an Authorised Financial Adviser with Forsyth Barr Limited in

Wellington. For further information on any aspect of this article or to arrange a

meeting to discuss your investment objectives in confidence, call 0800 367 227 or

email amanda.chadwick@forsythbarr.co.nz. This column is general in nature and is

not personalised investment advice. Disclosure Statements for Forsyth Barr

Authorised Financial Advisers are available on request and free of charge.

A Tale of Three Cities

By Graham Goodisson

I’m currently wading through the murky waters of trying to sell and buy in three

separate cities. It’s in no way as impressive as it sounds. Each requires a different

strategy and each can play havoc on the emotions. Engaging all three cities at once

creates something of a perfect storm.

We’re currently living in Wellington, but right now I’m attempting to sell and buy in Tauranga,

Lower Hutt and Christchurch. This has led me to observe again how different

cities are form each other, not just in their geographies or demographics, but also

how the real estate markets differ from city to city.

Tauranga seems to have auctions and you engage an agent who has the ability to

work across all real estate companies. There are lots of houses on the

market—and lots of really badly built ones at that. I think the real decision in

Tauranga is, not how many avocados to buy, but how to not be caught with a

leaky home. Prices are similar to Wellington.

Selling in Lower Hutt is a little more reserved it seems. It will be sold on a BEO or

listed price basis and will be with the company that seemingly “owns” that

particular suburb. Succeeding here is about a realistic price expectation and also

the thought that it might take a little while. The question in the Hutt Valley is

this: “Will it occur before Christmas?” Immaculate presentation is the key. Stock

levels are still low so that is helpful.

Christchurch is another story again. There are always many questions around

earthquake repairs. Initially, we’ll aim to sell via auction to get some interest and

then we will see. Our agent is the top agent in the city and it’s interesting to be

part of his process. Only one company is involved. It’s a conservative market

with lots of houses to buy.

I’ve learnt that what I know in Wellington is only transferable in terms of doing

your checks, spending time learning the value of properties and that local

knowledge trumps all. Also, you should never be emotionally involved, and that

is just about impossible for an emotional being.

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

Fixed Vs. Floating

By Brendon Ojala

And the winner is … drum roll please … fixing! Fixing for one year to be precise. But, yes, as always, it does depend on your situation.

The good news keeps coming for those with home loans. Not great news if you have money in the bank savings accounts though.

Interest rates continue to nudge down through the month and there have been significant decreases in the three- to five-year fixed rates in particular. However, there are a number of reasons why most banks and economists are still seeing the “sweet spot” at a one-year fixed rate.

Most of our clients are fixing the majority of their loans for one year and many are leaving a small amount in some sort of floating rate (revolving credit or offset accounts) to provide for flexibility/debt reduction. In making these statements, the disclaimer of course is that every situation is different and unique, so a conversation with your adviser is key before settling on an interest rate strategy.

Anyway, here’s why fixing for one year is so popular right now:

The one-year rate is the lowest on the market and, for an owner-occupied property with 20 per cent equity, we are seeing rates of 4.1-4.2 per cent (the 3.99 specials have gone for the mean time).

The Reserve Bank governor has indicated any change in the Official Cash Rate (OCR) is likely to be mid 2020.

Again the Reserve Bank has indicated the next move for the OCR is as likely to be down as it is up.

Although noting there are other things that affect home loan interest rates rather than just the OCR, it does have a major impact.

Given the above (and of course, who knows what unpredictable market shocks will occur?) fixing at the lowest rate and having a really good chance of being able to fix at low rates in a year’s time seems like a sensible strategy for most.

Do let your adviser know before you re-fix your home loan for another period. We can get some rates from the bank for you to consider and talk through your best strategy.

Brendon Ojala is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

Hard Knocks rugby star on Well-being

By Lance Shearman

Joe Harawira MBA, stars alongside Sir John Kirwan in Duke TV’s “School of Hard Knocks”. He’s also the RugbySmart Manager (NZRU), founder of Flo clothing, and client of Velocity Financial. I caught up with him to talk well-being.

Believe it or not, Joe and I played rugby together. We were both wingers, putting to rest the age old question, what would have happened if 80s All Black sensation Terry Wright came up against 90s bulldozer Jonah Lomu? (Note: I was the Terry Wright equivalent. Ask me some time about the result!)

Joe is a fit guy, highly motivated, and he tells me he has “flex-appeal” (he may or may not have used this term). If anyone could bring some thinking around well-being, he would be the person! So I picked his brain.

Well-being for Joe means having the right conditions to flourish in all aspects of life: physical, psychological, emotional, and spiritual. Consistency in these areas is fundamental to long term health and well-being.

I asked him about well-being in the work place. He said that well-being has come a long way, but more needs to be done. For instance, it’s great to see workplaces embracing the notion of a “well-being week” or the like. However, outside of these initiatives staff are working longer hours and the digital age means many of us take work home or do it in the weekends.

Recent surveys show that stress related illnesses and heart attacks are at an all-time high, particularly among males over the age of 40. This is an issue that must be addressed, says Joe.

Joe has been very successful in his studies and his career, so what would motivate him to start a social enterprise targeting lifestyle fashion? His response in short: “To create a brand that stands for more than just fashion.”

Flo (short for flourish) Clothing brings together his love of health and fitness and lifestyle fashion and his passion for giving back. Joe’s vision is to helps kids around the world: “Flo is a community where we don’t just aspire towards our own hopes and dreams, but we want to help others and we want to give back because that’s when we create real value.”

In New Zealand, one in four kids go without the basics that many of us take for granted, and that’s where Flo comes in. Flo is the New Zealand lifestyle brand with a mission to “level the playing field” so all kids flourish in school and in life.

Every purchase provides a meal in school for a child in need. It also helps sponsor kids to access sport and recreational activities outside of school. Joe says, “This is made possible through a partnership model with amazing charities and initiatives.”

Joe is about to start a crowd funding campaign through Pledge Me to expand into the yoga market and deliver more impact for kids in need.

Joe is passionate about making a difference and actively promoting well-being at a personal and professional level.

If you’re at Wellington airport over September be sure to call into the Flo pop up store to see Joe and the team. Otherwise check him out below:

Instagram @flo_clothing

Website www.flo.kiwi

Lance Shearman is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

What does Wellness look like?

Our team share their wellness practices. But, before we get to the inspirational bits, we can’t miss the chance to share possibly the worst/most brilliant dad joke in history.

What two words were used when the Loch Ness Monster was finally discovered?

“Well, Ness.”

The following is a ‘Monster’ Wellness Survey of the Velocity Crew.

Wellness is the new buzzword (not to be confused with “Melness”, which is a small crofting township in the Scottish highlands). We have surveyed the Velocity crew to see what their wellness strategies are and here are the (I’d like to say “surprising” but that would be an overstatement) results:

Graham:

Likes to journal and do yoga—probably not at the same time. Is hard at training for his first triathlon. Some of us have suggested he wear an emergency locator beacon during his swim.

His wellness has reached new heights since giving up drinking (fantastic effort, by the way!).

Brendon:

Apart from his daily 12:05pm trip to the sandwich shop, Brendon enjoys long-distance running and all the “fun” dietary requirements that come with this.

A client recently saw Brendon running in the morning and then again running at night, and was concerned that he’d been running all day. It has yet to be confirmed that this actually wasn’t the case.

Lance:

Is an avid fan of the nostalgic art of skipping and can be found a couple times a week at the gym skipping along to that old ditty “Jam, jelly, apple tart … Tell me the name of your sweetheart …”.

He also enjoys the odd game of “soccer” football, and serenading his neighbours with Lars Ulrich-esk drum solos.

Kylie:

Kylie tells us that she enjoys yoga (however, none of us have ever seen her carrying a yoga mat or wearing Lulu Lemon “essential” yoga gear). She also does something called F45, which may mean she enjoys shooting up a storm with the baby sister of the F90 assault rifle, or is secretly rebuilding a 1930s Fairchild Model 45 aircraft in her garage. It could also have something to do with a gym workout.

Stevie:

The newest member of the Velocity crew enjoys long walks on the beach and spending evenings cooking dinner with her partner. She has been voted “Most Romantic” staff member six weeks running. Her recently reduced coffee intake and numerous gym visits have no doubt assisted in her award-winning romantic ways.

Alex:

Enjoys rugby training (at a level most of us can only achieve via a Playstation) and walking his dog (making sure to leave his phone at home). Alex also gets great enjoyment from cooking for others. He is available for birthdays and Christmas functions for a limited time!

Debra:

Loves to relax with a gentle jog around Wellington’s “glory” run of Oriental Bay. As a living inspiration herself, it will come as no surprise that her on-going wellness journey also includes numerous inspirational podcasts. Her reduced sugar intake means the Velocity treat box lasts just that little bit longer these days.

Rebecca:

Another running fan, Rebecca also does something called Metafit, which sounds like it’s the not-so-long-lost cousin of Kylie’s favoured F45. I’m reliably informed that if there were to be an Office Olympics, Rebecca would be our weightlifting representative.

Simon:

Another in the office who enjoys long walks on the beach. He’s also a great “giver-backer” to the community and relaxes in the peaceful atmosphere of the world of kids’ soccer coaching.

Willie:

His time for the pursuit of wellness has in the past year been severely curtailed by the birth of his beautiful baby daughter. However, he still finds time to indulge in his favourite pastime of chopping and stacking firewood. His ultimate wellness goal is to have a firewood moat around his house, documenting the drying process on a monthly basis. He also enjoys the occasional jog up one of Wellington’s many hills to sit and enjoy the view.

Karl:

Working 3 jobs and studying full time, Karl maintains his full work to life ratio by enjoying the little things. An avid yogi, you will find him sitting on his matt at Hot Yoga Wellington most evenings, if not there, he’ll be behind his desk or spending time with his loving partner as they watch the latest Marvel movie cuddled up with popcorn in bed, “whoo-sa”

5 Quick Financial Wins

By Simon O’Neill

1: Do an honest expense report for yourself. Where are you spending too much? Seeing it on paper can be a trigger to change a habit.

2: Automate your savings. This is a trick many financially savvy people know about. Before you spend a single cent, put away at least 10 per cent of your income into a savings account. Name it something cool like “Dream Home” or “Bucket List Concert” to remind you why you are stashing cash away each month.

3: Limit the entertainment overdose. Eating and drinking out are the reason this old catch phrase was coined: “To have too much month left at the end of the money.” Only commit to things you can afford and don’t say yes to things just because you are invited.

4: The “no spending” day. Pick a day. Don’t spend a thing. Repeat each week.

5: Remember, less is more. Do you need all those subscriptions? Netflix, Lightbox, Spotify, YouTube? What can you cull? Need that gym membership if you only go once a week … or once a month?

And one bonus…

6: Give!

Paradoxically, being generous makes us feel abundant and, like having a savings strategy, forces us to adopt a more disciplined approach to money. Plus, the universe rewards us by giving us more!

If you are drawing a line in the sand today and saying, “Right, I need to make a change”, that is great! It’s a huge first step.

We can help you take the next step by helping you analyse what’s going on and where positive changes can take place. For more info talk to us in the office, online or over the phones.

Simon O’Neill is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

5 Tips to Mastering your Money

By Graham Goodisson

Many Kiwis have the means to gain financial well-being, but just need a strategy to get there. We share our top five tips for putting together a successful money strategy.

I’ve never wanted to be rich, just comfortable enough that when the bills come in, they get paid without needing to look around the room to see what could be put on TradeMe.

So, what does financial security mean to you? Take a moment and write down what it means to you. Perhaps completing the sentence below could help?

I will know I am financially secure when _________________.

What would your life look like or feel like if you were winning financially? How will you know when you reach your definition of financial security?

This table demonstrates how financial well-being can be understood as both about the present and the future and is at the same time about feeling secure and free.

Many Kiwis believe they’re just not cut out to enjoy this sort of financial well-being; that being in control of their finances and having financial freedom is simply out of reach. Instead, they get paid, they pay the bills (or those that they can) and spend the rest (if there is any left).

For many people, surplus is just not a word in their vocabulary.

How good would it feel to have money leftover to allocate to a holiday fund, a savings account, top up the bills account, put some money down for the kids’ Christmas presents? It feels pretty good, let me tell you.

For me, it certainly wasn’t always that way, but I wanted, needed even, to make a change as it was doing my head in to be “skint”. And I don’t like canned spaghetti that much!

Google “financial well-being” and you’ll never be short of things to read. Often, the search results will use lingo and some techniques that can sound like a foreign language. Many people start with these Googled tips and then give up or don’t try to get things sorted because it’s too hard or they don’t want to look silly.

I want to let you in on a secret: You can experience financial well-being regardless of your income.

Sitting down with a financial adviser and talking about your situation can be hugely empowering, because there is always something we can do to get things heading in the right direction. We’ll break down your personal situation and identify the things you’re doing right (well done you!) and where there’s room for improvement.

So, turning into the wind and facing this head on, what we don’t want to do is bombard you with technical lingo only to have you think, “Nope. Too hard!” Instead, what follows are my top five easy-to-initiate tips to get you on the road to financial freedom and five quick wins that you can implement today.

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

Help! The bank has threatened to freeze my accounts!

By Brendon Ojala

If you get an email from your bank threatening to freeze your accounts, there are three likely explanations …

1)     You are being spammed and if you click on the link and provide your details you will lose all your money. Moral of the story: don’t click the link and call your bank before doing anything else.

2)     You have been very naughty and committed some outrageous breach of the bank or the IRD or the government’s rules/laws. You’ll have some explaining to do.

3)     The bank needs you to reply to a request for information so they are not in breach of a new law.

Let’s go with number three for now…

If you have taken out a new bank product in the last year (like a home loan, credit card, or opened a new account), you would have been required to fill out a “tax form”.  The reason for this is that since 1 July 2017 New Zealand has been part of an OECD Common Reporting Standard, which means that if you are a tax resident outside New Zealand, the bank is legally obliged to pass certain information on to the IRD who then may exchange this information with other countries.

It is my understanding that even if you haven’t taken out a new product (which from a banks perspective is a good time to ensure you do it—as you generally are motivated at this stage) banks are asking you to confirm the country in which you are a tax resident. If you don’t respond, they may freeze your accounts until you have. That seems draconian, however, they do have a legal obligation they are trying to meet.

So, if you have been threatened with bank account freezing …

1)     Assume you are being spammed, until you’ve confirmed it directly with your bank.

2)     Don’t drug traffic, launder money or commit tax fraud.

3)     Fill out the bank form to confirm where you are a tax resident.

Brendon Ojala is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

Fixed vs. Floating – What gives you better Interest Rates?

By Graham Goodisson

Very little has changed with interest rates in the past six months, but can it last? Graham discusses.

In early February 2018, we pointed out that rates were as follows:

·         Floating rate – 5.3%

·         1-year fixed – 4.30%

·         2-year fixed – under 4.5%

·         3-year fixed – under 5.0%

Today, in August, it’s pretty much exactly the same. Sometimes the rates shift slightly, but mostly they are as they have been.

So, what’s in the forecast? More of the same?

Yes, probably more of the same for the coming quarter. We aren’t seeing any major changes in international markets. US markets are slowly increasing but New Zealand, as it has been for some time, is nicely positioned to cope.

Right then, what should I do if my mortgage has become floating. Well, if you’re not going to clear it the next 12 months then at least fix for that … longer than that depends on your personal situation and please contact your broker for the appropriate advice.

What’s going to happen longer term? Brexit and Trump, along with trade wars, will all obviously have an impact on the global economy and the All Blacks will on the New Zealand economy.  However, it doesn’t seem as though big changes are on the short-term horizon.

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

Should I Refinance my Home Loan?

By Kylie Cassidy and Brendon Ojala

With the banks competing for new customers and offering cash incentives, the temptation to switch banks can be rife. Brendon and Kylie ask if the switch is really worth it.

The first thing to note if you’re considering refinancing is that you should consider much more than just interest rates. The actual costs can vary depending on whether you have existing loans that are still fixed. There are also the non-monetary factors like finding a bank that better suits your needs or has a superior service level. These are all things to consider.

Turning to your mortgage broker for advice should be your first step as they can help you work out the pros and cons, in the meantime, here are four factors to get you thinking:

1. Does the bank suit my needs?

Consider the bank’s products and whether they will suit your current needs. Do you want to be able to make lump sum payments without penalty? Do you want a large revolving credit account? Or perhaps an offset product where you can use the funds across savings accounts to offset the interest on your mortgage?

2. Don’t get hung up on lower interest rates

Lower interest rates aren’t the be-all-and-end all, and often some smart budgeting coupled with the right mortgage structure can give you more than then a 0.2 per cent decrease in interest rates. We will of course, work hard to get a competitive rate from the bank, but it’s in this finer detail where your mortgage broker can add real value.

3. Making the switch can be messy

If you’re offered a cash incentive to move banks, chances are you’ll need to move your banking across to them. This means changing your APs, direct debits, salary and so on. Some banks do offer a “switching service” to make the process easier, but you may need to keep your existing account open with some cash in it, to cover any repayments or direct debits you may have forgotten about.

4. Costs of switching

Below are some costs to consider:

·         Potential break costs at your current bank (anywhere from zero to tens of thousands!)

·         Lawyers fees (approx. $1000-$1500)

·         Cash contribution claw backs (if your current bank offered you a cash contribution, if you move banks within a certain time frame—between two and four years—they reserve the right to ask for this cash back.

·         Discharge fees ($100-$150)

The new bank may offer you some cash to offset the above costs, however, it’s important to consider all of the above. The “best bank” offering the lowest rates changes all the time, so it’s important to consider your needs long term. 

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Kylie Cassidy and Brendon Ojala are Registered Financial Advisers with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.