What's New in the Zoo?

There has been lots of going on at Velocity end of last year coming into 2016. Here are few of the goings on.

• Velocity NorthShore welcomes a new Mortgage Adviser, Jaimie McDonald. Jaimie has a background ingrowing small businesses in the travel industry and is excited about transferring his skills to the financial services. Jaimie will be working with Rupert in their brand new offices in Takapuna, Auckland. Ifyou’re interested their new address is 445 Lake Road, Takapuna, Auckland 0622. 
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• There is also change afoot in the Wellington office. When driving down Vivian Street, looking left, you may have seen our Wellington new offices located at 22 Vivian Street.  We are excited to have some street presence and the grand opening is on Thursday, the 11th of February at 5:00 PM. You are welcome to attend. If you can make it please let us know via admin@velocityfinancial.co.nz.

• In Wellington, we are  excited as 2 new advisers are joining us:  Katherine Mexted, who has a background in Commercial Law is joining Graham and will have a specific focus on working with small and medium-sized businesses and putting together comprehensive risk management strategies for those companies. This is an exciting new development for Velocity and a much needed service in that sector.

We would finally like to welcome Alex Barendregt. Alex is originally from the Midlands. He has a legal background and also plays rugby at a high level.  It was his rugby career that led him to New Zealand and Wellington is now home for him. He is so excited to join Velocity Financial. Alex is going to specialise in assisting our clients with their personal insurance needs.

• So those are the exciting changes. Unfortunately, it is with some sadness that Sara Elemam has left us. Sara was with us for around three years both in a support role and was training as an Adviser. She made a decision to move back into the corporate land and is now back in a banking role. So we do miss Sara and certainly wish her all the best in her new role.

Fixed verses floating: What to do as interest rates hit new lows

Right now, there are some tantalizing fixed interest rates out there. But are they worth jumping ship for?

I hate to be the "I told you so" guy ... Actually, scratch that. I LOVE being that guy.

I embrace these moments at every opportunity. They are few and far between so you're getting most of an article dedicated to an “I told you so” moment this month.

I've been saying for the past four or five weeks that there will soon be a bank that offers a <4% one-year rate. It would most likely be SBS or BNZ and the reason they would do it is to grab the headlines. And lo, today it was released ... 3.99% for one year by SBS, which is a shame because the other major banks take pricing by BNZ a lot more seriously.

3.99% is a nice rate. When was the last time you saw a “3” in front of your mortgage rate? Never, that's when. Unless you're from another country.

So the inevitable question is this: Should you refinance in order to take advantage of this historic occasion?

Here are a few things to consider:

·         There are no cash contributions with these sub-4% rates;

·         This, in turn, means that you're covering the conveyancing fees;

·         And you’ll be covering any break fees (some of which can be eye-watering).

Similar to our Break Fees Calculator, Velocity has a calculator that will tell you if you're going to come out on top by moving to SBS. This calculator considers the points above and will let you know if a change will be worth it in the long run.

We have an agency with SBS and we find them a lovely bank but they do come with a catch. They are quite conservative with their lending so you may have trouble refinancing if you own a non-standard property. Feel free to talk to us if you have any questions though and it doesn’t hurt to punch the numbers with our calculator.

Rupert Gough 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.

Does it Pay to Break Your Fixed-Rate Loan?

What if you’re locked in to a fixed-interest rate and interest rates keep dropping. Can you get out of that fixed rate? And is it worth it?

Oh boy! Those interest rates have really fallen. Your neighbour just fixed his mortgage at 4.35% for one year and you're stuck on 5.29% from earlier this year.

When you fix your mortgage, you are promising to borrow money from the bank at a certain rate for a certain time. You get the benefit of knowing exactly what you will pay over that time and the bank gets a promise that you will borrow that amount of money.

However, if you want to change the deal, you will have to pay break fees. Usually the only reason you want to change is because the interest rates are lower—no one ever wants to get higher interest rates. So, sometimes the break fees are worth paying, other times they are not.

We have come up with a very smooth solution to this question of loss verses savings. And all we need are the following tidbits of information from you:

For each account:

• The amount that is fixed at your current bank (e.g. $350,000)
• The current interest rate that account is on (e.g. 5.39%)
• The date that account matures (e.g. 17 July 2016)

We also need:

• The quoted break fee. This fee will only be valid for one day but most of the time will be a good indication of cost. You can ask how much the fee will be simply by phoning your bank.

With this information we can provide you with a profit (or loss) so you can know if it’s worth pursuing.

And until 5 November 2015, if you ask us to calculate these break fee costs for you, you will be put into the draw to win an iPad Mini*.

There is no requirement to change banks or even action the break fee. We just want everyone to sleep as best they can at night with their mortgages and not have to worry about that pesky neighbour always mentioning their amazing mortgage rates.

Please call your friendly Velocity Financial adviser and they will be happy to help with any questions you have.

*Ts & Cs apply.

Rupert Gough is an Authorised 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.