MORTGAGES

We just bought our first home.. phew!!

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Alex has had an exciting summer, not only due to the amazing weather but also the fact that he and his partner have bought their first home. He shares his tips.

 

After gruelling budgeting—ditching brunches and lunches—requesting every favour in the favour-asking-repertoire book and numerous chats with Brendon, my friendly Velocity Mortgage Broker, about “how to get the deal across the line”, finally, our brunch-deprived weekends were spent at open homes, fighting with hordes of other potentially buyers.

 

In the end, we fought off the hordes and secured out little slice of paradise and are proud Wellington homeowners. The road was not easy and let me share a few tips that helped us out a lot.

 

Budget, budget, budget

 

Dreams are great and everyone has them, but only some people achieve them. The difference between people who achieve dreams and people that don’t is often very simple: one just dreams away while the other makes a plan.

 

The vast majority of people have to save up for a deposit—unfortunately, these do not just magically appear in our bank accounts. The only way to get there, fast, is to have a goal[1], make a plan and set the budget to achieve it.

 

Making a budget is the real deal; it gives you something to work with, work towards and gives you a sense of achievement. There are many great tools to help you budget. Find a way that works for you. At Velocity we have a useful get-rid-of-your-mortgage budget calculator.

 

Get professionals involved … early!

 

I can’t stress enough how important it is having professionals involved. Unless you are one or have extensive practical experience, prioritise seeking out assistance. Here are some examples of useful pros:

 

-       Ask the real estate agent for all information about property, neighbourhood, disclosures, etc.;

-       Get your lawyer to check the LIM and other documents;

-       Get a buyer’s building inspector in;

-       Contact your mortgage broker (that’s us) early to sort finance for that specific house;

-       Drop a line to your insurance broker to get an insurance certificate for the specific property;

-       Do extra checks—parking, public transport, cost of renovations etc.

 

All these professionals do these things on a daily basis and, when compared to taking a DIY approach, can save you vast amounts of money, time and stress.

 

After living in our new place for two months while the first round of renovations are taking place, I can testify to the need to avoid DIY-ing it whenever possible.

 

Next time: Budget and goal-setting tools and tips

 

Alex Barendregt 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.

 

 

 

 

[1] A good goals setting tool is the SMART technique – which encompasses all areas of setting and achieving a goal by making it – Specific, Measurable, Achievable Relevant/Realistic and Time bound.

 

How to upsize your family home

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We all know about the struggles of first-home buyers in today’s property market, however, there is a new group in an equally precarious position: those with “honey, I grew the kids and shrunk the house” syndrome. Lance explores how this group can upsize their home.

 

Here’s one of the main issues facing the upsizing family: Current housing market has meant that buyers with the least (read: zero) conditions win in the offer process. So, then, how do you purchase your next home without the fear of not only you becoming homeless, but also displacing your family? This hurdle facing the upsizing family stems the flow of smaller homes ideally suited to the many despairing first-home buyers.

 

So I propose three potential solutions for the too-small-home owner:

 

1.  Put in an offer conditional to sale of your existing property

In the Wellington property market of early 2018, there seems to be an ever so slight sway back towards favouring the purchaser. This is giving buyers more space to negotiate terms, particularly if the property has quirks. This being said, an offer subject to the sale of your property is not the most attractive term. It could take weeks to sell your smaller home, and there is no guarantee for the vendors that this will ever take place.

 

2.  Sell your home first

Sell your home, move to a rental (note, there are no rentals) with your family and hope to get back into a larger property. Now, I have a five-year-old daughter, and a two-year-old son, and as a parent the risk involved in such a move can just be paralyzing. What if we price ourselves out of the market? What if we can’t rent near their school/day care/work?

One of the benefits, of course, is that you are ready to offer (if you are not under a fixed rent agreement)—you have your cash in your hand and are ready to pounce!

 

3.    Bridging finance 

There are a couple of types of bridging: Open and Closed.

 

Closed bridging is when you have a sale date already confirmed for your current property and you wish to settle on a new property sooner than your current property is sold.

 

Open bridging is when you wish to cement an unconditional offer of purchase before you have a confirmed sale date on your current property.

 

Although both can be difficult to obtain, the questions the banks need answering over the bridging phase are as follows:

·      What is the equity position (the difference between your loan and the value of the property/s)? (the more equity the better)

·      Do you have access to cash for covering payments on both loans for an extended period of time?

·      You’ll often also need to provide valuations on both properties to confirm the likely sale price and demonstrate job security and income.

As always there are multiple considerations both in your personal situation and in partnering you with the right bank. Currently we know a couple of banks who have a greater appetite for bridging finance than others. If you would like to discuss the possibilities of bridging finance be sure to contact us at Velocity Financial and confirm whether this is an option for you.

 

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

About to Re-Fix Your Loan?

Don’t just take the “Click Button” approach to re-fixing your mortgage, there could be better options out there, says Brendon. 

A month-or-so before it's time to re-fix your loan, you will receive a letter or email from your bank asking if you want to re-fix your home loan. Banks are becoming more and more aggressive in this phase and some are providing discounted interest rates on the spot. They will often give you an option to simply click a button to accept a rate and it is all done.

 

While this is obviously a really simple option, we strongly advise clients to talk to us before doing this.

 

Currently, the banks aren’t giving us the ability to click a button on your behalf if you wish to re-fix your loan through us—a form and an email trail is involved. However, what we can do is give you advice. We will review how your loan has been going over the last year and have a conversation around the next two or three years to make sure your loan is still working best for you.

 

On some occasions it is just a matter of accepting the best rate. However, most of the time there will be a conversation to be had around your strategy. Very often we will change the structure of your loan to meet any changes in your life situation or make some tweaks to your current mortgage.

 

At Velocity, our job is to give you advice and to make sure your mortgage is designed to your specific needs. We are a little disturbed that banks do not even give the pretence of offering this sort of advice at mortgage re-fix time. The bright side to this is, of course, that the value of having a good mortgage adviser to call on is given even greater emphasis.

 

So please, before you click that button, give us a ring so we can make sure you finish up with the best mortgage arrangement 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.