09
May

Different banks, different rules. Here’s how to make them work for you.

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Each bank has a different set of rules. If you aren’t aware of them, you could end up with a loan that doesn’t fit your needs.

The reason for this is that banking is competitive but highly regulated. On top of the Reserve Bank regulations that govern all lending in this country, each bank also sets its own rules. For instance:

•    How much marketshare the bank has. Does it want to grow its loan book or just cherrypick the easy loans?
•    Exposure to different areas of the economy. Perhaps a bank has lent too much to the apartment market or is over-committed to Auckland.
•    Exposure to a particular development. Banks are wary of having too much skin in a property developer’s game

So don’t take it personally if your long-term bank doesn’t say ‘yes.’ It may have nothing to do with your creditworthiness. Give me a call instead.

By understanding your goals I can match you with the bank that’s best able to meet them. For instance, if you are buying a property that needs major renovations, we will find a lender who’s willing to fund the reno as well as the purchase.

There are also some traps to avoid. One of them is choosing the cheapest rate, and then finding the bank won’t lend you the funds for the renovations. Once you’ve locked yourself in for a long term it can be very costly to break out of it.

If you want it, we’ll make it happen. That’s because we are more than just mortgage brokers – we’re strategists to help you achieve your goals

Do you know someone who’s looking at buying and could do with some smart guidance? We’re more than happy to help, even if they aren’t quite ready to apply for a loan.  Make an appointment.

09
Apr

You are not entitled to a home loan.

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That’s a harsh way to put it, but we need to grasp a harsh truth. If, like me, you have been with the same bank since childhood, you may think you are entitled to their support. But in the bank’s eyes, you’re not.

2017 has been a shocker. I’ve seen good clients knocked back by their banks – even with those a solid credit record and years of loyalty. It’s nothing personal. The Reserve Bank is concerned about debt building up in the economy and has told the banks to dial back the amount they borrow overseas. Since we don’t save enough money in New Zealand, this means restricting the inflow of funds.

With less money to lend, banks have tightened their criteria. They can pick and choose who gets a loan, and if you don’t meet their model, they will turn you down. To add insult to injury, they may even tell you how to manage your finances.

What’s the way forward? Consider splitting your banking. Husbands and wives should hold accounts at different banks. Teenagers can have a KiwiSaver with one bank and their main account elsewhere. You’ll improve your chances of getting a yes from one of them.

Above all, make sure you talk to me before you refinance, go house hunting or start renovations. I’ll share my tips on the best way to get your loan approved.

Want smart advice on your mortgage? You don’t even have to brave the Auckland traffic – you can Skype us. Make an appointment.

09
Mar

What’s happening with interest rates?

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You may have noticed helpful little buttons popping up on Internet banking. Click now to grab this great rate! Fix your home loan! Act now!

It’s all about creating urgency.

There’s nothing sinister going on. The banks are offering you an easy way to fix your mortgage rate. But it’s worth taking a moment to look at the larger picture.

Your mortgage is much more than your interest rate, and you should take into account all the other factors in your life. Perhaps the best way to understand this is to look at the example of a couple who recently asked me for a comprehensive review of their home loan.

They were planning to start a family, which would mean going down to one income. By looking at their budget we could see that keeping their mortgage repayments at the same level would enable them to maintain their quality of life but still repay their mortgage years ahead of schedule. The net result: thousands of dollars saved in interest, and years off their mortgage term.

At Sue Tierney Mortgages we don’t charge for this advisory service. Helping you become debt-free is our passion. Keep that in mind before clicking on the automated buttons on a bank’s website.

Want smart advice on your mortgage? You don’t even have to brave the Auckland traffic – you can Skype us. Make an appointment.

09
Feb

The biggest mistake you can make with a mortgage this year.

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If you are thinking of committing to a house purchase – and you don’t have finance nailed down in advance – I have one word of advice for you: Beware.

The Reserve Bank is determined to choke off Kiwis’ insatiable demand for debt. Lenders are finding it harder to access overseas funds. As a result, they are looking very closely at new loan applications.

So don’t commit to buying an expensive new house before you’ve sold your current one, as you may not be able to get bridging finance. And don’t assume you can roll over an interest-only loan.

If you’re an older buyer, you may not be able to get a mortgage that extends past your 65th birthday. First-time buyers will need at least 20% as a deposit, and investors will need 40%.

It doesn’t matter if you’re a long-term customer with a good credit record. The banks will impose the Reserve Bank’s rules, regardless of your past dealings.

The golden rule is to be prepared. Talk to us before you go house hunting and don’t sign anything until you’ve got finance locked and loaded.

Are you thinking about buying a home or changing your mortgage? Make sure you get expert advice.

10
Jan

If the bank seems to be making life difficult, don’t take it personally.

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The world is changing. The Reserve Bank, which controls all banking in New Zealand, has been requiring lenders to implement new policies on mortgage lending. You may have experienced a delay because of this, or even found yourself turned down for a loan.

Don’t take offense. All lenders need to comply with Reserve Bank instructions, which are designed to take the heat out of the Auckland property market. Here’s what you can expect if you apply for a mortgage in 2017:

  • No more interest-only loans (or restricted extensions). If you own your own home, the Reserve Bank wants you to start repaying the principal.
  • Loan to Value Ratios (LVRs). These days you need at least 40% equity if you’re a property investor or 20% if you’re buying a place to live in.
  • 90% loans for first time buyers are now a rarity.
  • Household expenses are scrutinised. You will have to fill in an expense schedule to prove you can afford your loan repayments.

The days of shiny extras such as free TVs are well and truly over. Cash back offers are restricted or removed entirely. Once again, it’s because the banks are being directed to clamp down on excessive lending.

When you think about it, this is a good thing. No one wants a property market crash! So don’t take it personally, and don’t shoot the messenger, if the banks make it a bit harder to get the loan you want.

Are you thinking about buying a home or changing your mortgage? Make sure you get expert advice.

10
Dec

OUR NO. 1 TIP FOR FIRST-TIME BUYERS

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In real estate, the saying is that you should concentrate on location, location, location.

If you’re a first-time buyer the emphasis should be different. Focus instead on savings, savings, savings.

The first-time buyers we have worked with in recent years have invariably used KiwiSaver to the max. They have bumped their contributions up to 8% of salary and kept making payments through thick and thin. After years of diligent saving they have built up a sizeable deposit for that much-desired first home.

Many have also gone the extra mile and generated additional savings in a personal savings account. I’ve helped all sorts of young people, both singles and couples, to buy their first home, simply based on their ability to sock away savings for years on end.

Yes, some of them have also benefited from help provided by family. But many haven’t. And they’re not just buying apartments – many of them have purchased houses and land.

Saving a deposit is not rocket science but it does take commitment. If you or someone in your family is contemplating that first step towards home ownership, please get in touch. I’d be more than happy to provide some guidance to ensure you’re in the best position to obtain a loan when the time is right to buy.

Are you a first-time buyer, or do you know someone who is? Make an appointment

10
Nov

Smart buyers do their homework before an auction.

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Vendors love auctions.   Most buyers hate them.

However auctions are a fact of life, so switched on buyers do everything possible to reduce their stress levels.  The key is preparation.

Let’s imagine you’ve found a property you love, and the jolly thing is being sold at auction.  The first thing to do is make sure the agent gives you all the necessary documents.  These include:

  • a proposed Sale & Purchase agreement
  • a Certificate of Title search
  • a LIM report
  • a Body Corporate pre-disclosure pack (if you’re buying in a Body Corporate)

You may also need a builder’s report and registered valuation to give to the bank.

The costs of these can soon mount up.  If you (or your kids) are serial bidders at auctions you can find yourselves thousands of dollars out of pocket.  So here’s a tip – don’t spend money on builders’ reports or valuations until you’ve got pre approval of finance.

My next tip is to be aware that a Sale & Purchase agreement can be revised right up till the day of the auction.  If it changes you will need to run it past the bank again.

I know someone who missed an agent’s phone call and arrived late at the auction.  He put in a successful bid, only to realise that a clause about asbestos had been inserted into the agreement.  There were some tricky negotiations before the bank agreed to go ahead with finance.

It boils down to doing your homework.  There’s a lot of money at stake so be prepared.

Thinking about buying in the next few months?  Make an appointment

10
Oct

Buying off plan or thinking about bridging finance? Be careful.

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The Reserve Bank is keen to avoid a property crash which could have serious consequences throughout the economy.  To turn down the heat on prices it has tightened controls on lending.

There are two knock on effects that could come back to bite buyers in the next few months.

The first affects those purchasing apartments off plan with a settlement date a year or two down the track. The risk is that the bank may pre approve finance now but shake its head when you come back for the rest of the money.  Any letter of offer that still has conditions to be met is a cause for concern and the end result could be a lot of extra stress and expense at settlement time.

The second risk occurs when you borrow money to buy a new house before selling your old one.  Many people call this bridging finance but it is actually a speculative home loan.  They’re hoping the stars all align but what if they don’t?

Bridging finance is only where you have sold your home unconditionally and the settlement date of the new purchase is prior to your current home settling.

If the previous mantra was “buy before you sell”, the current one should be “sell before you buy”.  Then you won’t be at risk of carrying a large loan while desperately trying to flog your existing property in an uncertain market.

There’s no need to panic as both these risks can be mitigated with smart planning.  But make sure you talk to us before purchasing off plan or committing to buy an expensive new home before you’ve sold your current one.

Thinking about buying in the next few months?  Make an appointment

10
Sep

Interest only loans – a trap for the unwary

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An interest only home loan where you are only servicing the interest on your mortgage and not repaying debt can be useful at times.  You might want to reduce outgoings for a period or prioritise paying down your personal mortgage while your rental property ticks over on an interest only loan.

However the Reserve Bank has decided Kiwis are carrying too much of this kind of debt.  So it has put pressure on lenders to shift borrowers off these loans.

We’re seeing reduction in terms from 10 years to five years and pressure from banks to switch borrowers to table loans.  This can lead to awkward discussions at refinancing time.

If you have mortgages on different terms with a single bank, you could find yourself forced to convert one or more from interest only.  You’ll be unable to refinance with another bank because of painfully high break costs across your entire portfolio.

If this rings a bell talk to us now.  You will need a strategy to manage the transition from interest only loans that are nearing the end of their term.  Above all make sure you don’t end up in a position where your bank is obliged to take you off interest only and you are obliged to stay with that bank.

Are you looking at refinancing in the next few months?  Make an appointment

10
Aug

Fixed or floating? Which is right for you?

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When advising on a mortgage I’m often asked whether it’s best to choose a floating interest rate or lock in a fixed one.  The answer is always “it depends”.

First I need to understand your financial priorities and circumstances.  Do you have regular surplus income you can use to pay down debt quickly?  Will you receive regular bonuses or commission income?  Do you plan to sell something that could create a lump sum?  Are you expecting an inheritance?

What about changes on the horizon – maternity leave, a career shift or a change in working hours?  And do you have plans to sell the property?

Here’s another key question.  Are you the sort of person who worries about money?  Then you probably won’t be comfortable with uncertainty.

Based on your answers we can design a mortgage that meets your needs.  It may mean hedging bets with a loan that’s split between fixed and floating interest.  This provides some certainty while letting you pay down debt as fast as feasible.

I found out many years ago when working as a banker that all my wealthy clients had got rid of their personal mortgages.  My goal is to find the best combination of fixed and floating interest to enable you to do the same.

Are you thinking about taking out a fixed or floating rate?  Make an appointment