Continuing the theme of numbered checklists, here are four things you need to know about.
- Make the most of today’s astonishingly low rates.
I never imagined we would be looking at rates like 3.95% p.a. at this stage in the economic cycle. Talk to me now if you’d like to take advantage of these rates – they won’t be around forever. Furthermore, I strongly advise you to keep up your current mortgage payments, even if you refinance at a lower rate. This is the key to paying down your loan faster and becoming mortgage-free.
- Tell your kids the secret to becoming mortgage-free.
If you have children who have taken out a home loan or borrowed from family to get on the property ladder, here’s our top tip: Make payments at an interest rate of 6% p.a. – even if the actual rate is less. That way, they’ll make inroads into paying off the principal, and they’ll be conditioned to making the level of repayments that are historically more likely.
- Hardline bank regulations are here to stay, so get used to them.
In Sydney I was struck by the shock Aussies are feeling at being declined for loans by banks that previously were free and easy to deal with. In New Zealand, we’ve been coping with this for some time. The root cause is tougher bank and government rules, such as responsible lending codes. The old days of rampant lending will not come back, so get used to the idea that lenders are going to make you jump through more hoops from now on. Don’t worry – we’re always here to help you!
- If you’re a landlord, free money exists – for now.
From July 2019, your rental properties will need to be insulated or it will be illegal to let them to tenants. Act now before the rush begins – you can bet the insulation providers will be flat out next autumn. The good news is that interest-free loans are available from some lenders, so I advise you to grab this financial lifeline to ensure non-compliant properties are brought up to scratch.