Matters of Interest

How banks calculate interest – and what it means for your loan repayments

Sun, 28 Sep 2025 23:12:15 GMT

Banks only charge interest on the precise amount of money outstanding on your loan. They calculate this interest every day.

To show how this works, here’s a simplified example:

On Friday you borrow $100k.
Over the weekend, your long-lost granny re-connects with you. She wants to give you $10k.
On Monday you walk into the bank and deposit that $10k, and ask the bank to use it to pay down part of the loan.
On Tuesday your loan is now $90k and your daily loan interest charged is reduced accordingly.

This may affect the way you pay down your loan.

People often ask us if they should save up a lump sum, then use that ‘lump’ to pay down their loan.

The idea is sound, but you shouldn’t wait until you’ve got a big lump. Small, regular payments can chip away at the principal and reduce the total amount outstanding.

Remember, interest is calculated daily . It’s better to be reducing your loan steadily rather than waiting a year to make a really big dent in it – no matter how satisfying that may feel.

There’s an important caveat, which is that some types of loan don’t allow you to chip away at the principal every month. So it’s important to get specific advice that relates to your financial situation and goals.

But in general, you’ll be better off if you continuously reduce the total amount you owe interest on (i.e. the principal). So you can look at hacks like keeping your payments at the same level when interest rates drop. It could end up shaving years off your loan.

Get personalised advice.

If you’d like to review the structure of your loan and get some advice on being smart with interest, we’re here to talk. A good time to talk is when it’s time for your loan to rollover, or when your financial situation has changed.

Just book a chat using the buttons below.

Fear of money

Sun, 28 Sep 2025 23:04:28 GMT

Could that really be a thing? Yes, it is.

Over my years of helping people choose the right mortgages and insurances, I’ve come across many who look embarrassed when the talk turns to deposits, cash projections, lump sums and interest rates. Sometimes, they freeze and mumble, “I’m sorry, I’m just not good with numbers.”

My guess is it’s about 10% of the population. That’s one in 10 people who feel lost when it comes to making decisions that will drastically affect their future wealth and wellbeing.

So here’s my suggestion:

Talk to your friends who feel lost or panicky about money.

Maybe it’s a sister is who lives pay packet to packet. You could help them set up an emergency fund and start channelling regular payments to a pension plan.

Maybe it’s your best mate who always spending on tick. You could help them work up a simple budget.

Maybe it’s the friend who really wants to buy a house but never seems to get their ducks in a row. You could show what worked for you and suggest ideas that they might use.

You don’t have to ‘fix’ them. Just be a trusted friend.

I get it – these might not be easy conversations. People often get embarrassed or defensive. So be clear that you’re not trying to take over; just suggesting ideas.

The key thing is to wait for them to initiate the conversation.

The fact that they’ve revealed their fears or frustration provides a way in. They might have reached a decision that they need to get better with their finances, and you’re the person they trust to have that conversation.

If numbers are your thing, you’ll be perfectly placed to help out. Remember that we all have strengths and weaknesses. Theirs just happens to come with dollar signs attached.

A confession.

Science was never my thing despite having an outstanding teacher. I was just bored and feel sure I zoned out during all those lessons at school. The irony of now having a nephew who is an astrophysicist is not lost on me!

But I love numbers. I can see the patterns and I am fascinated by the way small changes in calculations make a huge difference over time. For example, compounding interest is one of the wonders of the world, and once you understand this, it will change your life.

My friends who are great with words, or fixing machines, or emotional support, might be less interested in numbers – but I can help them out. And of course, I deeply appreciate the difference they make to my life. We all have different things to offer.

Financial education is empowering.

To make it easy, we write articles (such as this one ) to explain now money works.

And if you have a friend or family member who struggles with numbers, but wants to buy a house – send them our way. We’re always happy to provide tips so they can start the process of getting a deposit and making themselves mortgage-worthy.

Just send them this article – or use the link below to book an appointment.

Find out your credit score – and what you can do about it.

Thu, 04 Sep 2025 21:45:35 GMT

Whenever you apply for a home loan, credit card, HP or any other form of credit, the lender will run some checks. Because if someone’s advancing you money, they’ll want to know if you can pay them back.

But as always with money, there are a few myths out there.

For instance, I’ve had clients tell me their credit score is A+ or that they have a “minimal credit record.” Spoiler alert – there’s no such thing.

Other borrowers do naive things like ‘shopping around’ for loans by making lots of applications. I’ll tell you why this is a bad idea.

Here’s the Sue Tierney Mortgages guide to credit checks and credit scores:

What is a credit check?

In New Zealand there are independent credit reference agencies that maintain databases of credit applications and missed payments. The main ones are Centrix , Equifax and Ilion .

When you apply for credit, the lender will order a credit report from one of these companies. What they see in your file will affect whether they accept your application, as well as the terms they offer.

Different lenders use different credit reference agencies. So the information supplied to one lender might differ from the information another lender gets.

Fortunately it’s easy to find out what information they have on you.

Here's how to get your free credit report.

Equifax offers a free credit report within 10 working days, or you can pay extra to get a fast-track report in three working days. Apply for your Equifax report here .

Ilion offers a free report in 10-20 working days or a fast-track report in three working days. Apply for your Ilion report here .

Centrix offers a free credit report in five to 10 days. Apply for your Centrix report here .

We suggest you apply for all three reports. It’s always useful to see the information these companies are holding, and compare what they have on you.

Tip : If you’re thinking about getting a mortgage or any other type of loan, we suggest you obtain credit reports well in advance. This will buy you time if you need to correct the record .

How do credit scores work in New Zealand?

Credit reports contain both positive and negative information. So if you’ve taken out a loan in the past, and paid it back in full and on time, these facts will be on your record. Your track record with utilities and phone companies will be there too.

The other side of the coin is that any missed payments, late payments, defaults or bankruptcies will also show up.

Keep in mind that every time you apply for credit, the credit reference company will record the application from the prospective lender who’s checking you out. It won’t say whether or not you were approved – that’s a matter for the lender or utility. But it will show that a company asked for your record.

Tip : Don’t make lots of credit applications with different companies just to see if they’ll offer you anything. It seems that the more credit checks are completed on you, the lower your score will be.

This makes you look like someone who’s shopping around for credit. Lenders may assume other lenders are declining your applications, and draw the conclusion that you’re not the sort of customer they want.

Incidentally, this is one reason we never shop around, but instead aim to match you with the best lender for your needs.

What say you find a mistake in your credit records?

Mistakes happen. Sometimes an incorrect entry on a database will make it look like you’ve defaulted on a payment. Even worse, you might find there’s a loan or utility account you know nothing about – but which has been recorded under your name.

Identity theft is a serious crime where someone dishonestly uses your details to obtain credit, and their bad behaviour is attributed to you. If you find this has happened, you should immediately alert the credit reference agency, the company involved, and the police.

Follow their instructions to correct the record and make sure the crime is reported. Your good name – and your ability to access credit in the future – is at stake.

What to do if your credit report gives you a low score.

All the credit checking companies use their own scoring systems, so the way they describe your risk status will differ. However, you won’t be in any doubt if they think your record makes you a sub-par credit risk.

So what can you do to improve it?

First, check that the information is accurate. If you think there’s a mistake – or even worse, a case of identity theft – then get in touch with the affected company without delay. Ilion, Equifax and Centrix have procedures to deal with cases of incorrect data, so follow the advice on their websites.

Secondly, if a bad debt is showing, contact the lender to rectify things. You won’t be able to get the information removed, but at least the record can show that you’re cleaning up your act.

Thirdly, don’t try to fix a debt problem by chasing new finance from different lenders. New loan applications will show up on your credit record and probably make things worse. Instead, get help from a budget adviser to put your finances on a more sustainable footing.

Finally, don’t panic. A less than stellar credit score doesn’t mean nobody will give you a mortgage. It just means you have to be thoughtful with your application and choice of lenders. And that’s where we come in.

At Sue Tierney Mortgages, we have many years of experience helping people apply for loans, even when they don’t have the best credit record. Be open about the problem, and we’ll put together an application that shows you in the best possible light. We’ll also use our knowledge of all the lenders to select the one that’s most likely to say yes.

It costs you nothing to get this help from Sue Tierney Mortgages. Just click the link below to set up a call.

How to sell your house for more money.

Thu, 21 Aug 2025 22:15:03 GMT

Spring is almost here, and that’s when Kiwis start browsing listings and going to open homes

Selling a property is one of those times when the goal is crystal-clear. You want potential buyers to feel motivated to open their wallets and offer you the largest possible sum of money.

For that, they need to fall in love with your home.

Of course, you could always call a professional home staging company or pay for a fancy makeover. But there’s an equally smart way of getting the benefits of presentation without paying a home stager’s fee.

Here’s the Sue Tierney Mortgages guide to presenting your house for sale.

G et an outside eye.

Over time, property owners stop noticing things around the home. We simply get used to the way things are, and may lack the time and energy to deal with niggling flaws.

There’s an easy fix for this: Recruit the unbiased eyes of a frank and honest friend.

A beady-eyed friend will spot the wonky step on the porch, the inconspicuous hole in the bedroom wall, the discoloured area on an otherwise clean shower cubicle. As the saying goes, “Our dirt is always clean.” (Sadly, a prospective buyer won’t see it that way.)

Or maybe they’ll tell you that Grandma’s antique table makes the room look cramped. Or the handy array of spices and utensils that suit your style of cooking don’t show your designer kitchen in its best light.

You want strangers to walk in and say “Wow!” Far better to have a friend point our your home’s flaws than have a potential buyer walk away with a poor impression.

Tip : Have your friend stick Post-It notes on everything that needs attention. And don’t hover – let them walk around the house at their own pace, without distraction.

C rib from the best.

Another way to elevate your property is to observe the spaces that those with plenty of money and taste live in.

You don’t have to knock on any upmarket doors or buy a pair of binoculars. Just spend some time on YouTube or luxury websites.

It’s not about ogling expensive goods and gilded fittings, but observing the trends they follow. These people have the services of the best designers in the world, so take your cue from them.

Quite often, it’s the small things that count. Do they have an array of stuff on the bathroom vanity or just a single candle? Or my pet hate – stickers showing energy ratings on their appliances. Remove them and store them on a piece of paper tucked away in a drawer.

You could also subscribe to luxury home and interior design magazines to get insights. Remember your goal is not to get seduced by lavish and unattainable lifestyles, but to observe the way these spaces are tastefully presented.

Less Kardashian. More common sense.

Tip : Plants will always look healthy in upmarket settings. So if you’re aiming for lush luxury, make sure your plants don’t have dead leaves and a neglected appearance.

Get the benefits of home staging without the expense.

Once you’ve had a friend tell you your property’s flaws, and gleaned ideas from upmarket sources, it’s time to look at some targeted changes. Let’s assume any glaring flaws, such as a shabby chair, have been removed. Now, what else can you add to bolster that all-important first impression?

Would a framed poster add character to that bland living room wall? Could you upgrade your lampshades for a modest sum? What about replacing those mismatched bath towels with some brand new ones on sale from Briscoes? Or adding a few signature pieces, such as a designer knife block (which of course you’ll take when you sell).

This is a large part of what home stagers and knowledgeable real estate agents do. We’re suggesting that it’s possible to get most of the benefits for very little outlay.

Tip : TradeMe is your friend. With careful shopping, it’s possible to pick up furniture and chattels in good condition for just a few dollars. Or maybe you could borrow a few stylish items from friends if you’re really looking to save money.

What happens next?

With a little time and effort, it’s possible to present your home in the best possible light and reap the rewards at auction time. Then you’ll have more money to put down on your next place.

As always, we’re here to talk whenever you’re thinking of going to the market. From when to sell first , to reducing your mortgage rate , it’s all part of the service.

Click on the link below to set up a call. There’s no charge.

Will the government decide who gets your hard-earned assets?

Thu, 21 Aug 2025 22:05:51 GMT

Imagine the state taking control of your house, Kiwisaver funds, insurance policies, and any other assets you’ve accumulated, and then deciding who inherits them.

It’s not a paranoid plot. It’s what happens if you die without a Will.

The law is very clear. If you have over $15,000 worth of assets, dying without a legally verified Will means the government steps in. In technical terms, this is called dying intestate and your estate going into probate. In plain language, it could mean an estranged spouse or distant relatives could end up inheriting a chunk of your assets, regardless of your wishes.

Now let’s look at the positive news.

Every homeowner should have a Will.

$15,000 isn’t a large estate. If you have a mortgage you’re most likely above the threshold.

However, 50% of New Zealand adults don’t have a Will.

If you’re in that 50% we encourage you to make one. It doesn’t have to be complicated or cost a lot. Your lawyer can help – or you can ask us to refer you to some great lawyers we work with. There are also websites that help you make a Will online.

It’s important, because passing away without a Will can cause a lot of heartache.

Protect your loved ones from unnecessary stress.

The last thing a bereaved family needs is a messy dispute about who inherits what. Your well-drafted Will is your opportunity to make your wishes clear.

It will also reduce the legal costs of dealing with your affairs and will clear the way for your heirs to receive their inheritance without delay.

At Sue Tierney Mortgages we’re not lawyers and we have no vested interest. But every day we deal with people who are buying property and taking out insurance. There are large sums at stake so it’s just common sense to make sure there are plans in place for the future.

Got a Will? That’s great!

If not, get in touch, and we’ll point you towards some people who can help.

Book an appointment now, using the link below.

We’re trying to save you money, so don’t hide from us!

sue@stml.co.nz (Sue Tierney) — Mon, 21 Jul 2025 00:20:57 GMT

I realise that an email from your Financial Adviser might not be the most exciting thing in your inbox. But bear with us, because we’re trying to do the right thing by you.

When Louise or anyone else in our team reaches out, it’s not just a box-ticking exercise, and it’s definitely not a sales call.

It’s because we want to check you have the right cover – not too much and not too little.

An insurance review is time well spent.

It’s not uncommon to find clients are paying for cover they don’t actually need.

Maybe the kids have grown up and left home, so you don’t need to feed and clothe them anymore. Maybe you’ve finally paid off your mortgage, so your financial exposure has shrunk.

Or maybe you’ve inadvertently wound up with overlapping policies, so you’re doubling up on premiums for no benefit.

At Sue Tierney Mortgages we follow the advice of my mentor, Dr Fred Grosse , who says everyone should their review their costs every year, and look for savings. Insurance is a big overhead, and if there are any savings to be found, we will find them.

This is just common sense when you think about it. Your life at 40 will be very different to your life at 20 or 60. So let’s take stock.

It’s exciting when we can save money for our clients, and it’s also useful when we spot gaps in their cover. It’s about making sure they’re adequately insured for the risks of life.

So don’t ignore those emails from the Sue Tierney Mortgages team. Better still, you can reach out to us. We’re always here to talk.

Click on the link below to set up a call. There’s no charge.

Buy first or sell first: Which is best?

sue@stml.co.nz (Sue Tierney) — Mon, 21 Jul 2025 00:02:32 GMT

A lot of clients ask us this question. We understand why they want to know, because there’s a lot at stake.

The honest answer is, it depends. Any advice has to be tailored to your situation. However, there are a few key things to keep in mind

Here’s the Sue Tierney Mortgages guide to selling your home before you buy a new one (or vice versa).

When to buy a new property before you’ve sold your current one.

The main reason to put an offer on a new place before you’ve put your current house on the market is when you have some very specific requ irements.

For instance:

• You have children who need to be close to particular schools

• You have pets (because the worst-case scenario is being forced to rent temporarily, and many landlords don’t want pets).

• You have a very saleable property, so can be confident it’ll sell quickly.

• The market is rising – but be careful because you might not achieve the price you assume you’ll get.

In addition, you shouldn’t ‘go unconditional’ right away. A clause that states the deal is subject to you selling your current property can be useful here.

One more tip: Consider using the agent who just sold the home you’re buying. They’ll be incentivised to close the loop so the deal doesn’t fall over.

When to sell your current property before buying a new one.

In a nutshell – when you have a quirky home.

It might be a one-bedroom property in a middle of suburbia, surrounded by family homes.

It might be a house designed around the needs and tastes of one particular person. For instance, having bedrooms downstairs and living spaces on the top floor will limit its appeal.

Consider getting the opinions of some experienced real estate agents who specialise in your area. They can point out the pluses and minuses of your property, and steer you towards a realistic price.

Then, when you do sell, make sure you negotiate a long settlement date.

The next step is to go house-hunting. We recommend you talk to us early in the process . Better still, ask us to get pre-approval of a loan so you know your buying range. Never commit to buy something and then assume the bank will lend you the money. We’ve seen a few nasty surprises in cases like these.

We're always here to talk.

House-hunting is fun but it pays to have a strategy. We’re here to advise – and we can even come along to auctions with you. Whether you sell first or buy first, we’re here to help.

Click on the link below to set up a call. There’s no charge.

It’s not always easy (and we wouldn’t have it any other way)

sue@stml.co.nz (Sue Tierney) — Sun, 20 Jul 2025 23:41:36 GMT

I’m surprised at how busy things have been lately. The economic climate is still quite challenging, but our phones never seem to stop ringing.

Perhaps it’s something to do with the way we do business.

Here’s what I think:

Every deal is different.

Gone are the days when clients could ask for a mortgage, and we’d fill in some forms, drop them off at the bank, and standby for approval. These days, the sums are larger, the process is slower, and the rules are more complicated.

(That’s a good thing, by the way. It means everyone’s thinking harder about debt – and taking more care.)

As Financial Advisers, we have a legal duty to make sure the loan you get is the right loan for you. So we need to ask more questions, gather more information, and make sure we understand what’s going on in your life.

Sure, some deals are straightforward, but others can be surprisingly complex. You might need a mortgage on an unconventional property, or one that has potential issues. The Sale & Purchase agreement might have a clause that’s going to put you under pressure. There may have been a change in your circumstances, such as starting a family or a new career. So we need to take the time to understand what’s in your best interests, and then put together a loan application that’s likely to be approved by the bank. That can take time.

But we wouldn’t have it any other way. All our work becomes worthwhile when we see you achieve your goals.

And that leads us to another reason we seem to be so busy…

Happy clients refer us to their friends and families.

Unlike other mortgage advisers, we don’t have flashy ad campaigns, 0800 numbers, or legions of smiling employees. It’s a tight team here: Just Sue, Louise, Tracey and Olivia .

We take personally care of your loan and insurance needs. The people you deal with via phone or email are the ones who deliver the service.

Over the years, we’ve found our clients really appreciate the care our team takes. Perhaps that’s why they recommend us to their friends and families.

Thank you for trusting us. It means a lot.

Dealing with referrals and providing a personalised service to all our clients can make for a busy life, but we wouldn’t have it any other way.

If you ever have a question or need some advice, we’re here for you. Just click on the link below to set up a call.

When buying property, our advice is to get advice

sue@stml.co.nz (Sue Tierney) — Mon, 30 Jun 2025 02:04:51 GMT

As Financial Advisers, we’re here to help you get the mortgage you need for the property you want.

And just like lawyers, we can save you time and money if we get involved as soon as you’re seriously looking.

That means sending us the Sale & Purchase Agreement before you commit yourself by signing.

Here are some of the things we look for:

1. How many days do you have to arrange finance?

We’ll look at the date of signing, and then count how many days you have to get your loan lined up. If the Finance clause in the Sale & Purchase Agreement isn’t in your interests, we’ll let you know.

Be aware that banks are currently taking up to 10 days to process home loans. If they suddenly ask for a registered valuation, a builder’s report, or other items, you’ll need to arrange these within that period. We’ll do our best to meet deadlines, and we prefer not to request extensions, but it could get stressful!

2. Are you relying on KiwiSaver to cover the deposit?

A 10% deposit is common. This is ‘hurt money’ so the vendor and agent know you’re not putting in a frivolous offer – you actually have skin in the game.

Where it gets tricky is if you’re planning on withdrawing your Kiwisaver to cover the deposit. You might need a bit of help from us and your lawyer to make sure this goes smoothly.

Alternatively, we may suggest a smaller deposit (though there’s no guarantee it will be accepted). Or the bank may agree to advance the deposit if you already have a home and mortgage with them that provides security. Regardless, it’s a process that takes time.

3. Should you get a builder's report?

It can be smart to get an expert opinion, especially if there are questions about the age and state of the property. So you might want to insert a clause about the deal being subject to a builder’s report.

Bear in mind that you’ll need to share this report with the bank. Depending on what’s in the report, the bank might put conditions on the loan – or even refuse to lend you the money if they’re not satisfied that the building is of an acceptable standard.

If the report highlights a specific issue, the bank will likely want building quotes to show the cost of rectifying the problem. They will then look at your finances to ensure you have surplus cash to cover rectification, or check whether you expect the vendor to fix it all before settlement.

We’ll help you work through the implications before you sign the Sale & Purchase agreement. If there are building or property flaws that have insurance implications, you’ll need to consider your options.

4. What about unconsented works?

The vendor and agent might disclose alterations that need further investigation. A LIM report should be part of the process but the deal might also contain clauses about unconsented works. Tread carefully!

Banks are generally wary of properties with unconsented works and other things that affect their security. Make sure you don’t commit to buy the property, only to find you can’t get the mortgage you need.

Forewarned is forearmed.

You might have seen news stories about purchases that went wrong because of problems like these. We want to stress that the vast majority of real estate agents and vendors are professional and honest. So don’t get paranoid – but do allow enough time to get advice on grey areas before you sign any Sale & Purchase Agreement.

And if you don’t have a lawyer you regularly work with, you can always ask us. We can point you towards experienced lawyers who regularly handle property deals. We’re happy to refer you to them.

As financial advisers, we’re always happy to review the contracts for a property you’re looking to buy. It helps us understand the loan you need, and then we can start the process of lining up finance. And of course, if we spot any red flags, we can tell you before you’re committed to the deal.

Click on the link below to set up a call. There’s no charge.

Video it. Just in case you ever need to claim it

sue@stml.co.nz (Sue Tierney) — Wed, 07 May 2025 00:55:54 GMT

Here’s a tip that might come in handy:

Get your phone out, open the camera, and video any possession that you might need to claim on your insurance one day.

We sincerely hope you never suffer a burglary, fire or flood – but if you do, you’ll be glad you made a record.

A few years ago, we made this suggestion to one of our clients. He videoed his stuff – and wouldn’t you know, he was burgled just two days later.

This leads to another piece of advice: Make sure you mention this to your insurer, just in case you find yourself in the same position as the person above. You wouldn’t want the insurance company to start wondering if you’d set the whole thing up. Stranger things have happened.

A reminder that we don't offer fire and general insurance.

We have no skin in this particular game – we simply want to be helpful.

However, if you’d like to talk about these types of insurance policies, we can refer you to some trusted advisers. Note that we don’t get paid referral fees or commissions if you arrange insurance with these people:

Our contact at Glenn Stone Insurance (GSI) is Lynley Evans, who manages some of our own insurance. Contact her at lynley@gsi.nz
You can also use the tool on Frank Risk online. Click on the link here .

Alternatively, we’d be happy to refer you to Tower Insurance. We’d need your authorisation to send them your contact details. Note that Tower do pay us a referral fee.

Talk to us if you need to look at your life and health cover.

If you haven’t reviewed your life, health, trauma, or income protection insurance recently, now may be a good time to do so.

This is especially important if your life has changed. Did you get married, start a family, retire, come out of a relationship, take out a mortgage, or experience any other major changes in recent years?

We’re not trying to sell you anything – just helping ensure your cover still meets your needs.

Click on the link below to set up a call. There’s no charge.

Why do we ask so many questions?

sue@stml.co.nz (Sue Tierney) — Wed, 07 May 2025 00:42:39 GMT

The reason is simple. Something you may not think is important could actually matter a lot.

It could save (or cost) you thousands of dollars.

That’s why we’re always keen to catch up. Talking face-to-face on a video call is an opportunity to find out the things that don’t appear in an email or bank statement.

Here’s an example:

When a 'cash contribution' from the bank is a bad idea.

Banks often use cashback offers or other sweeteners to encourage you to sign on the dotted line.

This can be a good deal…or it can be a terrible one. It all depends on your personal circumstances.

When we talk to you, we’ll ask questions like these:

“Could you reduce your loan in the next few years with a lump sum from KiwiSaver?”

“Are you expecting a windfall, such as an inheritance or company shares?”

“Are you thinking of selling your house and buying in a cheaper location within the next three years?”

Your answers to these questions (and the other questions we ask) will determine the type of loan that’s right for you. The sugar hit of a cash contribution from the bank might turn out to be a false economy, because it could end up locking you into a loan term that doesn’t match your objectives.

Here's another example.

Refinancing your loan might not be a done deal.

Refixing with your bank is usually pretty straightforward. But moving to a new bank – i.e. refinancing your mortgage – may not be.

First of all, you will have to go through a complete re-application process. Every lender will need a lot of detail, and their questions could be intrusive. That’s fair enough – they are checking if they want you as a customer. It’s a bigger deal than simply rolling over an existing loan.

And you may not even be approved. Then you’re back to square one.

Of course, there are times when refinancing is the right option – and we’ll be very happy to do it for you.

But first we need to dig into your particular circumstances. So we ask a lot of questions.

We're here to help you find the right loan.

Your emails and phone calls are always welcome. At Sue Tierney Mortgages, we’re here to give advice whenever you’re thinking about rolling over a loan, taking out finance or changing your insurance.

Try us. Click on the link below to set up a call. There’s no charge.

Some clever things you can do to reduce your mortgage rate

sue@stml.co.nz (Sue Tierney) — Tue, 25 Mar 2025 00:00:39 GMT

As Registered Financial Advisers , we’re all about doing the right thing for our clients. A big part of that is making sure you don’t pay a dollar more than absolutely necessary.

Right now, we’d like to focus on one thing: Timing.

How – and when – you refix your home loan can make a huge difference to your finances. Recently, we’ve been able to help people slice hundreds of dollars from their monthly outgoings.

Take a few minutes to read our inside tips.

Tip 1. Beware of loans that need to be refixed over December and January.

The Reserve Bank takes a break over the summer. Unless there are truly exceptional circumstances – such as an unforeseen crisis in the finance markets – there will be no meetings of the Committee that decides on the Official Cash Rate (OCR) for over two months.

Since the OCR sets the baseline for bank mortgage rates, this tends to mean a pause in short-term interest rate movements. (Longer term interest rates tend to follow international markets which are less affected by OCR movements.)

In a falling interest rate environment (such as the one we’re in now), we really want you locking in the lower rates.

So what do we advise?

If your loan is due to rollover in December or January, you might consider refixing outside that window. That could mean looking at 6 or 18-month terms – or a mix of both. By contrast, fixing for 12 months or two years would mean the loan rolls over at the same time of the year again.

Alternatively, don’t refix. Some clients have chosen to leave their loan floating for a few months, and then selected a new fixed term outside the summer window. By doing this they’ve been able to lock in loan rates much lower than what were offered a few months earlier.

You should also be careful of clicking on any email from your bank that nudges you to ‘grab this great rate now.’

While it may indeed be a great rate, it’s also possible you’ll accidentally lock yourself into a fixed term just before interest rates drop. Breaking that fix could involve an eye-watering penalty.

It goes without saying that this is general advice only. Everyone’s circumstances are different, so our advice is always tailored. That’s what we’re here for.

Tip 2. Be prepared - and minimise the hold-ups.

Summer may be the season when Kiwis like to take holidays, but it can also be a busy time in the mortgage business.

There are home buyers clamouring to secure the property they’ve fallen in love with. Financial advisers like us, juggling the needs of borrowers who are looking to pounce on changing interest rates. And to top it all, the banks are struggling to keep up, due to a dearth of qualified staff.

The reality is that home loan applications these days simply take longer to process.

So what can you do?

First of all, keep an eye on your email inbox. We realise summer is a time of year when people ease off work, but if Tracey from Sue Tierney Mortgages is trying to get in touch with you, it may be because it’s time to review your mortgage or prepare for a loan refix.

Secondly, as we noted above, it can be smart practice to structure your loans so they don’t come off a fixed rate during the busy season. We can help you with that.

If you follow these tips, and work with us, we’ll manage things so you’re best placed to benefit from looming changes, such as OCR announcements. And when it’s time to go to the market, we’ll have your paperwork ready to grab the best loan for your unique needs.

Last but not least - thank you!

It’s the nature of our business that work comes in waves. The last few months have been a tsunami.

Right now, interest rates are steadily dropping. That means people are super- keen to escape the high rates they’ve been stuck with over the last few years while the Reserve Bank has been fighting inflation.

Our team has been inundated with work – which we gladly accept, because that’s how we look after our clients’ needs.

Despite being busy, we’re thrilled when we can save our clients’ money. I can think of at least one person who has reduced their mortgage repayments by over $1000…a month!

We’ll keep our shoulder to the wheel, and we’ll keep sharing any tips we know can save you money.

Your emails and phone calls are always welcome.

At Sue Tierney Mortgages, we’re here to give advice whenever you’re thinking about taking out finance or changing your insurance.

Try us. Click on the link below to set up a call. There’s no charge.

How a quick call or email could save you thousands of dollars

sue@stml.co.nz (Sue Tierney) — Tue, 04 Feb 2025 22:12:06 GMT

Given the choice, most of us would opt for a loan agreement that trims thousands of dollars from repayments.

Seems obvious, doesn’t it?

All you have to do is get some free advice before you sign on the dotted line.

Why? Because it's easy to miss the big picture.

Whenever you’re about to sign up for a loan, you want to be sure it’s the best one for your needs. Maybe there are more cost-effective alternatives from other lenders. Or perhaps your current financial situation means you’d be better served by taking another approach.

To find out, simply fire off a quick email to us. We can help you review the numbers and maybe arrange things so you’ll be much better off.

Here are some real-life examples:

Example 1: An EV Loan.

We recently talked to a client who was on the verge of taking out finance to buy an electric vehicle. The car salesman had put together a loan offer that looked okay.

But when we sat down, we were able to point to an alternative EV loan offered by the client’s bank. The interest rate was better and the cost savings were attractive.

The thing is, it can be hard to know if these options exist if you’re not a professional financial adviser. Not all banks offer EV loans and the market is changing all the time.

Please note that we are not here to recommend you buy an electric vehicle or not. That’s your business. What we can do is help you figure out whether the numbers work, and we can manage your loan application.

As always, it costs you nothing to get our advice.

Example 2: Refixing a home loan.

It can be tempting to click on a friendly email from your bank when they remind you it’s time to refix (and they tell you they have a special rate, but there’s a deadline).

It’s easy – but it may not be the right choice.

For instance, we know someone who clicked on a link to take advantage of a special interest rate. The problem was that she had already gone unconditional on a new property and the current mortgage was about to be repaid.

Result: a costly and unnecessary break fee.

It’s a problem that could have easily been avoided with a quick phone call. We would have asked questions about any changes in the client’s circumstances, and then made a recommendation based their needs, not the bank’s marketing campaign.

Others have been caught out by refixing before a change in the OCR that led to rate drops. We keep a beady eye on Reserve Bank announcements, and would have been able to advise them whether to act immediately or hold off for a cheaper rate.

Your emails and phone calls are always welcome.

At Sue Tierney Mortgages, we’re here to give advice whenever you’re thinking about taking out finance or changing your insurance. If we think you’ll be better off by signing the loan or by holding off, we will look at the bigger picture and always work in your best interests.

Try us. Click on the link below to set up a call. There’s no charge.

Plugging the leaky money bucket.

sue@stml.co.nz (Sue Tierney) — Wed, 23 Oct 2024 22:07:10 GMT

Even with the best will in the world, I sometimes feel that personal finances can be like a sieve or a leaky bucket.

Money comes in every month…and then it trickles away. It happens almost without noticing.

I’m talking about those little APs and subscriptions we set up and then forget about. $5 here, $20 there. Each one hardly seems worth noticing, but they

quickly add up.

Of course, you could review every little payment but who has the time for that? It feels like a lot of drudgery to save a little money.

Worse – the companies that are milking you every month often make it hard to find the webpage that lets you unsubscribe.

Click. Cancel.

Now imagine if there was an easy way to review and then delete these small regular payments. You could save a lot of money over a year. That’s money that could go towards your mortgage, knocking down debts, building up your KiwiSaver, or even fun stuff like a holiday.

That’s why I’m thrilled to share an app I recently discovered. It’s called SortMe , and I think it’s a game changer.

SortMe is a personal finance management tool designed to simplify personal and household bills and transactions, enabling users to seamlessly manage their finances without tedious monthly spreadsheets.

It has tools to automatically track the money coming in and going out, so you can quickly figure out the state of your budget without a lot of grunt work. It’s a bit like Xero but for individuals, not businesses.

Here's the really clever bit.

You can get the app to show all your recurring subscriptions, Automatic Payments and Direct Debits from your bank accounts and credit cards. From micropayments to streaming services and regular charity donations – you’ll see them all in one screen.

You’ll spot where your money is trickling away each month. Suddenly that Sky subscription you haven’t thought about since the rugby season seems like an avoidable waste of money.

Imagine if you could easily spot $60 dollars of monthly recurring subscriptions and cancel them. Over the year, you’d save $720. Over five years you’d save a whopping $3,600. We’re sure you could find a better use for that money.

And here’s the bit I really love: There’s a prompt beside each one – do you still use this? If you decide to get rid of it, simply tap on the item and the SortMe app will take you to the page on the service’s website that shows you how to cancel it.

This completely removes any friction from the process of tidying up your finances.

Click. Cancel. Less money going from your bank account every month.

Plus easy tracking of receipts.

SortMe also has a super-convenient feature that lets you do away with those scrappy bits of paper you’ll need if you ever want to return a product and claim a refund.

I used it the other week when I needed to return a product to Bunnings because it wasn’t the right option for our renovation. The Bunnings supervisor was not having a bar of it unless I could produce the actual receipt. But when I found the payment in my phone, via SortMe, suddenly there was no problem.

It’s another brilliant way to plug the leaky bucket of money dripping away, simply because most of us find it a hassle to sort through old records. Suddenly that’s not a problem anymore.

Tools and training.

I’m a fan of SortMe but there are other tools you could use to take back control of your monthly outgoings. Pocketsmith and MyBudgetPal provide a similar service. You can use any tool you like, but the key thing is that you’re plugging the leaky bucket.

Just for the record, we don’t earn a referral fee or commission if you click on the SortMe link in this article and download the app. However, you will get a discount on the monthly fee. Instead of $29 you’ll pay $9 – saving you $20 per month. Isn’t that brilliant!

And if you’d like help to set up one of these money-saving tools, I’d be more than happy to spend 15 minutes with you. I’ll show you how I’ve set up SortMe and demonstrate a few of the features. Before you know it, you’ll be cancelling useless payments for fun!

Feel free to set up a 15 minute session via our online calendar. As always our service is free.

And this time it could actually save you money.

All of a sudden, it’s all systems go!

sue@stml.co.nz (Sue Tierney) — Wed, 18 Sep 2024 21:42:20 GMT

We’re suddenly become very busy – and that’s good news.

It suggests the property market is stirring, and that perhaps the economy is heading for a better place.

What’s particularly interesting is that we’re getting enquiries from all kinds of clients:

First time buyers.
Property investors.
People looking to move up the ladder to a bigger home
People doing ‘green renovations’, to make their homes more energy-efficient.
Those close to retirement looking to buy their ‘forever home.’

The action isn’t concentrated in just one part of the market – it’s pretty much across the board. This tells us that something might have changed. What is it – and how might it affect you?

It’s not just about the OCR.

Interestingly, our phones started ringing before the Reserve Bank announcement last month. That suggests that something fundamental may have changed. Maybe people have weathered all the bad news, and are deciding it’s time to make a move.

Knowing this, what should you do?

If your house didn't sell earlier, maybe it's time to have another crack.

Many clients who listed properties over the past year didn’t get an offer they were happy with, so they decided to wait things out.

Maybe now is the time to talk to your agent again.

A new strategy or a fresh approach could mean you go to the market in spring 2024 and get a different response. With interest rates trending down, you may find there’s more energy and optimism in the marketplace.

If you’ve been biding your time to buy, consider whether now is the time.

If you’re still keen to get into your first home, or your next home, then it could be a smart move to do the sums again.

As always, it pays to talk to us first. We’ll help you with the numbers and advise on current bank rates as well as their recently enhanced lending policies. Things change rapidly in a dynamic marketplace, so make sure you get expert help with your mortgage strategy. As always, our advice is free.

Just click on the link below to set up a meeting with one of our advisers at a time that suits you.

4 things you need to know as interest rates (finally) start falling

sue@stml.co.nz (Sue Tierney) — Thu, 22 Aug 2024 00:50:29 GMT

It’s been a wild ride over the last few years.

House prices rocketed and interest rates fell during the Covid lockdown era. Then inflation took off, so the Reserve Bank told us to stand by for higher rates. And a lot of our clients started to feel the pinch.

Now we’re beginning to turn the corner. The last Official Cash Rate (OCR) announcement by the Reserve Bank on 14 August 2024 stated that conditions were right to reduce the benchmark interest rate to 5.25%.

That’s good news for anyone who has a mortgage – and especially those who have loans set to roll over this year and in early 2025.

So how can you make the most of a falling interest rate environment?

Here’s what you need to know.

1. Understand the timetable.

The Reserve Bank regularly reports on its thinking and announces any OCR movements on fixed dates. The most recent announcement was on 14 August 2024 and the next two are set for 9 October and 27 November 2024. Then it’s the holiday season until 19 February 2025. ( You can find out more here .)

What drives their decisions? The OCR committee is mandated to keep inflation in the rage of 1-3%. House prices are big factor in this, which is why homeowners with mortgages need to keep an eye on what the Reserve Bank is saying.

For the team at Sue Tierney Mortgages, these OCR announcement dates are very important. Based on what we learn, we can spring into action and potentially save clients a lot of money.

For instance, we weren’t expecting the OCR to drop in August – but it did. So that has influenced the advice we’ve been able to give. The clients we’ve worked with this month have received the benefit of this well-timed advice.

This leads to our next, very important piece of advice: Don’t jump the gun.

2. Watch out for banks that suggest you re-fix before the OCR is announced.

Some – not all – mortgage lenders like to send out emails with links to ‘Grab this great rate’ as your current fix gets close to the expiry date.

Just clicking on that link could cost you thousands of dollars over the life of the loan. This is because the email may arrive close to the date of the next OCR announcement. You might benefit from holding off.

If it really is a great rate, we will tell you. Or we may suggest that it’s smarter to wait and see.

Remember, our advice is personalised, and it costs you nothing.

3. Get your ducks in a row and be ready to go.

The name of the game right now is, ‘ride the interest rate wave down.’

Like surfing, it’s all about watching the conditions and catching the trend at the right moment.

Bear in mind that it’s not as simple as picking up the phone and saying, “get me a lower rate now.” You need to be prepared.

Every loan is unique and every borrower is at a different stage of life. Some may need more certainty because their household income has dropped and they’re on a tight budget. Others may be in a better position to wait and see.

We need to know what’s happening in your life and whether your goals have changed. That’s the heart of what we do as Financial Advisers. This can take a little time, so it’s really important to gather all your information and schedule a proper talk with you.

Once we have the ducks in a row, we can move fast to find the best rate for you.

4. Don't ignore those emails and phone messages from Tracey.

Since Tracey Little joined our team this year, she’s been in charge of contacting clients who have fixed-term loans coming to an end.

Tracey is our right-hand woman who does the vital job of setting up client appointments as well as getting quotes from lenders and taking care of the all-important paperwork behind the scenes.

It’s her job to gather information from you as well as arrange a time when you’re free to talk with an Adviser. She will send you a questionnaire, which we need completed before we can start researching your loan options.

Tracey isn’t a Financial Adviser, so she won’t be giving you tips on interest rates or mortgage strategies. That’s my job – but I couldn’t do it without her.

If you hear from Tracey it’s probably because you have an important loan or insurance review coming up. It’s not a sales job and it’s not about providing financial advice. She is simply setting things up so our Advisers can be 100% focused on giving you the right advice.

As we said earlier, it’s all about getting all the relevant information so you can get the best deal in the market. Tracey makes that possible.

And remember, you can always get in touch with me directly if you have any questions about your mortgage or Louise if it's your insurance cover. It’s always great when clients are proactive.

Just click on the buttons below.

Tracey Little, our indispensable administrator and support person. She’ll be in touch when it’s time to review your loan.

What changed on 1 July 2024? Not much.

sue@stml.co.nz (Sue Tierney) — Wed, 10 Jul 2024 00:37:50 GMT

You might have heard a lot of noise in the media recently about changes to lending rules. The Loan to Value Ratio (LVR) and Debt to Income (DTI) regulations have been revised.

You can read the nitty-gritty here . But our advice is to take it all with a pinch of salt.

There’s something much more important going on, which means the loan floodgates are unlikely to open for a while yet.

Bank rates will probably remain high for some time.

Putting aside any talk of DTIs or LVRs, what really makes a difference is the test rates that apply to any new lending. A test rate is the hypothetical interest rate the lender uses to see if you’ll be able to cope if rates should jump sometime in the future.

Currently, these test rates are set around 8.95%. The bank will stress-test any new loan at this rate. If your finances can’t handle the test rate, you won’t get the loan.

The bottom line is that until test rates drop substantially, you will be unlikely to get a new loan in July or August that would have been declined in June. So the DTI and LVR are beside the point – the bank will simply say no.

At some point in the (hopefully) not too distant future, rates will drop, and banks will relax their test rate criteria. It might be later this year or sometime in 2025 – we don’t have a crystal ball.

When test rates drop, the game will change. Not before.

Talk to us to get the full picture.

Of course, every loan is unique, so it’s always worth talking to our advisers to explore the possibilities. We will listen to your plans and provide our expert guidance about the best options for re-fixing or re-mortgaging.

Just send me an email or book an appointment using the links below.

Or you can log into our calendar and book a meeting any time, by clicking on the link at the bottom of our emails.

Why referrals are great (and it may not be the reason you think).

sue@stml.co.nz (Sue Tierney) — Wed, 10 Jul 2024 00:27:29 GMT

Every business loves it when a client recommends them to a friend or family member. At Sue Tierney Mortgages we’re no exception. Your referrals are very much appreciated.

And there’s an extra benefit when trusted clients send new business our way.

Because of the existing relationship we have, our advisers can often access loans with better terms for your family member or friend. We may even be able to get a loan approved that would otherwise be turned down.

Here’s why:

We can help de-risk the application for the bank.

These days, there’s a strong push to make sure banks don’t take on risky loans. So they look very closely at new applications and try to figure out any risk factors. ‘Know your customer’ is their mantra.

This is why there’s such a long-winded and rigorous process with every application. The lender wants to know everything possible about the borrower and property before they put their money on the line. As a result, borderline applications may not get approved.

Here’s a typical example.

Imagine your son or granddaughter is trying to buy a rundown property that has heaps of potential but needs a lot of work. The buyer wants to put in some ‘sweat equity’ and add substantial value.

However, the bank may not be confident that a first-time borrower can pull off such a demanding project. So they might reject the application out of hand.

That's where we come in.

Maybe we’ve known the borrower’s family for years. We know Mum and Dad have many successful renovations under their belt – and they’re keen to do the same for this project. So we can make sure the bank is fully appraised of the special circumstances in the mortgage application.

Because we have such a long track record and strong relationships with lenders, our word will mean a lot. It could mean the bank is happy to offer a larger sum with fewer strings attached. It may even get a loan approved that would otherwise be declined.

That’s just one example. In situations where a bank might otherwise pass on the loan, we can fight hard to get approval, armed with the knowledge and trust we’ve built up over the years.

Your referrals are precious. We really appreciate the business you bring to us, and in return, we will use all our inside knowledge and connections to help get a borderline application over the line.

It could save a lot of hassles and heartaches.

We're always here for you - and for your friends and family members.

Just send me an email or book an appointment using the links below.

Or you can log into our calendar and book a meeting any time, by clicking on the link at the bottom of our emails.

Three conversations, three great results.

sue@stml.co.nz (Sue Tierney) — Tue, 11 Jun 2024 23:48:02 GMT

"We need to talk” may sound ominous in some situations.

However, in the world of loans and insurance, it can lead to a much happier outcome.

Here’s why.

In recent months we’ve had multiple discussions with clients that have led to big savings on their loan repayments and insurance premiums. We uncovered information that meant we could steer clients towards a solution they weren’t aware of.

The bottom line is that they were able to reduce the cost of their loans and insurance cover.

To understand how this works, here’s a bit of background.

Why do we need to talk?

There’s been an important shift in the way financial advisers work over the last few years. The government has introduced regulations via the Financial Markets Authority that require advisers to demonstrate they are acting in the best interests of their clients at all times.

We think this is great. It’s always been our philosophy.

That’s why we schedule regular conversations to check our clients still have the best mortgages and insurance for their evolving needs. We ask whether anything has changed (or might change), and we keep detailed notes.

On top of that, if you get in touch to arrange a loan, we need to make sure we understand the background to your request and not simply say, “Yes, here’s a loan.”

This can really work in your favour – as we’ll explain.

The home renovation loan that comes with 0% finance.

Recently, a client contacted us about a loan for home renovations. This is a common request because people are putting off house moves during the current era of economic uncertainty, and choosing instead to upgrade the house they already own.

We asked a few questions and discovered that the renovation plan included some items to improve energy efficiency. That’s great news, because if you’re borrowing to pay for things like double glazing, insulation and solar panels, we may be able to get part of the loan at 0%. The government is supporting lenders to subsidise these loans because it’s keen to see Kiwis saving energy.

Now, before you get too excited at the idea of a home renovation loan at 0% finance, I have to remind you that every loan is different and there are no

guarantees. There are specific conditions, which we’ll need to explain to you in person.

But that just underscores the importance of having the conversation. If we know the details of your project, we may be able to access alternative (i.e. cheaper) finance.

Long story short: Don’t just go to the bank and ‘put it on the house.’ Talk to us first.

The car loan that’s a better deal than dealer finance.

The second example is a client who wanted to buy a car.

She found one she liked and was about to sign a finance contract with the dealer but decided to check with us first.

It’s good that she did. The car in question was an electric vehicle, and it may be possible to get a cheaper rate from a lender who specialises in EVs.

Now I have to offer a disclaimer here: We’re not qualified to advise you on which car you should buy and whether an EV is the right choice. I know nothing about batteries and resale prices. I’m just saying that if I learn you’re buying an EV, then I may be able access finance at an interest rate that’s better than the car yard can offer.

It all starts with a conversation.

Cutting insurance costs without sacrificing cover.

The third example is a client who was sick of seeing their insurance premiums rocketing at a time of financial stress.

The kneejerk response in cases like these is to start cancelling policies. But this client decided to check in with us.

We undertook a full review of their cover and got an up-to-date view of their finances and life stage. As a result we able to spot some opportunities for savings, and reduce the premiums without sacrificing cover.

Result: Lower premiums and a happy client.

In other cases, we’ve been able to find out where clients are under-insured, and then adjust their cover to minimise the risk of bad news at claim time. Once again, it takes a conversation to identify the issue – and then we can fix it.

Our goal is always to make sure you have the right mix of loans and insurance to help you reach your goals.

I’ll leave you with this thought: When was the last time you reviewed your insurance cover?

It’s good to talk.

If you’re looking at a first mortgage, a re-mortgage, or a re-fix – talk to us early in the process.

If you’re looking at a loan for home renovations, to buy a car, or practically anything else – get in touch.

If something has changed in your life, like starting a family or changing your employment status – we need to talk.

It’s not about selling loans or insurance. It’s about finding out what’s in your best interests. Then we can get to work on your behalf.

Just send me an email or book an appointment using the links below.

Or you can log into our calendar and book a meeting any time, by clicking on the link at the bottom of our emails.

AI technology will never replace empathy in the world of finance.

sue@stml.co.nz (Sue Tierney) — Tue, 07 May 2024 22:46:25 GMT

My Nokia flip phone was state-of-the-art when it came out in the 1990s. It had diamonds that lit up and sparkled when people called me.

I loved that phone.

It wasn’t just the sparkly diamonds – it was the way I was able to stay in touch with clients instead of being tied to a desk. The finance industry was simpler back then. There was less paperwork and fewer boxes to tick. And my Nokia phone was a business tool that made things even easier.

I’ve always been a fan of using technology to help clients.

I was initially reluctant to shift to an iPhone because I loved my sparkly Nokia, but once I understood the smartphone’s capability there was no holding me back.

Responding to emails on the go, snapping photographs, scanning docs – this new technology was another big step forward.

The trend has continued. Planolitix is just one of the tools we use to help clients these days to analyse their financial situation and build a plan to achieve their goals. We also use technology to streamline the processes the banks have introduced for loan applications.

For example:

Online application portal . No need to gather a package of bank statements and other mandatory documents to send to the lenders – just login to our site and upload them in minutes. We’ll manage things from there.
Virtual meetings. We’re big fans of video for those essential face-to-face meetings where we explore your financial position and start building a plan. Scheduling these meetings online and using a tool like Zoom means we can fit the meeting around your availability. It also means that neither of us has to deal with the horrendous Auckland traffic!
Meetings summarised by AI. Our client meetings are recorded and summarised by Artificial Intelligence. As soon as the Zoom meeting is over, we’ll send you a quick written summary of the key points and next steps. This AI summariser is a clever tool, even if it struggles a bit with the New Zealand accent. For instance, it renders Nokia as Knockier!

We’re not stopping there. We’ll be making even more use of AI in our business over the coming years, as it provides extra capabilities with video and text.

But there’s one key aspect of the mortgage business no AI tool can replicate.

It’s always been about people – and it still is.

A lot has changed over the four decades I’ve been advising clients on mortgages and insurance.

House prices have rocketed. I can remember when you could buy an Auckland house for well under $100K. (But don’t be daunted by today’s house prices – we have some tips to help you get on the property ladder now .)

The banks have shifted from paper documents and fax machines to electronic technology. More critically, they have much more complex approval processes, and now take weeks to process applications that used to be turned round in hours. (Pro tip: Get pre-approval of a home loan before you go house hunting – it will save you a lot of hassle and heartbreak.)

Insurance has changed, too. Now there are heaps of innovative policies to protect you from risk, so an unfortunate event doesn’t torpedo your finances or place your family in a difficult position.

With all this innovation, it’s easy to lose sight of something that’s never changed: the human needs of human beings.

People still want a place to live, financial freedom, and protection from the inevitable risks of life. Technology, new products and services are only valuable if they help you achieve your goals and add to your quality of life.

And that takes a human being.

AI doesn’t do empathy. But we do.

Our business is all about advice – and that only comes once we understand what’s important to you.

That’s why we need to meet with you face-to-face – most likely on a video call these days – to work through your financial situation and find out how you’re placed.

Then we use our decades of experience and extensive knowledge of the financial market to put together a plan that works for you. Whether you’re buying your first home, looking at an investment property, downsizing once the kids have left, or thinking about your health risks, we’ll listen with empathy and ask questions to build a clear picture of your needs.

It's a very human role, and all the AI in the world will not replace the role of empathy here.

So if you have any changes in your mortgage or life you’d like to discuss, we are here for you anytime. Just send me an email or book an appointment using the links below.

Or you can log into our calendar and book a meeting any time, by clicking on the link at the bottom of our emails.

A smarter way to cut insurance costs

sue@stml.co.nz (Sue Tierney) — Mon, 15 Apr 2024 02:20:58 GMT

Cutting costs is a smart move. Cancelling your insurance probably isn’t.

The kneejerk reaction we often see when clients want to reduce outgoings is to suggest cancelling the insurance policy. This is risky, because if you can’t afford

it, you definitely need it.

Never forget: Your ability to earn is your most precious asset.

So think hard before you eliminate your health or income protection.

Instead, here’s how you could make some real savings – and still stay protected:

Let's review all your policies and see which ones are still fit for purpose.

Chances are, plenty has changed since you last took out your policy.

Maybe you have sick days banked, so you could extend the excess and save some money.
Are there multi-policy benefits you could access by having a range of covers with one insurer?
Perhaps your risk profile has changed. For example, if you’ve made a big dent in the mortgage, you might be able to reduce the sum insured.

These are just a few ideas – there are many possibilities. Let’s sit down and work out the cover you actually require now, and make sure you don’t pay a cent more than you need to.

If you haven’t had an insurance review recently, click the link below or send us an email, and let’s get your review underway.

After all, who doesn’t like to save money?

Refinancing a mortgage can be tricky but totally worth it.

sue@stml.co.nz (Sue Tierney) — Mon, 15 Apr 2024 01:56:55 GMT

Lately we’ve had lots of clients contact us about refinancing. In fact, we arranged more refinances last month than we did for the whole of last year.

It sounds straightforward but there are some things to watch out for.

We’ve talked before about the process of refinancing a home loan. It’s not as simple as you might think.

Even if you and I have known each other a long time, we still need to work through a lot of things.

For instance

The laws and banking regulations, which may have radically changed since the last time you got a home loan.
The banks’ appetite for risk. This varies from year to year and even month to month.
What’s going on in your life. Have you got married, split up, started a family, changed jobs or otherwise had a change in your circumstances?
Your future goals and needs.
Has your income gone down, or your monthly expenses gone up?

We need to document this, and more. It’s because the government wants to make sure advisers aren’t encouraging their clients to move loans simply to generate new commissions. So we need evidence on file to show why every decision was taken.

It’s all about doing what’s best for the client – which is a philosophy we totally support.

Taking all that into account, here are some things that can make refinancing the right move.

Are you on a high rate but can' get a decent fixed rate from your bank?

With the current cost of living, many people are looking to reduce their monthly outgoings. So they ask their bank for a new rate, and are underwhelmed by

what’s offered.

The most common issue is that household expenses have increased while income has not kept pace. In this high-inflation era, borrowers may look to lighten

the load by extending a loan term or going interest-only for a while. They approach their bank and don’t get a positive response – so they call us.

If that’s the case, we can review what’s out there in the market. Even with all the upheaval refinancing can generate – including the need to go through a full

approval process where the new lender will assess all your spending as well as your credit record – it can still be worth it if you end up saving money every

month.

Is there a different type of loan that might suit you better - but which isn't available from your current bank?

Home loans come in many different flavours. For instance, there are loans that offer a redraw facility, which can be useful for some people.

During your mortgage review we’ll dig into what matters to you. If we think you can achieve a better result with a different type of loan, it might be worth

refinancing.

The issue is, we won’t know until we’ve explored your wants and needs, as well as what’s happening with the market. So we need some one-on-one time with

you.

Beware of juicy 'carrots'.

Some banks offer the incentive of a cash contribution, which can lead to clients wondering if they should refinance.

The answer is, ‘maybe, maybe not.’

These attractive offers may come with costs, which we will have to take into consideration. Once again, it’s something we need to discuss after looking at all

the relevant facts.

The good news is that it costs you nothing to call us and find out.

Do you know someone doing it tough? Put them in touch

We’re here for all our clients who want to review their loans and insurance at any time. And we’re also available to give advice to your friends and family who might appreciate a fresh set of eyes.

The current economic climate has put the squeeze on a lot of people. If you know someone who could benefit from a loan review, put them in touch.

It’s not about making a sale or earning a commission. If they already have the right loan, we’ll give them that feedback.

We simply want to help people figure out if they’re set up to achieve their goals.

Short weeks... and some very cautious optimism.

sue@stml.co.nz (Sue Tierney) — Mon, 15 Apr 2024 01:40:29 GMT

It was lovely to have time off over Easter. Even the end of daylight saving can be a blessing as it gives us brighter mornings for a while.

Of course, the work still has to be crammed into short weeks. Our diaries have been packed with loan reviews as we help clients work out whether they’d be

better off with different structures.

Everyone’s trying to second-guess interest rate movements – which is not something we’d recommend. It can be an unnecessary distraction from focusing

your own financial priorities and options.

That said, we’ve noticed one encouraging sign.

Unadvertised 'special rates' have been drifting down.

While the banks have kept their ‘carded’ rates steady, the special rates they don’t publicly advertise have slipped a smidgen.

These rates are sometimes available to clients when we submit a request to refix or refinance. They’re unpredictable as they are totally discretionary, based on the bank’s judgment about the loan size and LVR (loan to value ratio). The less risk to the bank, the more likely they are to drop their rate, so we can expect to get an offer that’s lower than the advertised rate.

In recent months, we have seen a few mortgages go through with a rate that was better than expected. We have no control over this – it’s up to the bank. But all else being equal, it’s nice to see our clients getting a better deal.

It’s tempting to speculate that perhaps the banks are picking an end to the current high OCR environment in the medium term. We have no idea. At some

stage the trend will become clear.

Note that none of this changes our usual advice, which is that you should get the mortgage that’s best for you. Don’t try to time the market and beware of placing a bet that you’ll get a better rate in six to 12 months. No one knows what will happen in the world or in your back yard.

In the meantime, we’ll continue to focus on making sure you’re set up with the best mix of loans and insurance policies to help you achieve your goals.

Want to talk about it? We’re here.

The myth that insurers don't want to pay out

sue@stml.co.nz (Sue Tierney) — Tue, 12 Mar 2024 20:36:13 GMT

A lot of people believe that insurers will do anything to avoid paying out a claim. They imagine all sorts of traps in the small print, designed to leave you hanging.

This has not been my experience.

In fact, I found my insurance company very keen to make sure I got the full benefit of my cover.

Let me tell you a story of two accidents.

Six or seven years ago I had a bike accident and broke my collar bone. Instead of taking plenty of time off to recover, I decided to be a hero, and go back to work as soon as possible.

This meant that my collar bone didn’t heal properly. Even today I have issues with it.

Then in April 2022 I had another accident, this time breaking my shoulder. Because I had Accidental Injury and Income Protection with AIA Insurance, I got a cash payout. A nice bonus when I was feeling sorry for myself, living in one bedroom while going through a major renovation at home.

So this time, I took time off work to recover. In fact, the insurers wouldn’t let me go back to work full-time until I had fully rehabilitated the injury.

It was the right decision. I have made a full recovery and am back on my mountain bike again .

The lesson here is that AIA wanted to make sure the problem was handled correctly. They deal with accidents every day, so they are set-up to make sure you get the support you need. It certainly made a difference in my case.

Don't be too cynical about insurance companies.

While there will always be sad stories of people who didn’t get a payout for one reason or another, it is far more common to get your claim approved.

Of course, first you need to make sure you have the right cover in place.

We can help you with that.

The crystal ball is broken

sue@stml.co.nz (Sue Tierney) — Tue, 12 Mar 2024 20:11:21 GMT

If you’ve been following the news, you may have seen one well-known economist predicting that interest rates are going to rise.

At the same time we’ve seen banks dropping their rates.

What on earth is going on?

If the last few years have taught us anything, it’s that nobody knows what interest rates are going to do. No one has a crystal ball – or if they do, it’s not giving reliable views of the future.

In the face of this, our advice is simple.

You should do what's right for you.

If it’s time to refix your loan, maybe lock in the rate that works best for your requirements. Beware of hanging back to see if rates will go down, because you could end up paying more.

On the other hand, if you can afford to be flexible, maybe you could float part of your loan and keep some options open.

It all depends on your personal circumstances and financial goals. Whatever they are, we will work with you to tailor your loan arrangements.

You don’t need a crystal ball. Just a conversation with us.

I wasn't going to miss this opportunity!

sue@stml.co.nz (Sue Tierney) — Tue, 12 Mar 2024 20:05:46 GMT

At every bank there are people we can call when things get tricky with a mortgage application.

At Sovereign / GO Home Loans , one of those people has been Tracey Little.

We never met in person – in fact, our only dealings were via email and phone. But I knew Tracey would always be helpful if one of our clients had an issue like a very short deadline or some unconventional circumstances that might derail the application. It’s been great having Tracey to smooth the way.

Then I got an unwelcome email: Tracey was leaving.

I immediately wrote a cheeky reply. “Don’t you dare leave without calling me and saying goodbye in person!”

When we talked, I discovered that Tracey had decided to take time off after many years at the bank, and then look for a new challenge.

(As an aside, this is something I’ve been hearing a lot in these post-Covid years. People feel burnt out, or they simply need a change, so they’re stepping away from their jobs or downsizing their workload.)

Tracey leaving the bank presented us with a problem – but also an opportunity. Knowing how desperate the finance industry is to retain experienced staff, I made her an offer:

When you’re ready, I said, get in touch. We could really use your skills.

Welcome aboard, Tracey!

With her encyclopaedic knowledge of the industry and her proven admin ability, Tracey is a fantastic addition to the Sue Tierney Mortgages team.

Ever since our bubbly Bevan retired last year, I’ve been on the lookout for someone who can help support Louise’s and my clients. Tracey really knows the ins and outs of the business, so we’ll be making the most of her skills.

Tracey isn’t a financial adviser – instead, she’s the indispensable back-up every adviser needs. So from now on, Tracey will be the one sending you emails to set up rate reviews. From time to time, she will also be helping Louise and I process your applications.

With Tracey taking care of the admin and coordinating our diaries, I’ll be unleashed to spend even more time working one-on-one with clients. It’s all

about making sure you are properly supported to get the loans and insurance cover that’s right for you.

We’re thrilled to have Tracey join our team. And we think you’ll find her a pleasure to deal with.

Insured…just in the nick of time!

sue@stml.co.nz (Sue Tierney) — Mon, 19 Feb 2024 01:45:21 GMT

Imagine putting off a discussion about insurance for years, and then finally getting around to it. Eventually you sign up to a new policy.

Now, imagine if you had to make a claim almost as soon as your new cover was in place.

This is exactly what happened to one client.

All because of an annual review.

Our client decided not to put off insurance any longer. They set up an appointment and we worked together to set up the policy. The client paid the first premium…and then had an accident.

We were so happy to confirm a full payout after a quick phone call to the insurer.

While no one wants to suffer misfortune, life is much easier if you have the funds to support you and your family while you focus on getting better. It’s a huge relief.

Make this the month when you review your insurance.

Now is the perfect time to review insurance and put in place cover that matches your lifestyle. It’s especially important if relationships, children, property and

career changes have entered the picture since you last looked at insurance.

There are some innovative policies that may surprise you with their benefits and perks. Most of all, you’ll have the satisfaction of ticking off a critical item from

your to-do list.

If your insurance review shows that you don’t need new cover, we will tell you. We’re not looking to sell you anything – simply to check that you’re covered for the risks you face. And of course, our advice is free.

Don't put it off. Click the ‘Book Appointment’ button below now to set up a chat.

When to refinance your mortgage. (Spoiler: not often, but sometimes you really should).

sue@stml.co.nz (Sue Tierney) — Mon, 19 Feb 2024 01:33:01 GMT

There’s a bit of confusion about the pros and cons of refinancing home loans.

Every week, people get in touch and tell me their fixed-term loan is coming to an end, so can I look at refinancing?

In most cases, they don’t need to refinance. That could open a great big can of worms.

What they need to do is complete a review with us. It may involve looking at the fixed rates on offer and then choosing the fix that’s right for them.

By contrast, refinancing means changing to a new lender. You’ll be moving your mortgage to a new bank – and that’s a big deal these days.

Are you ready for the bank to probe all your finances?

Refinancing in 2024 requires a full application where the bank will dig into your personal life to analyse all your spending. Your ability to repay a home loan will

be subjected to an exhaustive stress test.

For instance, the bank will look at the credit limits of all your cards, not just the outstanding balances. They will check to see how much you’re paying into

Kiwisaver.

School fees? Child support? Family trusts? They’ll want to know about those too.

All lenders are obliged to gather this information because they’ve signed up to the Responsible Lending Code . This was created because the government

wanted to limit the ability of borrowers to overload themselves with debt.

With this in mind, you need to think hard before submitting to the rigmarole of a new loan application (and possibly being declined). If you simply need a new fix, we can work out the details when you complete your loan review.

However, there are always exceptions to the rule.

High inflation has changed the game for many people.

2023 was a year when consumer prices leaped ahead. Many borrowers found their monthly budget came under pressure, with groceries, utilities and other

items taking a much bigger bite out of household income.

2024 looks like more of the same.

On top of that, the banks have tightened their lending criteria, so it may not be possible to obtain or roll over an interest-only loan. In this case, your interests

might best be served by refinancing with a different lender.

This is a decision that can only be made on a case-by-case basis. We will work with you to see what’s possible, check your requirements, and give advice based

on your individual needs and goals.

If the sums make sense, we’ll work hard to put together a new mortgage application. It might be a bit of a slog – but it’s worth it.

What’s in it for us? Maybe not much.

If you decide to refinance, we will earn commission from the bank.

If you simply refix, we will make much less money. Maybe zero dollars or a small fee.

And that’s fine, because we want to make sure that moving to another lender is the right decision for you. That has to be the focus.

At Sue Tierney Mortgages, we are not motivated by short-term fees. Instead, we want you to receive advice that matches your needs and goals. It’s a long-term

view of financial wellbeing that we’re 100% committed to.

So please get in touch when it’s time to refix (or possibly refinance). Don’t just click on the link in a bank email urging you to ‘Refix Now’ or ‘Grab This Great Rate.’ There may be better options, and we’ll help you find them.

Our mortgage advice costs you nothing, and we will always act in your long-term interests.

Back on the bike!

sue@stml.co.nz (Sue Tierney) — Mon, 19 Feb 2024 01:01:44 GMT

What brings you joy? For me it’s riding my mountain bike.

There’s something about leaving the city behind and pedalling along a tree-shaded track that makes me feel truly alive.

Unfortunately, in April 2022 while riding in Woodhill forest, I decided to hug a tree by falling into it, and fractured my shoulder. It took many months to heal, by which time I was in the middle of major house repairs, followed by the upheaval of an office move.

I didn’t get back on my bike because I simply got out of the habit.

Last Christmas I promised myself I’d go riding three times a week over the holiday break. That’s a big commitment which may not be possible every week, but I’m pleased to say I managed six rides in my three-week break.

It was a revelation.

I remember making the early morning drive to Woodhill and managed to be one of the first on the track. Within five minutes I witnessed four deer cross my path. Then I was accompanied by a wild boar for a few minutes. It was an amazing experience that made my day.

What are the magic moments that make your day?

My mentor Dr Fred Grosse has a name for these. He calls them ’10 out of 10 experiences.’

Dr Fred urges us to identify the magic moments that are special to our lives. They recharge and refresh you. When you’re super-busy at home, stretched at work, or challenged by a big, hairy goal, you need to have something special in mind, just for you.

Mountain biking on a dewy morning at Woodhill is my 10-out-of-10. I’m going to build it into my schedule and make sure I get my fix.

It’s good to have goals – but not too many.

The other lesson I’ve taken from this is to keep things simple.

I’ve learned that setting myself up with too many goals just creates stress. It’s better to have one or two things that really matter – like jumping onto a mountain bike once a week – than to pile on the pressure to achieve everything all the time.

What are one or two things that keep you sane, happy and connected to what matters in your life?

Make time for them on a regular basis.

This lending rule change could be a nasty surprise.

sue@stml.co.nz (Sue Tierney) — Thu, 16 Nov 2023 08:02:41 GMT

Everybody focuses on interest rates, but it’s the ongoing changes to lending rules that could really trip you up.

For instance, the Labour government decided it wanted to reduce the risk of borrowers entering retirement with mortgage debt…so it introduced a rule to stop the banks lending to customers who would need to make repayments after they turn 65.

All well and good. Except this makes it a lot tougher to get onto the property ladder if you’re a late starter.

You may also find yourself unable to change your current mortgage – for instance, by going onto interest-only.

Every week, we talk to people who weren’t aware of this, and how it could affect them.

So here’s a heads-up:

The mortgage game has changed.

If you haven’t recently tweaked your mortgage or taken out a new loan, you may be unaware of how much things have changed.

Now you have to jump through a lot more hoops than before.

Don’t blame the banks. They didn’t create the rules. They are required to follow the Responsible Lending Code and other rules imposed by financial regulators.

These days, the onus is on both the banks and us financial advisers to do a lot of investigations into the borrower’s financial affairs before a loan is approved. We’ve covered this before in detail, but this time we’d like to highlight another issue.

Here it is in a nutshell:

The government wanted to make sure New Zealanders weren’t struggling with debt in retirement – so they have required lenders to apply some pretty strict tests to new loans.

This has had two unintended consequences.

1. If you don't have a mortgage by your mid 40s, you may struggle to get one.

It’s not unusual to find yourself getting onto the property ladder in mid-life. It may be the first time you’ve had the income to justify home ownership.

Or maybe you’ve gone through some life events, such as a relationship break-up, and you need to start again.

But you need to be aware that your mortgage application, income and spending will be closely scrutinised by the bank. If the numbers show you won’t be able to clear the mortgage by age 65, then you may not be able to borrow as much as you need or hoped for.

(There are some exceptions, for instance with rental properties, but as a general rule, the banks are looking at the numbers to see if you’ll be mortgage-free by retirement.)

So if you’re approaching mid-life, this is a heads-up. Get in touch as soon as possible and we’ll work with you to see what you can afford.

Maybe it won’t be your dream home in your dream suburb – but at least it will be yours, and perhaps a stepping stone to that dream home.

2. If you want to change an existing mortgage, you might not be able to.

We know many people who have structured their loans so they’re paying interest-only. Their plan might be to pay off the principal in a big chunk sometime in the future. But for now, they’re simply servicing the loan.

However, as we are all too aware, interest rates can go up a lot. That means a lot of people suddenly have less cash in their pockets. They might want to free up some cashflow by pushing out the loan term.

Or maybe they’ve been paying off the principal every month, but now they’d like to switch to interest-only, and bring down their monthly outgoings.

Under the current regulations, both of these changes would trigger a new loan application.

Yes, that’s right. You can’t just modify the existing loan – the rules require the banks to complete a full new loan application. So you would need to start at square one by showing your pay slips, bank statements, and all your household spending.

The bank needs to analyse the application, and bear in mind they’re looking for the new loan to be repaid before 65. If that doesn’t look possible, we’d need to have some very solid reasons for the bank to ignore this.

Our view - plus some advice.

We’ve always been fans of paying down debt so you can be mortgage-free. Being debt-free in retirement is a great goal!

But not everyone’s life fits the same template. We see plenty of clients with reasons to extend their loan terms or go interest-only, and we support them in their desire to pursue their own goals. More often than not, interest-only requests are temporary and just address a particular need at that time.

However, rules are rules, and it’s our role to help you get the outcome you want within the rules. So when we talk to you, we will take the time to find out your goals and how we can help you achieve them. Then we’ll use our knowledge of lenders and insurers to find the solution that works best for you.

The government may require lenders to ‘stress test’ loans, but we won’t add to that stress!

Get in touch and we’ll work with you to see what’s possible.

When you get an EQC payout and the bank says, “I’ll have that, thanks!”

sue@stml.co.nz (Sue Tierney) — Mon, 09 Oct 2023 02:11:45 GMT

Here’s a scenario you may not have come across before. A homeowner suffered damage to their land during the floods earlier this year. EQC recognised the loss and negotiated a payout.

But the payment was diverted to the homeowner’s bank, which held a mortgage over the property. The bank used this sum to pay down the loan.

The owner was bemused, to say the least.

How can this happen? There’s a reason, and it’s related to the bank’s registered interest in the property.

You might remember from our article about building reports that every bank wants to see a solicitor’s certificate showing the property is insured before it will release funds on a new mortgage. The bank will insist that its interest in the property be noted on the insurance policy. In the event of a large claim on the property the bank receives the payout, not the homeowner.

This is almost certainly what happened here. The bank has been able to reduce or even clear the mortgage debt, and the property owner is left to remediate the damage.

The bank is perfectly within its rights to take this action. It’s part of the deal you sign up to when you accept their funds to buy a property. They now have a financial interest – so they will protect their interest.

A reminder that we don't provide Fire & General Insurance.

We share this story because it illustrates the implications of taking out a loan to buy property. Insurance is an important part of the process, but we don’t have skin in the game.

At Sue Tierney Mortgage, our focus is on protecting your ability to earn, your heath, and risks to life and limb. We don’t provide cover for tangible possessions like houses and cars.

But we're always here to talk - and possibly to refer you to another specialist adviser if you need cover for your home and contents.

ASB Home Loans vs Go Home Loans. What’s in a name?

sue@stml.co.nz (Sue Tierney) — Mon, 09 Oct 2023 02:01:34 GMT

We’ve noticed some confusion amongst borrowers about the difference between standard home loans from ASB Bank and the loans provided under a separate brand – Go Home Loans.

Here’s a bit of background.

Go Home Loans were originally offered by Sovereign Insurance, which became part of CBA Bank group in the 1990s, alongside ASB. These loans were marketed separately through an online channel, as well as using the services of mortgage brokers like us.

Then CBA sold Sovereign but kept its mortgage business, which is why Go Home Loans are still available under the ASB corporate umbrella. Note that Go Home Loans remains an Internet-only brand, so you can’t walk into your local ASB Branch and ask about a Go Home Loan – you need to talk to us.

This is where it gets a bit confusing.

If you’re an ASB customer you can now view your Go Home Loan via ASB Internet Banking or their mobile app, alongside your other ASB accounts or credit cards.

So it looks like a Go Home Loan is just another ASB home loan. But it’s not.

Go Home Loans come with some bells and whistles you don’t get with ASB loans, such as no monthly fees on certain accounts. We won’t go into all the details here, but if you swap your Go Home Loan for an ASB home loan, you won’t get exactly the same deal.

The good news is that nothing else has changed.

If you are happy with your Go Home Loan, don’t be misled by the connection with ASB. You still enjoy all the advantages you had before, plus visibility through the ASB mobile app and Internet Banking.

The other good news is that Sue Tierney Mortgages still has access to Go Home Loans, as well as the full range of ASB loans. So if you want to know more, we can talk you through the options.

Do you need to pay for your own LIM report?

sue@stml.co.nz (Sue Tierney) — Mon, 09 Oct 2023 01:52:14 GMT

You’re probably familiar with the document called a Land Information Memorandum (LIM). It’s an official record from the local council that details all the permitted work on a property, which can be checked against what you see with your own eyes.

That lovely deck out the back? If it’s not on the LIM, then it’s been built without a permit. Caveat emptor!

But recently there have been some sad stories of buyers and LIMs.

So we decided to share what we know.

Your bank doesn’t need to see the LIM – and neither do we.

First things first. Your bank doesn’t need to see the LIM, so don’t send it to them.

We don’t need to see your LIM, either. As mortgage brokers, we are not the people to advise you on issues with building permits, or the lack thereof.

So please do not send us a LIM when we’re helping to arrange your finance – we will simply suggest you pass it on to your lawyer.

Never underestimate the value of expert advice.

As a general rule, talking to your lawyer is the right thing to do at an early stage. Lawyers are trained to spot issues of compliance and regulation, so they can potentially save you a lot of time and money if the property has issues.

Some people don’t want to engage a lawyer because they’re wary of the expense. But we say, consider the cost of not getting advice.

As a heads-up, we asked a lawyer to point out some common issues and misunderstandings with LIMs. Matthew Tetley-Jones is an experienced property lawyer at McVeagh Fleming in Auckland. Here are his tips.

1. If the agent or vendor supplies a faulty LIM, you probably have no comeback.

It’s tempting to save time and money by relying on a LIM supplied by the real estate agent or homeowner. This may be perfectly fine – but remember, free stuff comes with strings attached.

Matthew’s comments:

"Many real estate agents provide a LIM to interested buyers before they make an offer on a property or bid at an auction. This appeals to buyers because a LIM costs around $400 but there are problems with relying on a LIM provided by the agent.

"Most agents stamp a disclaimer on the front page to say: ‘We do not accept any responsibility for any errors or omissions in this document.’ This might not save an agent who knowingly distributes a LIM that has been deliberately altered but if pages have been left out through carelessness, the agent will point to the disclaimer ."

In addition, the council may include its own disclaimer. Matthew suggests you note the bolded words.

“ Auckland Council says: ‘This Land Information Memorandum (LIM) has been prepared for the applicant for the purpose of section 44A of the Local Government Official Information and Meetings Act 1987. This Land Information Memorandum is valid as at the date of issue only.’ ”.

As Matthew puts it, “ The council is disclaiming any liability to anyone except the person who applied for and paid for the LIM .”

And then there’s the small but real risk of outright fraud.

In the case mentioned here , the buyers relied on an agent-supplied LIM that turned out to have been doctored. If they had paid for their own LIM, they would have received accurate information and avoided a significant financial loss.

2. How current is the LIM?

If you don’t arrange your own LIM report, and instead rely on one supplied by someone else, be sure to check the date.

Matthew's comments:

“ Many LIMs provided by agents are already a month old by the time the buyer gets a copy. Sometimes a lot can change in a month .”

So if you don’t want to take the risk, what are your options? Matthew has some tips for buyers.

“ If you are buying under the standard Agreement for Sale and Purchase of Real Estate, then you can tick the LIM Condition clause and give yourself two weeks to get your own LIM. Most councils can provide an up-to-date LIM within 10 working days at a cost of around $400.

“If you are buying at auction, you have to make an unconditional bid. So you should get your own LIM before the auction. This can be expensive if you do not win the auction, which is why many buyers rely on the agent’s LIM. ”

3. Read the LIM carefully.

Once you have the document in your hands, make sure you understand what it means. You don’t want to be the homeowner who learns about a flood risk when there’s water flowing under the door!

Matthew's tips:

“ When you get your LIM, read it thoroughly. They run to 30 or 40 pages. You should check the Building Consents and Resource consents and the Hazards and Services Maps. Also check the drainage map for overland flow paths .”

“ If you employ a lawyer to check these details, the lawyer will charge for the time and that may cost as much as the LIM. If you have already identified points of concern, you can then ask for expert help from a lawyer but possibly also a planner or civil engineer and make an informed decision on how much you want to pay for advice .”

The two most important words are 'buyer beware.'

With properties selling for millions, and hefty mortgages commonplace, buyers need to be aware of the risks.

A LIM is a tool to help you understand potential downsides before they cost you money. Just like building reports , they can help you decide what a property is worth to you – and whether to go ahead with the purchase.

If something goes wrong after you’ve bought, it’s tempting to blame the agent. But if you didn’t pay for your own LIM, then the purchase is at your own risk.

Do this to stop a house purchase falling through.

sue@stml.co.nz (Sue Tierney) — Tue, 05 Sep 2023 21:47:55 GMT

We’ve noticed a disturbing trend around town. Banks are declining loans – even though the purchaser has ‘pre-approval’ for finance.

This can be a complete dealbreaker for people who have invested time and money in coming to an agreement to buy a particular property. But if your bank says it won’t approve the loan then there’s not much you can do about it.

However, if you know the underlying reason for these loan declines, you may be able to front-foot the problem – and get your finance without any hassles.

Here’s the key:

Get a building report early in the process - and disclose all issues to the bank.

Banks need to know if there are potential problems with the property, such as rotting piles or hidden water damage. After all, they’re going to register a security over the property (i.e. a mortgage). So they need to ensure the security being offered is satisfactory and the property will be easily saleable in the future.

They will want to know that the property is insurable. In fact, they won’t advance the funds on settlement day unless they get your solicitor’s certificate to prove the property is covered, with the bank’s interests noted on the policy. This means the insurance company specifically notes that the bank has a mortgage over the property. In the event of a large claim on the property your bank would receive the payout to clear the mortgage, not you.

To encourage the bank to lend on a property that does have issues, you’ll need to satisfy them that you can fund any repairs. Maybe you’re borrowing $500,000 for the purchase, but you’re going to need another $200,000 to bring things up to scratch. The bank will want to know you have sufficient funds (or the ability to top up your loan without breaching the bank’s lending criteria).

If you need an Accredited Building Surveyor, start here .

It's not just the building, it’s the land.

Your pre-purchase report should note any issues with unstable land or flooding. Natural disasters such as floods, landslips and earthquakes have made all New Zealand lenders very aware that the value of a property can be wiped out overnight.

Once again, it is up to you to check any risks before you commit to buying – and to make sure the property can be insured.

If you’re buying in a body corporate, check for any unresolved issues.

The body corporate must tell you about any issues with the building or land. They do this via a pre-disclosure document. If an issue has been raised and minuted, then this will be noted in the pre-disclosure document you receive from the body corp administrator (and in the body corp minutes from their Annual General Meeting).

In practice, we find that banks are wary of lending in multi-unit properties where there’s the potential for disruptive repairs and a big bill. Even if the issue seems minor, such as an unstable retaining wall on the driveway, they may decline the loan.

Can you see a theme emerging? Banks hate uncertainty. The more evidence you can find to prove that the issues are either minor or resolved, the better chance you have of an approval.

So what can you do?

How to minimise your chances of having a home loan declined.

Get a detailed building report early in the process.
Disclose any risks to your insurer to check whether the property is insurable.
If remediation work is required, get firm quotes from reputable firms, including contingencies and time frames.

It may seem like a lot of due diligence – but it’s in your interest to get this information out in the open before you’re too committed. Remember that your ‘pre-approved’ finance simply means the bank is happy with your personal creditworthiness. It isn’t a blank cheque to buy any old property the bank thinks is risky.

On the bright side, you may find that the vendor agrees to sort out any issues at their own expense, so you can do a clean deal.

If you’re a vendor, front-footing problems is in your interest too.

I don’t know why more vendors don’t get reports and fix any issues before listing their homes. It can help them achieve a better market price and makes the property attractive to more buyers.

The bottom line is this: information is power. Banks already know this, which is why they will not close a deal with too many unknowns.

Whether you’re a purchaser or vendor, it’s in your interest to have this power, too.

This is not good advice.

sue@stml.co.nz (Sue Tierney) — Thu, 17 Aug 2023 02:53:06 GMT

This is not good advice.

In fact it’s not advice at all.

In a general newsletter like this one, I’m not going to give you any specific advice. While I may share my thoughts on mortgages and personal finance, this is not the place for me to tell you what I think you should do.

The key word here is ‘you.’

What is right for you, at this moment, may be completely wrong for another client (or for you at another stage of your life). This is why the banks these days follow the mantra of ‘know your customer’.

Just like the banks, we are required by the law to be very mindful of the advice we provide. So every time you ask us to look at a new home loan, renew your fix or adjust your insurance, we will start by asking you to take two minutes to fill in a questionnaire.

Even if we’ve known each other for years, this is a vital part of making sure we have understood your needs. We need to know what may have changed in your life before we start offering advice.

It's the law.

As Registered Financial Advisers, we are regulated by the Financial Markets Authority . There is now a very prescriptive process we must be able to prove we have followed at all times. It requires us to show we take our clients’ unique circumstances into account whenever we provide advice.

So we need to review your structures and understand the context of your finances before we start processing any paperwork for a loan. On top of that, we are audited every year and have to be able to show that we have helped clients review their loans.

And this is why it’s important not to ignore any emails we send when it’s time to renew your fix. They’re not spam – they’re part of the process we need to complete before we can start working out the best options for you.

We’re in the business of helping you get the right loans and insurance policies to help you meet your life goals.

That’s why we’re very careful with the advice we give.

Think interest rates have peaked? Be careful

sue@stml.co.nz (Sue Tierney) — Thu, 17 Aug 2023 02:52:36 GMT

Think interest rates have peaked? Be careful

One I know a few people who breathed a sigh of relief the last time the Reserve Bank board met and decided not to push the Official Cash Rate (OCR) any higher. The general inference was that interest rates have now peaked.

Well, not so fast.

While the OCR has a big influence on the mortgage rates that banks can offer, it’s not the only factor. There’s also the matter of New Zealanders’ very low savings rates.

Why does this matter? Because it means that New Zealand banks have to fund our demand for mortgages by borrowing from banks overseas.

These banks then place restrictions on the loans to protect their own interests. After all, a country with a savings deficit is bit riskier than one with plenty of spare cash.

One way this shows up is in higher wholesale money market rates. In turn, this recently led to higher-than-expected interest rates on home loans.

So some people who held off fixing have found themselves caught out. They would have been better off taking the fixed rate on offer instead of holding out with the belief that they could grab a lower rate in the near future.

This is just one reason it’s a fool’s game to try and second-guess interest rates. The things you read about in the media, such as OCR decisions, are never the full story.

What type of loan you have, the bank you’re with, the way you structure your loans – all these factors need to be considered in the context of your personal financial position.

Don’t be mesmerised by the OCR. Ask us to help you work out the best option for you.

Two ways to avoid the curse of relentlessly rising insurance premiums.

sue@stml.co.nz (Sue Tierney) — Thu, 17 Aug 2023 02:49:27 GMT

Two ways to avoid the curse of relentlessly rising insurance premiums.

One of the biggest complaints we hear is, “My insurance premiums keep going up.”

It’s understandable. No one likes seeing prices rise year after year for the same cover.

So here are two ways you can keep your premiums down – without sacrificing any benefits.

The first is something called Level Premiums for 10 Years. This is where you pay the same fixed premium for a full decade. Think of it as the insurance equivalent of a fixed rate on your home loan.

The idea is that you pay more during the early years but the savings soon start to add up. By the end of the decade you will be paying substantially less than if your premiums had been rising every year.

The second way to save money on your premiums is to take advantage of AIA Vitality. This is a savings and wellness programme linked to AIA Insurance that rewards you with significant discounts.

Just signing up gets you an instant 10% discount on your premium. Then each year, you can get extra discounts if you achieve certain health and wellness targets. These might include tracking your sleep or reaching some weekly activity milestones. You also get rewarded for eye checks, mole maps and other things that can contribute to staying healthy. I’d be happy to give you more details if you’re interested.

AIA are making it even easier to claim these discounts by holding a one-day event this August. You’ll have the opportunity to have all your health checks done in one session, and you’ll get an AIA Vitality points bonus just for taking part.

Let me know now if you’d like to take part, and I’ll meet you there.

Get all your health checks sorted – and get a healthy saving on your insurance too.

How making a will could change your life for the better

sue@stml.co.nz (Sue Tierney) — Mon, 22 May 2023 01:21:06 GMT

I’m always astonished at the number of people I meet – many with successful careers, much-loved families and significant assets – who don’t have a will.

It matters because I’ve seen far too many situations where people died without a will. The result was chaos. Yet it’s a problem that’s easily avoided.

It’s such a simple thing to do, you could draft the outline for a will in 10 minutes. Read on to find out how.

And learn how making a will can make you better off.

Why a will is important

A valid will is the only way you can be sure that your wishes will be carried out when you’re no longer there to say what should happen.

So if you want your children, grandchildren or other family members to inherit some or all of your estate, you need to spell it out. If you want your partner to inherit your shared home, you need to be clear about this.

Some people have the vague idea that their loved ones will simply be able to step in and take ownership of the property if they die intestate (which is the legal jargon for dying without a will). This is where it gets tricky.

For example, the law says that siblings may be able to inherit a share of your estate if you die without a will. Imagine if family members you didn’t feel particularly close to were able to claim property that your surviving partner really needed.

Your loved ones may also be unable to access bank accounts or investments they need in the aftermath of a funeral.

Not having a will could mean a long, painful wait while lawyers sort out the mess.

How to make a will

Here’s the good news – it is actually really easy to make a will.

You could take the first steps in 10 minutes, simply by answering the 13 questions in this free will template.

Questions like…

Where were you born?

Do you have any burial or cremation wishes?

Are there any specific gifts you wish to make to anyone? (e.g. jewellery, art, furniture, money?)

At what age should your beneficiaries/children receive – 25 years?

…and so on.

Of course, it can get more complicated if you have a family trust or a complex mix of assets. But the basic approach is simple: Answer the questions to make your wishes known.

Do you need a lawyer to make a will?

We always advise people to pay for expert advice, so the next step after filling in our will template should be to contact your lawyer.

A lawyer can run an expert eye over the document, check that it complies with the law, answer any questions, and finalise things for you. For a straightforward will, most solicitors will charge a modest fee and keep your will safe in their files.

The key point is to make sure your will is witnessed and signed.

To be valid, your will must be in writing and be signed at the end by you and two witnesses. All three of you should do this together, with all three seeing the others sign. And of course, the document must be intended by you to take effect as a will. Vague statements of intent aren’t enough.

Why you’ll be better off having made a will

By now it should be clear that having a will is just plain common sense.

And it’s no big drama.

We’ve seen so many people placing themselves under huge psychological pressure by putting off making a will. They worry that it will be a complex, painful, drawn-out and expensive process. It doesn’t have to be.

Just start by downloading our free will template and filling in the answers to 13 questions. Your lawyer can take it from there.

By creating your will you can be sure that your wishes will be carried out after you’re gone. You’ll also be saving those you love from a lot of distress.

And you’ll have the satisfaction of ticking off one very important task from life’s to-do list.

Has inflation reduced the value of your income protection insurance?

sue@stml.co.nz (Sue Tierney) — Mon, 17 Apr 2023 22:12:31 GMT

Just a quick reminder that insurance should never be ‘set and forget.’ In the case of income or mortgage protection, it can quickly become out of date after wage rises and inflation.

That’s because your cover may not automatically increase, even though things are a lot more costly than a few years ago. Your income may have risen, too, so you become used to a higher standard of living. You’ll need to make sure your cover keeps pace.

There’s an easy way to check.

Just ask us to review your cover to ensure it reflects your current needs. In today’s interest rate climate, your monthly mortgage payments might have gone up a lot. We’ll make sure you can still meet them if life takes an unexpected turn.

And if you don’t have income protection, ask yourself: Could I survive on my savings for three to six months if I got sick tomorrow?

If the answer is no, we should talk.

It costs you nothing to review your insurance with our team. Get in touch.

Not all mortgage advice is good advice

sue@stml.co.nz (Sue Tierney) — Mon, 17 Apr 2023 22:12:26 GMT

You might have seen social media posts and comments with ‘useful information’ about mortgages. One example is anecdotes from people who have paid off a lump sum from their mortgage, and they tell you the bank was absolutely fine with it.

What you have to remember is that this ONE person’s experience. It only applies to their loan and their bank.

Yes, it is certainly possible to pay off lump sums with no penalty, but it depends on a whole lot of factors:

When did you fix the mortgage?
What is the current rate?
Where are the bank’s rates sitting now?
How long is the remaining term on your loan?
Which bank are you dealing with?

And there are other relevant factors, such as whether you’ve previously paid off a lump sum.

So don’t jump to conclusions based on ‘advice’ in a Facebook post. It may not be relevant to your circumstances. Worse, it may be spam or a scam. I recently saw a fake video of a celebrity appearing to give dodgy financial advice. We should expect more of these scams as AI takes off.

You’ll only know if you can repay a lump sum without penalties if you check with your bank. It’s true that in a rising interest rate market, there’s less likelihood of being hit with a fee if you change your loan – but you still need to check. Here are some links to the main banks, and what they say on the topic.

Ways to pay off your loan faster

Pay off your loans faster

Paying off your home loan faster

Pay off your home loan faster

Get mortgage free faster

Remember that the only people allowed to provide financial advice in New Zealand are Registered Advisers. You can find the legit ones here.

And if you have any questions about your loan, we’re always ready to talk.

Land lost but freedom gained

sue@stml.co.nz (Sue Tierney) — Mon, 17 Apr 2023 22:12:20 GMT

The rain came down and then some more rain came down. A lot of rain.

It continued to fall from the sky, hour after hour, while I sat in my clifftop home watching the land carve away. My neighbour’s large jacaranda tree was pulled down the slope, taking some of my land with it.

I got ready to self-evacuate and packed a bag with passport and toothbrush. The cat was loaded into the car and the dogs were ready to go. At times like these, you realise what really matters.

In the end I was able to stay in my home, albeit with a yellow sticker from the Council that has subsequently blocked access to some parts of the property.

Now that a few months have passed, it’s time to take stock. Here are some things that come to mind.

1. Let’s look out for each other.

A lot people have gone through similar experiences during this summer’s horrible weather. While the media focus has been on Hawkes Bay and Muriwai, there are people I know in Wairau Park, Parnell and elsewhere whose lives have been turned upside down.

They’ve lost business premises or rental income, and have seen their homes yellow-stickered, with potentially years of waiting while geotech and insurance issues are resolved. People are sucking it up and getting on with life. That’s fine in the short term, but as the months drag on they may find themselves drained, both psychologically and financially.

If that’s you, make sure you reach out to friends and family. Don’t go into your shell.

And if you’ve been fortunate enough to be spared major loss, keep a friendly eye open and be prepared to offer support.

2. Maintenance matters!

The flooding that caused such problems in my neighbourhood was aggravated by a blocked drain on public land. It sent water pouring down our street, and then gravity directed the torrent down the steep slopes at the rear of our properties. As a result, our land slumped down the hillside.

It’s a timely reminder that well maintained infrastructure is critical. While we can’t control public drains, we can clean gutters, keep our own drains clear, and generally make sure our properties are resilient. Prevention is a lot better than cure.

We’ll cover this topic in more detail in a future issue of this newsletter.

3. You can always look on the bright side

Monty Python said it first – sang it, actually – but there’s something to be said for finding positives in a situation.

In this case, I’ve lost some land but at least I no longer have to laboriously clear weeds from the portion that has now slipped down the hill. Instead, I have some terraces that may turn into a new planting opportunity. And my fortnightly task of mowing my older neighbour’s backyard lawn is history. No more Saturday night aches and pains!

I lost land but gained freedom. That’s a reason to be cheerful.

The serious point is that a positive outlook can help give us strength to deal with the demands of life. That’s not to minimise the very real problems we face, and the need to tackle them realistically, but it may prevent us being overwhelmed. Losses are real but so are the good things in life.

My autumn wish for you is to find the things that make life worthwhile, plus the resilience to keep on living your best life and achieving your goals.

We’re always here to talk about those goals – and how to structure your mortgage so you achieve them.

Life-changing financial mistakes – and how to avoid them

sue@stml.co.nz (Sue Tierney) — Wed, 29 Mar 2023 09:17:26 GMT

The media love to report on what’s happening in the economy and draw conclusions about how these events will affect individual New Zealanders. For example, a news story about rising interest rates becomes a discussion about Kiwis who can no longer afford their houses, and will thus be forced to sell.

This is understandable because public events do have personal consequences. The reporters will always be able to find some individuals who fit the bill.

But this conceals a far more important truth:

The biggest factor in whether or not you keep your home is your ability to make well-considered decisions.

So let’s explore what that means.

Mistake 1. Not changing your plans when circumstances change

People who are good with money understand that things change throughout a lifetime. As the years go by, you will accumulate experience. You can use this to adjust your lifestyle as circumstances change.

A classic example would be buying a house when there are two income earners in the family. The bank looks at your loan application, runs the numbers, and tells you the mortgage is affordable. You go ahead and buy the house you want.

A few years down the track, one partner has taken an extended break from the workforce to focus on raising children. A larger house is on the cards but circumstances have changed. Since there’s now only one income, the bank’s previous calculations no longer count. You will need a different approach if a new loan is required.

It’s no good assuming the bank will wave through a new loan because you’re a good customer with a good credit record. The numbers will need to re-done from scratch.

To avoid disappointment you’ll need to be pro-active – and be prepared to make changes before the bank says you no longer meet its criteria. (Pro tip: Talk to us at least six months before you think you’ll be in the market for a new loan.)

Mistake 2. Not foreseeing the consequences of decisions

This is all about seeing the big picture. It means understanding that a seemingly innocuous financial decision can trigger a chain of events that lead to a stressful situation.

One classic example might be taking out a loan for the new car you’ve always wanted. You’ve worked hard and you deserve it, after all. But then interest rates jump, the rates bill arrives, you don’t get that pay rise you counted on, and unwelcome envelopes start to land in your letterbox. A couple of years down the track you’re not sleeping and your health is suffering.

The lesson here is not ‘don’t treat yourself to nice things.’ It’s ‘pause and think about your overall financial position before you take on big financial commitments.’

Of course, you might game out things in advance – and still be blindsided by something unexpected. None of us have 20/20 vision of the future. But when you’re faced with financial stress, make sure you look at the big picture and take a reasonable decision that reflects your new reality.

In the example above, you might reach out to the finance company that paid for your new car. Most lenders will work with a borrower who is struggling to make payments because they want to help find a solution that doesn’t involve repossessing the car.

But if you panic and hide your head in the sand they will have no alternative.

Mistake 3. Not sharing a problem with someone who might be able to help

This is a big one. We all have times in our lives when we need advice, or even just an outside perspective on our finances. But all too often, I see people slipping deeper into debt because they don’t want to seek help (or are too scared or too embarrassed to do so).

This is a critical moment. A problem shared may be a problem on the way to being overcome.

Most of us have a solid friend or family member who is good with money. Or maybe you’re that person yourself. In which case, you can be available for a low-key chat with those who need a fresh perspective on their financial situation. Reach out!

(I have found that many people who are good with money enjoy mentoring others. They feel good about being able to help their friends make smart decisions.)

Your ‘money buddy’ doesn’t have to be a friend or family member. The trusted family doctor might be good person for a chat if you’re finding that money stress is affecting your wellbeing. They’ve seen it all and can often point you towards help that’s available in the community.

Last but not least, there are some great resources and organisations to help tackle money problems.

A problem-solving toolkit for Kiwis

To get a grip on ‘money in versus money out’, you can create a budget. Sorted has a great online budgeting tool .

The government has put together a great webpage with links to community services, financial resources, support group and calculators. Check out what you can get.

For free, face-to-face budgeting advice, there’s the Citizens Advice Bureau , which has offices around the country.

At the end of the day, banks and government ministers will make decisions that affect the economy. This is just the world we live in.

But in the long term, whether or not we thrive in this world largely comes down to our own decisions.

How to buy a home when you have one to sell

Sat, 07 Jan 2023 20:30:00 GMT

The most challenging time to buy a home is when you already own one. Financially, it would be best if you sold your home before buying the next one, but sometimes the person you are buying off doesn’t want to be tied down waiting for your home to sell if things don’t work out. It’s especially true in a hot market.

In a hot market, most properties attract multiple offers. As a result, sellers are less inclined to accept a conditional offer. Particularly one that is reliant on a house sale.

Buyers need to be in a cash position to be competitive, which is hard to achieve if you already own a home.

In this scenario, buyers with a house to sell have a series of unattractive options:

�� : You can keep offering on properties subject to selling your own home, but you will likely keep missing out. As a result, you could spend serious time and money investigating properties with little chance of success.

�� : Secure bridging finance from your bank so you can buy before you sell. Bridging finance can be costly if your home takes a long time to sell, and the approval criteria can be hard to meet.

�� : Sell first and take a punt that you will find a home you like once you’ve sold. If you don’t see something quick, you could end up having to find temporary accommodation and paying to move twice.

�� : Buy first and take a punt that you can sell your home before you need to settle. This option comes with a zero backup plan and potentially puts pressure on you to accept the first offer that comes your way. You could end up selling for less than you should sell your home in time. Not an option for the faint-hearted, and not one we recommend.!

You’d be forgiven for thinking that none of those sound particularly appealing. But there are other options.

Alternative Solutions to Consider

Keep your existing home as a rental

Talk to a property manager to find out what your home might rent for. If the numbers stack up, your existing home could become your first investment property!

Sell first with a long settlement (most popular)

One perk of a hot market is that cash buyers are often flexible on settlement dates. Sell your existing home first and ask for a 3-4 month settlement, giving you time to find your next home before you have to move. Having clarity on exactly how much you have to spend on your next home allows you to take your time and focus on securing the best possible price.

Sell and then rent

Sell and then rent could be the best option if you are moving to a new location. Many families choose to rent for 6-12 months to get to know an area before deciding exactly where to buy. Explore different suburbs, check out local schools, discover your favourite local café, and scope out amenities like nearby parks and walking tracks.

Getting into a new home can be challenging, especially if you already have a home to sell. Throw kids and pets into the mix, and the resulting disruption can make you wonder why you ever wanted to move in the first place!

Keep in mind; there is a way through it. It might seem like an insurmountable problem, but many homeowners have successfully made the transition while also achieving a great sale price for their existing home.

Why You Need to Stress Test Your Mortgage Now

Fri, 09 Dec 2022 21:30:00 GMT

Much like hunkering down for a coming typhoon, stress testing your mortgage can help ensure your finances don't get swept away should interest rates continue to rise.

Whether you are a first home buyer or a seasoned property investor, your capacity to keep up with your repayments is essential to stay on top of your mortgage. However, coming from the less than 2.5% one year fixed rates property owners saw last year, we are now seeing rates climbing up over 5%. If this trend continues, it's entirely possible to see one year fixed rates climb up to 6.0% come next year.

While the rising interest rates can be quite stressful for both aspiring and current property owners, there are certain steps you can take to make sure you stay in control of your mortgage.

What is a Mortgage Stress Test?

One of the key requirements of a successful mortgage application is the borrower's capacity to consistently meet the required monthly payments over the term of the loan. This is more commonly known as the borrower's serviceability.

To be on the safe side, mortgage lenders perform a mortgage stress test by using interest rates that are typically higher than the ones they publicly advertise. While each lender uses their own set of rates when performing a mortgage stress test, all lenders use rates higher than any current mortgage rate forecasts.

For Upcoming Mortgage Applicants

Banks are starting to increase the mortgage rates at which applicants are "stress tested". This is a decision typically made after a bank considers a variety of factors, such as potential housing market economic conditions, the current home loan rate environment, and ongoing interest rate trends. As a point of reference, this rate is as high as 8.15% at one lender.

These higher interest rate requirements can affect a borrower in different ways:

A borrower that was pre-approved for $800,000 previously could now have his or her borrowing capacity reduced to $760,000
A borrower that had their monthly expenses calculated at $3,000 previously may potentially have that increased to $4,000

While each bank has it's own way of assessing the borrowing capacity of an applicant, it's likely that we will see a decrease in the amount of applicants able to purchase property. This, in turn, can mean a potential decrease in house prices.

For Current Property Owners

When it comes to current property owners, it is essential that you perform a mortgage stress test as early as possible - doubly so if your current fixed rate is expiring soon. With interest rates going the way they are, it's likely that the interest rates you'd be able to fix for in the coming months will be much higher than before. This will likely lead to higher mortgage payments, making budgeting for you and your family much more difficult.

While adjusting to higher mortgage payments can be difficult, there are two key ways you can ease your finances towards a stricter budget:

Allocate more of your monthly budget towards potentially higher mortgage repayments by reducing non-essential spending
Preemptively save up for a "repayment fund" now, which you can use to top up your mortgage repayments should they increase in the future

Regardless of what method you choose, what's important is that you prepare for a potential increase in your monthly repayments as soon as possible. This way, you and your family won't be caught unawares when you eventually have to fix for a higher interest rate.

Our Team is Here to Help

Increasing interest rates can be a very stressful time for property owners. If you need a helping hand when it comes to sorting out your finances or working with a tighter budget, we would be more than happy to help.

Should you re-fix at today’s interest rate or wait and see?

Tue, 06 Dec 2022 14:21:44 GMT

Many people are watching interest rates climb to heights they haven’t seen before. And they’re getting a bit panicky.

Some are wondering whether to break their fixed-term loan early in order to grab a new rate now. They’re worried they’ll be caught with even higher rates in the next year or two.

Our advice is: Tread very carefully.

For a start, you may incur costs if you break your current loan, because the bank is entitled to claw back revenue it was expecting when you committed to the fixed term. In a rising interest rate market that’s increasingly unlikely but we never know until the bank has quoted.

But there’s an even more important reason to pause. We don’t actually know how high rates will go and when the cycle will turn. And there are other relevant factors, like the size and term of your current loan, and how your mortgage is structured.

Your situation is unique, so we’ll need to run the numbers to work out whether it’s worth breaking your fix early.

We are always happy to look into your loan and give guidance on whether to refix or wait things out. It’s a personal decision and there’s no ‘one size fits all’ solution. Interest rate trends are only part of the picture.

Don’t jump the gun. Talk to us.

Insurance for your kids. This is a difficult topic.

Tue, 06 Dec 2022 14:11:37 GMT

Nobody likes to think about it, but sometimes children have accidents or get sick. Sometimes they end up in hospital for a long time. Starship is always full.

If it happens, parents often give up their jobs. They drop everything – because who wouldn’t?

Fortunately, there are some excellent policies that can provide welcome support when families are affected by a child’s misfortune.

And we have the perfect person to help you with this insurance – our in-house insurance specialist Louise Nicholls.

Louise is here to help.

We first got to know Louise when she worked in a senior role at one of New Zealand’s largest insurance companies. She really knows her stuff, so she can help you find the best cover for your family.

As well as being a qualified and registered Financial Advisor, she’s a mum of two. She knows all about the joys – and responsibilities – of family life.

Not only will she help you find the best cover, but she’ll be there if you ever need to make a claim. She will handle all the paperwork and spare no effort to get things sorted while you focus on the needs of your child.

It’s not just about the insurance. It’s about the support.

If you’d like to review any of your personal insurance policies, Louise is always ready to talk.

A quarter century of Bevan

Tue, 06 Dec 2022 13:23:43 GMT

I can’t believe I’m writing this, but my great mate (and brilliant mortgage advisor) Bevan McShane is saying goodbye.

After 25 years working together, Bevan has decided to do something different with his life. He’s leaving the finance industry and we wish him all the best.

Since this is the last time I’ll be able to write about him as my comrade in arms, I thought I’d share some random Bevan facts.

It all began in 1997.

We were working at another company and Bevan was introduced as one of my colleagues. We didn’t have much in common (or so we thought). Neither of us suspected we’d still be popping our heads around each other’s office doors 25 years later.

But here we are. The Greek Kiwi and the Māori (as we fondly refer to ourselves) have complemented each other’s strengths. That’s why I’ll miss him so much.

I tried to count the number of clients Bevan has helped, but gave up.

How do you tally up all the mortgages Bevan has arranged, all the phone calls he’s taken and all the advice he’s given? It’s too hard.

So let’s just say Bevan has done a lot. He’s really enjoyed working with you. But now it’s time for a change.

Bevan and Bella – the odd couple.

It’s fair to say that Bevan raised his eyebrows occasionally at my dog’s office antics. But these two strong characters eventually reached a modus vivendi – even if it was a love/hate relationship.

But then something strange happened. Nudged by his daughter Izzy, Bevan became the proud dog parent of his own miniature schnauzer, Honey. And now there’s a second dog joining the McShane family unit.

I didn’t see that coming.

It’s goodbye…but hopefully not forever.

After a hectic few years in the mortgage business, Bevan says he’s ready for a career break. So who knows – you may meet him out and about in a totally different role? If you run into him around town or near his holiday home in Whangamata, make sure you say Hi and have a chat.

He may be popping in from time to time to help out at Sue Tierney Mortgages, so we hope it’s not a final goodbye. We just won’t be seeing him every day.

Here’s to many happy dog walks in the years to come!

How do I calculate the return on a rental property?

Tue, 29 Nov 2022 20:45:00 GMT

Property remains as one of the most common forms of investment in New Zealand. However, not all properties are made equal. This is why when it comes to choosing which properties to invest in, one of the best ways to start is figuring out your investment strategy.

Choosing your investment strategy

Before choosing a property, it's important to first clarify your preferred investment strategy: buy and hold or buy and flip.

Buy and hold

For buy-and-hold investors, their goal is to hold the property on a long-term basis so they can benefit from its value potentially increasing in the future. As they hold the property, the buy-and-hold investor will also receive a secondary cash flow through its rental yield.

Rental yield is the amount of rental income a property investor can get in relation to the price of the rental property. This is calculated by the annual rental income of the rental property divided by its purchase price.

To explain rental yield in better detail, consider the following properties:

Property 1

Location: Dunedin

Price: $700,000

Rent: $505/week

Rental Yield: 0.0375

Property 2

Location: Auckland

Price: $1,400,000

Rent: $780/week

Rental Yield: 0.0289

As shown above, it is entirely possible for a lower-priced property to have a higher rental yield than a more expensive property. Therefore, when assessing a property's earning potential from a yield perspective, casting a wider net that also covers less popular locations can go a long way towards securing real property gems.

Buy and hold is the more common and accessible strategy of the two and is recommended for investors who:

Are new to property investing
Want to keep their full-time job
Have other important time-consuming commitments, like raising a family

Buy and flip commonly called trading

Succeeding with the buy and flip strategy largely depends on previous investing experience, a good amount of DIY knowledge, and having a keen eye for renovation opportunities. Unlike the first strategy, the buy and flip investor's goal is to maximise the amount of profit he or she can make when eventually selling the property for a higher price. This price increase usually happens when the property's value goes up over time, or through efficient and well-planned renovations. The profit gained from selling a property at a higher price is more commonly known as capital gains.

To explain capital gains in better detail, consider the following properties:

Property 1

Location: Auckland

Price: $1,000,000

Property 2

Location: Auckland

Price: $1,400,000

If all houses in Auckland were to increase in value by 10%, selling Property 2 would result in higher capital gains ($140,000) as compared to Property 1 ($100,000).

While the profits that can be reaped from properties that have been successfully bought and flipped are more immediate and arguably more gratifying, it is also the more time-consuming and difficult strategy of the two. Given this, the buy and flip strategy is typically used by short term investors or traders who:

Have the time, connections, and expertise they need to scout, renovate, and sell properties consistently
Prefer turning the equity they gain into cash quickly

Rental yield VS capital gains

As a general rule, more expensive properties have a higher earning potential when it comes to capital gains. On the other hand, more affordable properties tend to have a higher earning potential when it comes to rental yield. Therefore, in addition to the investor's preferred investment strategy, the desirability of a property also depends on his or her property investment goals. These goals typically boil down to either a more consistent cash flow through rental yield, or significant but inconsistent profits through capital gains.

Assembling your property investment team

When it comes to property investment, it pays to forego the Kiwi "do-it-yourself" mentality. Purchasing a property is usually the biggest financial commitment the average person makes. When the stakes are this high, stumbling through the process to figure out things on your own can lead to serious financial consequences.

An effective property investment team is typically comprised of the following:

Financial Advisor

Financial advisors (previously known as mortgage brokers) act as your representative when it comes to setting up the best mortgage structure based on your financial situation. Apart from their experience in setting up mortgages, it is also their responsibility to stay on top of the latest rates from all the major banks and financial institutions, as well as any upcoming changes to lending criteria.

They also help review and process your loan application to make sure it has all the required identification, documentation, notes, and signatures. Remember that each bank has its own set of requirements when it comes to getting a loan approved. Without the help of a financial advisor, getting a loan application across the line can quickly become a frustrating and time consuming process.

Financial advisor’s focused on mortgages typically don't charge a fee because they are compensated by the banks.

Insurance adviser

Similar to a financial advisor, an insurance adviser acts as your representative when it comes to choosing the best insurance products based on your current situation and goals. The wording that goes into explaining what insurance products cover and do can be quite confusing. This is why it is the responsibility of the insurance adviser to have a comprehensive understanding of the different nuances that separate each insurance product.

Not all insurance products are created equal. Without getting the proper guidance from a competent insurance adviser, you may end up signing yourself up to a limited and restrictive insurance policy that you won't be able to rely on when emergencies do happen.

Apart from their thorough understanding of the various insurance products currently in the market, insurance advisers can also look after your insurance claims. They can make sure that your claims are processed in a fair and timely manner.

Insurance advisers, like financial advisors, are paid via commission by insurance companies and typically don't charge a fee.

Solicitor

Solicitors help ensure your interests are looked after from a legal perspective. They typically review important documentation used in purchasing of a property, such as the sale and purchase agreement and the Land Information Memorandum.

Having a solicitor by your side helps ensure you have a thorough understanding of the legal implications of the documents you are signing and submitting. Agreeing to certain clauses without understanding what they mean can quickly lead to serious problems down the line.

Solicitors typically charge a fee for their service.

Property accountant

A good property accountant is as important as your solicitor.

Ensuring you set up your correct structures and file correct tax returns will save you sleepless nights.

Many property investors pay more tax and fees than they need to, by simply not getting the right advise at the right time, thinking they can do it themselves, mainly because of their limited knowledge regarding entities such as family trusts and companies. A competent property accountant can save you time by filing your tax returns, ensuring that the numbers you are submitting to the IRD are correct, and checking if you are paying the correct amount of tax.

Property accountants, like solicitors, typically charge a fee for their service.

Property manager

Once you manage to jump through all the hoops required to finally own an investment property, the next step is managing it in a profitable and time-efficient manner. A property manager's responsibility is to ensure that the property is regularly inspected, potential tenants are vetted thoroughly, tenant issues are addressed promptly, and rent is paid regularly.

Property managers typically charge for their services by taking a percentage out of your property's rental income.

Property adviser/Buyers agent

Based on your investing goals and financial situation, property advisers provide you with a personalised list of potential investment opportunities. Their advice ensures that the properties you end up choosing to grow your portfolio have a good return on investment potential and will have a higher likelihood of helping you achieve your property investment goals.

Property advisers typically charge a fee for their services.

Start building your property investment team

Sue and her team have decades of experience in helping Kiwi property investors prosper in the ever-changing New Zealand property market. Whether you are looking to get your first investment property or are looking to grow your investment portfolio, helping you achieve your investment goals is our priority.

Some things are more important than a mortgage

Thu, 17 Nov 2022 03:05:52 GMT

“The world loses a man to suicide every minute of every day, with males accounting for 69% of all suicides. Our fathers, partners, brothers and friends are facing a health crisis, yet it’s rarely talked about.”

I was struck by this quote from the people who promote Movember – the annual event devoted to ‘changing the face of health.’

Originally dedicated to raising awareness of prostate cancer, Movember has become a global movement of Mo Bros and Mo Sisters making a difference in mental health and suicide prevention as well as prostate and testicular cancers.

As moustaches wispy, weird and wonderful sprout on the faces of Kiwi blokes this month, I thought it would be timely to talk about why mental wellness has been a lifelong cause we support.

Mortgages are important. Mental health, even more so.

Thoughts on depression, stress and anxiety.

These are absolutely normal states of mind.

How do I know? Every time I sit down with a client to apply for insurance there are questions about mental health. You’d be surprised at the percentage of clients who say they’ve had a mental health diagnosis or treatment at some point in their life.

Staunch Kiwi blokes and women – they’ve all had their ups and downs.

So don’t feel you have to keep these things a shameful secret. As Movember shows, it’s healthy to have conversations about mental health. (It’s also smart to get these issues out in the open when applying for insurance, so we can explain any implications and give appropriate advice.)

We are not psychotherapists but we’re empathetic. It’s all about understanding our clients’ needs.

Smart tools for dark days.

The last few years have been tough for many of us. If you’ve been doing it hard, or you simply feel a bit stuck, here are some things we’ve found that work.

The first tip is something I learned from my mentor Dr Fred Grosse . It’s the concept of ’10 out 10 days.’

This is based on the insight that one antidote to the greyness of a low mood is to consciously celebrate the moments that make life wonderful. They can be quite small things, but they can make your day a 10.

For me, it’s stepping outside to smell the wonderful roses blooming in my garden. For others, it might be taking the dog for a good long walk. A friend of mine who has moved to Mexico shared how thrilled he was to find a great café making flat whites with premium Mexican coffee beans.

If you regularly do the things that make your day a 10 out of 10, you will have a powerful tool to de-stress and stop small problems becoming large ones in your mind. Tony Robbins has a similar concept – he calls it ‘Creating Magic Moments in Your Life.’

My second tip is simple: Seek help.

There are so many charities and groups doing great work in mental health. Lifeline is one that springs to mind.

You can also start a conversation with your mates and loved ones. Movember is great for this because it’s a public event that gives us all permission to be open about the issue. You could even grow a mo if you feel that way inclined (and have the requisite whiskers.)

Giving back.

Last but not least, it’s great to give back. By supporting a good cause, you get the bonus of feeling good about yourself.

Two charities we support financially are Lifeline and the City Mission . The first is there for Kiwis who need help in their dark moments, while the second provides a helping hand for those who fall through society’s cracks. These issues are often linked, by the way.

What causes do you support?

And how do you deal with the issues around mental health? We’d love to hear your thoughts.

Mortgages and insurance may be our business, but they only matter because people matter.

Stay well this Movember.

If you’d like to donate, here are some charities doing great work:

Lifeline

Auckland City Mission

Movember

How to pay off your mortgage faster

Wed, 09 Nov 2022 23:00:00 GMT

Your mortgage is likely the biggest financial commitment you'll make in your life. This is why it's important to have an effective strategy in place when it comes to paying off your mortgage faster.

What makes up a home loan?

Before we discuss our tips to pay off your home loan faster, it's important to at least have a basic understanding of what makes up a home loan.

Home loans consist of two parts: the principal (the loan amount you borrow from the bank) and the interest (the cost of borrowing that money). In general, the interest for your home loan is calculated based on the amount of principal owed each day. This is why home loans are generally harder to pay off at the start of their term. That's because generally the beginning is when we owe the most amount of money. This is also the main reason why paying off a mortgage completely can seem impossible at first, especially for new homeowners.

With this in mind, let's get started with our home loan repayment tips!

Tip #1: Increase your repayments

A typical home loan can have a term of up to 30 years - which is quite a long time. However, small increases in your repayments can quickly add up and shave heaps off your mortgage term and interest payments if done consistently.

Consider the following home loan example:

Home Loan: $700,000

Deposit (20%): $140,000

Interest Rate (2 years): 5.79%

Repayment (fortnightly): $1,510

Home Loan Term: 30 years

Amount Owed: $560,000

Total Interest Paid: $621,040

This basic example illustrates how the interest portion of a home loan ($621,040) can actually exceed the remaining amount owed ($560,000) for the same loan. This is why it's important to start strong and squeeze out as much extra money as possible to increase your repayments.

With the same example in mind, consider what would happen if you were to increase your mortgage payments from $1,510 to $1,600:

New Repayment (fortnightly): $1,600

New Home Loan Term: 26 years

New Total Interest Paid: $523,232

A 90$ increase in repayments resulted in four years being taken off the overall term of the loan, as well as a potential $90K + reduction in total interest being paid. Now, imagine how much more you could save in terms of time and interest payments with an even bigger repayment amount?

Setting up a mortgage structure that maximises the size of the repayments you could make while still allowing you to have a comfortable lifestyle is very important. This is why getting independent financial advice beforehand is key.

Tip #2: Have a flexible mortgage structure

In our previous blog, we discussed how a split home loan can give you both the flexibility of making lump sum repayments to pay off chunks of your mortgage, as well as the security of having consistent monthly repayments. Through the help of an independent financial adviser, you can create a split home loan structure that is specifically designed to pay off your mortgage faster without straining your finances.

Tip #3: Switch from monthly payments to fortnightly payments

This might seem like a strange tip, especially if you assume that you'll simply end up paying the same overall amount, just in more frequent intervals. However, what's less obvious is the fact that you will be able to make two additional payments per year through this simple change if you simply halve the monthly payments and pay it fortnightly.

As mentioned in our first tip, small changes that are consistently done throughout the term of your loan can result in significant changes. This simple change, coupled with increasing your repayment amount, can shave even more years and thousands in interest payments off your mortgage.

Tip #4: Put your money to work

Throughout the year, we often end up accumulating extra money without noticing. This could come from several sources, from tax refunds to the odd piece of furniture being sold on TradeMe. When it comes to paying off your mortgage faster, it pays to be diligent especially when it comes to spare money that we would otherwise neglect. Make it a habit to review your finances and consistently set aside what you can to accumulate more extra payments for your mortgage.

Tip #5: Get creative with mortgage calculators

All major banks feature online repayment calculators that you can use to visualise how you can pay off your mortgage even faster. Have a play and see how far you can take your finances in terms of maximising your mortgage repayments. Seeing the number of years and interest payments you can shave off with a click of a button could be the inspiration you need to take your financial planning into overdrive!

Tip #6: Talk to an independent financial adviser

Like going for a regular check-up with your doctor, talking to an independent financial adviser can help ensure you are repaying your mortgage as fast as you can. Not only that, getting independent advice can also help you plan ahead in case something unexpected happens. From an unexpected promotion at work to welcoming a new baby into your family, life's many ups and downs can easily derail your mortgage repayments without a proper plan.

Talk to our team

There are plenty of ways to pay off your mortgage faster, from increasing your monthly payments, to streamlining your finances to making more extra payments, and updating your financial goals for the year. Sue and her team have decades of experience in helping Kiwis prosper in the New Zealand property market. We would love to have a chat with you!

How high will interest rates go?

Sat, 22 Oct 2022 14:40:25 GMT

The short answer is – your guess is as good as mine.

The long answer is that banks are now stress-testing loans at a hypothetical interest rate around 8.15%.

It’s not a prediction, but it does give you some idea of where the Reserve Bank thinks rates might end up.

Those of us who remember the 1990s will recall paying 9% and more. Yes, it was a different time, and house prices were lower. However, incomes were a lot lower too. Somehow, we coped.

Interest rates do matter, and we’d all prefer to pay less rather than more. However, they are only one factor in the equation. Remember that house prices are no longer rising by leaps and bounds because of the cheap money that previously flooded the market. Many young people are now earning high incomes due to the tight employment market. These factors can balance each other out.

If you can live within a reasonable budget and keep making repayments, the interest rate on your mortgage shouldn’t matter too much. You just need a game plan to achieve your goals.

As always, we’re here to help you work out the right strategy with interest rates. And to help you get the house you want.

Cancer vaccines and your health

Sat, 22 Oct 2022 14:33:46 GMT

Cancer is the single biggest cause of death in New Zealand. So the possibility of new vaccines that can prevent cancer is a very exciting development.

When we see news like this, we’re reminded of the power of the medical profession to come up with options that weren’t available to previous generations. It’s a good thing, isn’t it?

The next thing that come to mind is: Who funds the treatment?

Maybe the New Zealand government (via Pharmac) will fund the next miraculous vaccine or life-saving drug – or maybe it won’t. Budgets are finite. The government can never promise you’ll receive every treatment you need.

For that, you need a good health insurance policy.

If you want the peace of mind to access non-Pharmac drugs or surgical procedures outside the public system, ask us to review your health insurance.

If you’d like to review any of your personal insurance policies, we’re always here to talk. Get in touch now .

First time home buyers – this is your time

Sat, 22 Oct 2022 14:08:16 GMT

For those of us who been through a few previous cycles of the property market, the current situation will feel familiar.

The seemingly unstoppable rise of house prices has paused…and then dipped. Auction rooms that were packed with bullish buyers are looking emptier these days. Properties are taking longer to sell . Agents are advising vendors to be realistic.

This is good news for one group in particular: first-time buyers.

If you are one – or you know one – here’s how to make the most of the situation.

Less competition, more time.

The last few years have been tough for those looking to get into their first home. With almost every property going to auction, buyers were pressured into outbidding each other in a live-action drama. Fun for vendors; terrible if you’re just trying to get a foothold on the first rung of the property ladder.

We lost count of the number of clients who blew thousands of dollars on reports and valuations for houses they didn’t buy. They had to do their due diligence, but then lost out when cashed-up buyers pushed the bid beyond their reach.

In today’s slower market, first-timers have more breathing space. They can trawl the market, put together a conditional offer, and start negotiating on the home they want. They can undertake the costly due diligence if and when the vendor accepts.

There’s also the possibility that they might pay less this year than they would have last year.

We know one buyer who is now the proud owner of a home that cost him $300,000 less than he anticipated paying last year. The end of the runaway market creates winners as well as losers.

But what about interest rates?

Some people who haven’t been in the market long are shocked at the prospect of rates rising above 5%. Our advice is: Don’t panic.

No one knows exactly where rates will top out – and for most of us, it won’t matter much. As long as we’re not hugely overstretched, it’s simply a matter of budgeting carefully and living within incomes. We can carry on living in our homes, and wait for the interest rate peak to pass.

For first-time buyers, it’s a useful reality check. They can build a deposit and work out how much they can afford to repay. The banks will scrutinise their ability to repay at a higher rate . Once the loan is approved, they can start looking for a house to buy – and know the money is there.

The last bit is key. Always make sure you have a loan approved before you start putting in offers. If nothing else, you’ll know exactly what you can afford.

If you’re looking at getting into the market for the first time – or trading up because you’ve outgrown your home – we’re here to help. Come in for a chat before you need a mortgage, and we’ll give you our best advice. There’s no cost.

Is it better to purchase a new build or an existing property?

Wed, 12 Oct 2022 06:04:35 GMT

Buying your first property is one of the most significant decisions you'll likely make.

Choosing whether to go for a new build or an existing property can be confusing. It's worth discussing the pros and cons of going for either a new build or an existing property.

New Build Homes

There's nothing like turning the keys to a brand new house that you finally own. Beyond this, there are also several good reasons to go for a new build over an existing property.

1. Additional financing via the First Home Grant

If you and your partner meet the requirements for a Kāinga Ora First Home Grant, you can get up to $10,000 each to add to your home deposit. The extra money is an excellent way to add to your initial deposit, especially if you are looking to expand your budget for more options in the property market. It is also a way to reduce the principal you'll have to pay over the term of your loan.

2. Get approved for a smaller deposit

Those looking to purchase a new home are likely able to qualify for loans requiring a smaller minimum deposit - typically starting at an average cost of 10%. This can help aspiring property owners with a more limited deposit fund to get their foot in the door easier when climbing the property ladder.

3. Easier and cheaper to maintain

Much like anything that is brand new, a new home is less likely to require extra costs for maintenance or repair - especially within the first couple of years of its life. This can save you from a lot of potential headaches from additional expenses, especially considering all the different parts of a house that wear out over time (plumbing, wiring, insulation and heating, for example).

4. Lower insurance costs

New homes are required to follow the latest compliance requirements before they are built. This makes it less risky (and therefore may be easier) for insurance companies to cover your home at a lower cost, especially compared to older homes.

5. Better efficiency and energy costs

Newly built homes must also be up to code. The Building Code of New Zealand is an extensive list of requirements that homes must follow, such as appropriate ventilation levels, natural light, insulation, and structural stability. Adhering to this code ensures that the costs you would incur, such as heating or general electricity use, would be more or less within a reasonable amount.

6. Easier to resell

A property that is up to current Healthy Homes standards and the Building Code of New Zealand will also make it much easier to sell, should you desire to go that route in the future. This will go a long way in giving potential buyers the peace of mind they need to purchase your home.

Additionally, should you decide to sell your property, later on, preparing a recently compliant property to be fit for sale is much easier than an older property that hasn't been compliant in years.

Purchasing Existing Homes

Why wait for your dream house to be built when it already exists? From getting the best locations, having a home with character, and faster occupancy, going for an existing home can give you various advantages you wouldn't get otherwise.

1. Fixed cost

Unforeseen circumstances can cause a new-build property's labour, material and construction costs to quickly spiral out of control during its construction. On the other hand, the price for an existing home is often set in stone once the auction and negotiations have concluded. This simplicity will likely give aspiring homeowners and property investors the peace of mind they need to proceed with the purchase.

2. Character

For some people newly-built homes can often feel sterile, uninspired, or even downright similar to other newly-built houses in the area. Going for an existing home will likely give more exciting options for adventurous buyers looking to acquire a property with character and style.

3. Better location

Whether you are looking to live closer to your nearest city centre, set your sights on a specific school for your children, or want a scenic beachfront property, popular areas rarely have any undeveloped land left for new builds. That's why going for an existing home will likely be your only option when it comes to getting the best locations possible for your property.

4. Less waiting for occupancy

Not a fan of waiting a year before occupying your newly purchased property? Going for an existing home also means much less waiting before occupancy. When you've ticked the boxes, and the paperwork has been approved, you and your family can start moving into your new home.

5. More landscaping options

Unlike their newly-built counterparts that sometimes come with limited landscaping, existing homes have often had the time to grow a lush landscape. This abundance of landscaping options is worth considering, especially for property buyers with a bit of a green thumb.

6. More DIY opportunities

For experienced investment property owners, doing key renovations for an existing home can easily add thousands to a property's market value - making it an excellent opportunity for profit. This, however, requires more diligence and prior experience as existing homes are typically harder to repair back up to code.

Talk to our team

Whether you are looking to purchase your first home or are interested in growing your investment property portfolio, talking to an independent financial adviser can help you make more informed and profitable decisions. Let us know if you'd like a quick chat about an upcoming property purchase - we would be more than happy to help!

How long should I fix my mortgage for?

Wed, 05 Oct 2022 12:00:00 GMT

Fixing your interest rate for the appropriate term is one of the best ways to stay on top of your mortgage by getting certainty regarding your repayments.

Much like going for a check-up with your doctor, getting advice on how long to fix your loan is essential in ensuring you can maximise your mortgage repayments without straining your finances. Additionally, given how mortgage rate increases have continued throughout these past several months, getting a professional opinion on how long to fix your mortgage has become essential in navigating this uncertain time.

What is the difference between a fixed rate and a floating rate?

Before diving into how long you should fix your mortgage, it's essential to understand the difference between a fixed rate and a floating rate.

Going for a fixed rate allows you to "lock in" your mortgage interest rate for a set period - usually measured in years. This enables you to have consistent mortgage repayments based on your chosen term - making budgeting easier. As a downside, this also prevents you from changing your repayment amount without incurring additional charges.

On the other hand, going for a floating rate (also known as a variable rate) allows you to remain flexible regarding how you want to repay your mortgage. This option is typically considered by borrowers who intend to make lump-sum payments to pay off a more significant chunk of their mortgage faster. However, this option will also expose you to interest rate fluctuations, preventing you from having consistent repayments that you can easily budget for.

Should I fix it for a longer term or a shorter term?

While there are several factors that you and your financial adviser must consider when deciding how long to fix mortgage rates, the decision will eventually boil down to one thing: choosing between certainty or flexibility.

Going for a longer-term fixed rate

If getting certainty regarding your monthly repayments is a priority, then fixing for a longer term is recommended. This ensures that your repayments will remain the same for a more extended period, allowing you to plan your budget for the coming months or years much easier.

Going for a longer-term loan interest rate will also protect you from potential increases in mortgage rates for a longer duration.

On the other hand, fixing for a longer-term also comes with disadvantages.

First, going for a longer-term will lock you out from potentially lower loan interest rates that may pop up in the future.

Second, going for a longer-term also means you are committed to consistently meeting your repayments for much longer. Should you require to adjust your repayments due to unforeseen circumstances, you may incur an additional cost - known as a break fee - before you can fix your mortgage for a different term and rate. This additional fee may also apply if you decide to pay off your loan ahead of schedule through a lump sum payment.

Going for a shorter term fixed rate

On the opposite side of the spectrum, you can also decide to fix your mortgage for a shorter term - typically given in six-month or one-year loan interest rates. This is an excellent option for borrowers expecting significant changes in their financial situation in the coming months.

These changes may come in the form of higher income due to a coming promotion or the addition of a new income earner in the household. On the other hand, events like a significant work injury or the addition of a baby to a family typically lead to lower income or higher expenses. In both cases, going for a shorter term will allow the borrower to remain flexible and adjust their repayments based on their current financial situation without paying additional fees.

Why you should get financial advice

While you may thoroughly understand your circumstances and how these affect your finances, keeping up with all the different factors that go into structuring a home loan is often best left to the professionals - mainly financial advisers. Collaborating with an independent financial adviser will help you get objective financial advice on how long to fix your mortgage and enable you to explore more complex options when it comes to fixing mortgage interest rates.

The third option: Going for a split home loan

Unlike the options discussed above, a split home loan allows you to benefit from the certainty of having a fixed rate while still retaining the flexibility of having a floating rate. However, this home loan structure is often more complex to set up optimally.

How does a split home loan work?

To illustrate how a split home loan works, consider the following example:

50% Floating Rate, 50% Fixed Rate (two years)

In this example, the mortgage is divided into two portions: a 50% floating rate portion and a 50% fixed rate portion. As mentioned earlier, the key benefit of a floating rate is the flexibility it gives the borrower in terms of making lump sum repayments towards their mortgage. With this in mind, the 50% floating rate portion of the loan will allow the borrower to consistently make lump-sum payments to shave off up to half of their mortgage as quickly as possible.

On the other hand, the 50% fixed rate portion of the loan will still protect the borrower from potential interest rate increases. In addition, this fixed portion will also provide a degree of certainty in terms of the borrower's repayment amount.

This example is an essential representation of what a split home loan could look like. However, based on the borrower's goals, home loan structures can easily increase in complexity. Consider the following split home loan examples:

1. 25% Floating Rate, 75% Fixed Rate (three years)

2. 40% Floating Rate, 30% Fixed Rate (two years), 30% Fixed Rate (three years)

Each home loan structure has its benefits and disadvantages. However, the important thing is getting a home loan structure that is tailored to your specific financial situation and goals. This is where talking to a financial adviser comes in handy.

Talk to our team

Our team has decades of experience in the New Zealand housing market. If you need help figuring out how long to fix your mortgage, we would love to chat with you.

What is the CCCFA and how does it affect your mortgage?

Wed, 21 Sep 2022 01:01:37 GMT

If you already have a loan, you don’t need to worry about the Credit Contracts and Consumer Finance Act – the CCCFA for short. Just keep on making repayments and you should be fine.

But as soon as you want to take out a new loan, or make significant changes to your current mortgage, things could get tricky.

That’s because every lender in New Zealander has to follow the rules and processes set out in the Responsible Lending Code every time a consumer applies for credit.

It could be a few hundred dollars to buy furniture, or a million dollars to trade up to your next home. There are no exceptions.

Here are the key things to remember:

It’s not about you

It doesn’t matter how long you’ve been with the bank.

It doesn’t matter how much you’ve borrowed and repaid before.

It doesn’t matter how much equity you have.

Many of us grew up when these were the only things that mattered. You were a ‘loyal customer’, and the bank had a lot of discretion about offering you more money. That’s not the case anymore.

It’s not even about how much you earn. I’ve had borrowers on high incomes shocked to learn that the bank doesn’t want to increase their home loan. By the same token, someone on a lower income – but with a larger monthly surplus – might get a mortgage.

The last bit is key. It’s what the CCFA is all about.

CCCFA regulations and your home loan

To explain why CCCFA changes have led to banks going through your finances with a fine-toothed comb, it helps to understand why the government passed the Act in the first place.

The CCCFA requires lenders to act responsibly at all times. It’s designed to protect consumers from racking up debts they can’t service. So lenders these days have to take a 360-degree look at all your income streams and monthly expenses whenever you ask them for money.

The onus is on the bank to prove that you won’t be landed with a loan that sinks your household budget. To do this, they need information. Lots of it.

This comes as a nasty surprise to many of our clients. They have to provide reams of bank statements and detail all their recent outgoings

If you’ve been having a flutter on the horses or buying lots of Uber Eats, that’s no concern of ours – but the bank may take note. They will also tally up all your outgoings – including the worthy, ‘responsible’ payments – to see what’s going out of your bank account every month.

Here are just a few of the things they look for:

Child support
Private school fees
Large contributions to Kiwisaver (i.e. 8%)
Tithing, church and regular donations
‘Buy now, pay later’ schemes such as Afterpay and other consumer credit agreements
Supporting your kids at university

The bank will also look at all your credit card limits. They want to know how much you can theoretically borrow, not just how much debt you currently have.

As you can see it’s a very intrusive process. It requires a lot of documentation. It has the effect of making many clients feel like the bank is grilling them about their personal affairs.

If you feel this way, you have our sympathy. We don’t regard it as our business to peer into your personal finances, but we do have to gather all this information before we can submit your loan application.

There are no shortcuts. No ‘quick phone calls’ we can make to bypass the CCCFA process. No exceptions.

The CCCFA and your monthly surplus

If you’ve read the Rich Dad books by Robert Kiyosaki, you’ll understand the concept of having a healthy monthly surplus of income over expenses. This is the key to building wealth.

The CCCFA isn’t there to make you rich, but it does force every borrower to look carefully at how much is going from their bank account every month. It puts a number on their monthly surplus.

Why does this matter?

We see many people who live a wealthy lifestyle. The more they earn, the more they spend. Others earn less but manage their outgoings carefully, so that they enjoy life but consistently generate a monthly surplus. These are the people who succeed at the Rich Dad game – and more to the point, get their loan approvals stamped.

Once you grasp this, the CCCFA shouldn’t be a surprise. It’s simply part of the loan approval process.

Tips to succeed with your CCCFA review

The first is simple – allow plenty of time. Talk to us well before you put in an offer on a house. We will guide your through the loan process so you can get all your ducks in a row.

The second tip is to be proactive about your living expenses. If you are looking to buy your first home or upgrade your present one in the medium term, take a long, hard look at your monthly expenses in the year before you apply for finance.

We can help with some due diligence to make sure the monthly surplus is there, and spot any issues the bank might highlight with your monthly spending. Then you can be proactive.

It might mean cutting up a credit card, reducing Eftpos withdrawals from takeaway outlets, and other tweaks you can make to ensure the CCCFA won’t be a problem when you apply for a bank loan.

Do this in the year before you need finance. We are more than happy to advise you at no cost.

Here are some other questions people ask about the CCCFA?

Who enforces the CCCFA?

The Commerce Commission is responsible for overseeing the Credit Contracts and Consumer Finance Act (CCCFA). It has powers to investigate and punish lenders who are deemed to be irresponsible in lending to people who can’t manage their debts.

This is why the banks are such sticklers for the rules. They need to demonstrate that they’ve checked your income and expenses, to show that you have the financial headroom to service any loan they advance.

Remember, it’s not about you. The banks have to do this to stay on the right side of the law.

What is a consumer credit contract?

This is the catch-all term that applies to contracts between a consumer and a lender. If you apply for a credit card, take out a personal loan or borrow to buy a house, you are entering into a consumer credit contract.

It’s not new for banks to ask for a list of the consumer credit contracts you have when you apply for a loan. What’s different with the CCCFA is the way they also ask about things like church tithes and Kiwisaver contributions.

Bear in mind, they aren’t just checking your credit record. Under the CCCFA, they want to know how much money you have left over every month.

What is the Responsible Lending Code?

This is the Code that spells out what every lender in New Zealand has to do to avoid getting into trouble over the CCCFA. It’s the rulebook they apply when looking at your loan application.

The Responsible Lending rules are reviewed periodically but the principle remains the same. The government is directing lenders to avoid lending to people who are at risk of falling behind with their monthly repayments.

You may have seen news stories about people refused a loan because they bought some Christmas presents for their family. These hard luck stories led to a tweak of the CCCFA rules, to remove some of the more pettifogging restrictions.

Hopefully, the rules will continue to evolve so banks can apply them in ways that don’t make life unduly hard for borrowers. But there will always be rules.

What is a consumer lease?

Some people ask us if a contract to lease goods, with an option to buy them, comes under the CCCFA?

In most cases, it will.

Any lease contract where someone is leasing goods for personal use, and either has an option to purchase them, or the term of the lease is over 12 months, comes under the CCCFA.

So the bank will look at these monthly outgoings and check to see if you have the capacity to take on additional finance. That’s what the CCCFA requires.

Talk to us any time about CCCFA changes

As with most attempts to legislate human behaviour, the CCCFA can be complicated and require expert help. But the basic idea is simple.

You need to show you can handle the monthly repayments of any loan they offer. They will stress-test this number at various interest rates, look at your monthly outgoings, and tell you how much they can lend you.

The law requires this approach, so make life easy for yourself by being smart with the CCCFA.

We’re here to help you do just that.

How my sponge cake efforts led to a major home reno

Fri, 12 Aug 2022 23:35:17 GMT

Funny how the desire to bake cakes ends with the roof off my home and wind whistling through the rooms in midwinter.

Let’s start at the beginning...

I have never been much of a domestic goddess but recently I discovered the joys of home baking. Victoria sponges in particular.

My oven and I have not been close acquaintances over the years so the desire to perfect my sponge skills led to (you guessed it) a new oven.

Replacing the oven meant I might as well update my kitchen.

Updating my kitchen meant I needed new flooring and windows.

New flooring and windows meant taking the roof off – so re-roofing was the next step.

Re-roofing led to fixing the cladding on the house exterior.

…and since I was fixing the cladding and almost everything else, I might as well install a new bathroom at the same time.

So there I was, camping out at home in the coldest month of the year, with heaters blazing but the room temperature struggling to get over 15 degrees. I kept a smile on my face by holding fast to the mantra: This too will pass!

So now I have a lovely new kitchen plus a renovated home. However, for the cost of it all, I could have had sponge cakes delivered every week for the rest of my life, and still have money left over!

Dollars and sense

The whole exercise was a crash course in project management. If you’ve gone through a similar experience, you’ll know exactly what I mean.

Read the mortgage news in this issue for more observations on home renovation costs and pitfalls.

Avoid these traps when financing a renovation

Fri, 12 Aug 2022 23:35:15 GMT

My recent reno was a crash course in dealing with builders. If you’ve gone through the process yourself, you’ll know what I mean. If you haven’t, here are some tips to minimise foul-ups.

1. No, you can’t do it cheaper

I’d be a rich lady if I had a dollar every time a client said, “The project is budgeted at [insert large number] but I reckon I can do it for cheaper.”

Cue a hollow laugh. It never happens.

There’s a shortage of tradies, rampant inflation in building materials and all sorts of hurdles that never existed in simpler times. At the very least, you’ll need to get several quotes and drill down into the details. And then add more to the budget, just to be sure.

It’s not just about your wallet. It’s what lenders require.

2. Banks will add up to 15% to your estimate

…And that’s on top of what your builder has already included for contingencies.

You can’t argue the toss. It’s the bank’s process and the bank’s money. They will look very closely at your ability to borrow, and take a conservative view.

In this, they’re following the law. Every lender in New Zealand has to comply with the Responsible Lending Code , which spells out what banks must do to avoid landing borrowers with debts they can’t manage.

It doesn’t matter how long you’ve been with a bank, and how much you’ve borrowed and repaid in the past. There are no exceptions.

3. Some banks will need a QS report

Many lenders also insist on a report from a Quantity Surveyor. Once again, it’s about checking to see if your sums are realistic before they advance any funds.

They may also require a report from a registered Valuer, showing a valuation before and after the works. This is because they want to check how much security they have, and then ensure your renovations will add value. They’ll want to know their end position, too.

You’ll need to do it their way. There is now a computerised online system the banks use for valuations. Don’t waste your time or money setting up the valuation yourself. We are required to order the valuation for you, using this system.

And here are some personal lessons I can add to the above

I used a proper Licensed Building Practitioner , and I’m glad I did. These guys have a responsibility to point out and fix any issues they uncover – and trust me, they will find some! They can’t un-see anything they find when the toilet comes out or the roof comes off.

As a result, you need to have some ‘what the heck’ money in your budget. Who knows what the renovation process will reveal?

Allow plenty of time and avoid wishful thinking. And talk to us early in the process.

A $10,000 payout helped with the pain of a broken shoulder

Fri, 12 Aug 2022 23:35:12 GMT

I seem to have the habit of breaking bones at Easter, just before my birthday. This year was no exception.

My shoulder bore the brunt when I crashed into a tree while out riding my mountain bike. Painful, yes, but it could have been worse.

Since I took out Accidental Injury Cover two years ago, I was eligible for a $10k payout to help me get through the recovery period. Luckily, there was no need for surgery, and I wasn’t in a cast – if I had been, the payout would have been even higher.

I notified the insurer and had the money in my bank account after two weeks. It certainly softened the blow.

Are you insured against common accidents?

For as little as $15 per month, you could be covered for the sort of accidents that lead to time off work. It helped me and it could help you, too.

If you don’t have an Income Protection Policy in place – or even if you do – Accidental Injury Cover could be a smart option. Get in touch if you’d like to find out more.

How inflation affects your insurance premiums

Sun, 27 Mar 2022 12:21:46 GMT

Inflation is back. It’s pushing up the cost of petrol, groceries and practically everything your household spends money on.

That includes insurance.

While no one likes paying more, here are some things to keep in mind when your insurer tells you premiums are going up.

One is that insurance cover is always being reviewed, and often improved. For instance, new drugs and medical treatments can make a dramatic difference to your wellbeing. These are generally expensive and not freely available in the public system. The cost will be reflected in health insurance premiums.

The second tip is to consider ‘rate for age’ annual premiums when you take out new cover. These cost more initially but remain flat for a fixed term – often 10 years – which can make them substantially cheaper overall.

Our final money-saving tip is to review your total cover.

Insurers are constantly changing their cover, so the policies you took out five years ago might not be the best fit today. There might even be options that offer better value. So make sure you talk to us whenever you’re tempted to make changes to your insurance.

If you’d like to review any of your personal insurance policies, we’re always here to talk.

What’s happening with mortgage rates in 2022?

Sun, 27 Mar 2022 12:08:33 GMT

Unless you’ve been sitting out the pandemic in a cave in Fiordland, you’re probably aware that interest rates are rising.

Anecdotally, we suspect a lot of home loans are maturing around now. That means a lot of borrowers will be looking for a new loan this year – and possibly worrying about the rate they’ll get.

Our advice is simple: Don’t panic.

Here are some things to keep in mind as we come out of the era of super-low interest:

If you kept the same repayments when rates dropped previously, you’ll reap the benefit now.

We often advise clients to keep making loan repayments at the higher rate when interest rates drop. It’s a simple hack that can lop years off your mortgage. You’ll also be used to living within your income and well placed to ride out a rise in interest rates.

Is that you? Give yourself a pat on the back!

If higher mortgage payments are straining your monthly budget, look at extending the loan term.

If you’re finding it a real stretch to balance your monthly budget, you can look at repaying your mortgage over a longer period.

Yes, it will take longer to clear the mortgage, and you’ll pay more overall. But you could get some precious breathing space right now.

Look to trim fat from your monthly budget.

The other common-sense move is to reduce your outgoings. One tip is to look at the savings you made under lockdown – and activate those savings again.

For instance, a lot of us saved money because we couldn’t go to the café every day. This inspired me to buy my own coffee maker, and now I’m saving $10 a day. Over a few months it has pretty much paid for itself. Over a few years my coffee savings will add up to a decent lump sum.

There are all sorts of things you can do to create savings and reduce your financial outgoings. You just need a plan – and we can help with that.

You may need to re-fix. You probably don’t need to re-finance.

Sun, 27 Mar 2022 11:59:47 GMT

Many people have taken out fixed interest loans in recent years. Eventually the day comes when this fixed rate reaches the end of its term.

The bank will notify you by letter or email. If you do nothing, your mortgage will default to a floating interest rate.

If you don’t want this to happen, you need to talk to us.

How to get the best deal when you re-fix.

It’s pretty straightforward but there’s a process we need to go through to help you get the best outcome.

We’ll start by asking a few questions to find out whether you’d be better off with a fixed or floating rate. For example, if you’re planning to sell in the near future then you should probably have a floating rate (and no penalties for breaking a fix). Similarly, if you have a chunk of money ready to pay down the loan, then you can do that before you re-fix.

We will also ask if there have been significant changes in your life, such as your marital status or employment. We’re not being nosey – the FMA requires us to check your financial circumstances before we offer advice. The idea is to ensure you get a loan that’s tailored to your needs rather than simply rolling over old arrangements.

The good news is that there’s no need to go through your finances in great detail. This onerous process only applies if you’re changing the type of mortgage you have.

For instance, you’ll need to go through the full re-application process if you switch from a fixed term to revolving credit. You will also need to re-apply if you’re changing the identity of the borrower from a company or trust to an individual, or vice versa.

In most cases, it’s pretty simple to re-fix.

Re-financing is a different kettle of fish.

When should you re-finance?

It’s much less common for homeowners to re-finance. Shifting a loan from one bank to another triggers the full application process, with plenty of paperwork and intrusive questioning required by the CCCFA . It’s not a speedy process.

Sometimes I get requests to re-finance because someone has seen a temptingly low rate and thinks he or she can save money by switching banks. In most cases, any savings on interest are wiped out by the legal and loan set-up fees when you switch.

One good reason to shift is when you’re with a bank that doesn’t specialise in residential lending. These banks tend to have poor systems and patchy service. So there might be a good case for re-financing in these circumstances.

Of course, there are always exceptions. The only real rule is to get advice before you take a decision on a loan with huge financial implications.

And advice is what we’re all about.

Insurance premiums going up? Here’s what to do

Tue, 08 Feb 2022 22:46:21 GMT

Inflation is driving up a lot of prices these days. Insurance is no exception.

I regularly hear from clients who are suffering ‘insurance bill shock’ and wondering what they can do. Should they stop spending money on cover?

Here’s what I advise.

Look at the swings and roundabouts

You probably have a number of policies – for health, life, trauma, income protection, and so on. If your health premiums have gone up, perhaps you can reduce your life cover? The savings can balance out the health insurance price rise.

This is a logical move for many people because their needs have changed over a decade or two. Maybe their kids have left home, or the mortgage has now been paid off. They’re more financially secure, so they don’t need the same amount of life or income protection cover.

At the same time, their health may be coming into focus. Innovative treatments and drugs give you more options as your likelihood of illness increases. So think very hard before you give up this cover.

We’re happy to help you review your policies at any time. If the last letter from your insurer contains unwelcome news about a price rise, don’t panic and delete your cover. Ask us to help you rebalance your total portfolio.

There’s no charge for this and I’m not looking to sell you any more policies. I’m always happy to help you reduce premiums, so they match your budget and risk factors. Just ask.

If you'd like to review any of your personal insurance policies, we're always here to talk.

How to protect yourself when you’re buying new

Tue, 08 Feb 2022 22:35:17 GMT

We’re currently arranging a lot of mortgages for clients purchasing in new developments.

Investors like new builds because of changes to tax rules . First-time buyers like them because they can purchase at a fixed price and avoid competing at auctions. First-timers can also unlock a bigger HomeStart Grant .

However, there are some traps to look out for.

Trap 1: Looooong delays.

Thanks to Covid lockdowns, sluggish supply chains and an overheating construction market, many developments are taking much longer to complete. We know of people who’ve faced stress and extra expense because of problems lining up their finance with a completion date that’s been pushed out.

There’s also the pain of losing a property because of a sunset clause in the contract.

Trap 2: Not getting what you paid for.

It’s not unusual for the fittings, appliances and other features in the show home and brochures to change during the construction process. Sometimes this is unavoidable due to supply issues. Sometimes it’s no big deal. You may even get an upgrade.

But it is a reminder that you may not get what you thought you were paying for when you signed the contract for your brand-new home.

Trap 3. Developers with no track record.

Buying new usually means buying from a property developer or spec builder. How confident can you be that they will deliver what they promised – or even complete the build? There’s an element of risk you won’t get with an existing home.

The solution is research – and a good solicitor.

It’s worth finding out as much as you can about the developer or construction company. Do they have a good reputation? Have they been around for long? Does it look like they have a long-term commitment to the New Zealand market?

Above all else, do not skimp on legal advice. Make sure your solicitor goes through the contract and explains any risks related to the above. Listen to their advice and don’t hesitate to push back if the contract is one-sided in favour of the developer.

Allow plenty of time. Don’t be naïve and don’t get too emotional. You may be desperate to buy the new home of your dreams, but you only get one chance to sign a contract. Make sure it’s the right one.

Beware of Leaks and Unbudgeted Home Expenses

Tue, 08 Feb 2022 22:25:13 GMT

If the last two years have taught us anything, it’s how to roll with the punches. The world remains an unpredictable place, so it’s best not to get bent out of shape when life throws you a curveball.

That said, I do think there’s one area where a little forethought can make life much easier for property owners.

It was brought home to me by some water dripping in my hallway.

Pipe nightmare.

What I thought was a minor roofing issue after spring rainstorms turned out to be something much nastier.

The polybutylene pipes originally installed by the plumbing contractors during construction were failing. It’s a systemic issue caused by this type of plastic pipework, which was a popular choice from the 1970s to the 1990s. As soon as I discovered this, I knew I was in for some serious maintenance.

Non-action was not an option. I had to spend the money to maintain the value of my home.

If you faced a similar issue, would you be able to find tens of thousands of dollars in a hurry?

Here’s an idea: think like a body corporate.

Every multi-dwelling building with a body corporate is legally required to create a long-term maintenance plan. It’s a tool to help the owners budget for necessary expenditure, so the money is there when it’s time to replace the roof or repaint the exterior.

Private homeowners rarely bother with this sort of forward planning. This hands-off approach can leave them caught short when they realise they need to replace their water pipes to forestall serious damage.

What can you do? One idea is to budget 1% of the property’s value every year for ongoing maintenance. You could invest this to earn a return, or simply make sure you have the ability to borrow at an affordable rate rather than paying over the odds for an emergency loan.

If you’re really organised, you could put together a long-term maintenance plan. The goal is to identify the likely costs of your building over the next decade or two, and put some dollar sums on what you might need.

In other words, think like a body corporate. Here’s a template you can use to get started.

It’s worth it.

Spending big bucks on structural maintenance is not a fun purchase. It’s not like renovating your bathroom or creating a kitchen fit for a glossy magazine. But it’s well worth the investment.

I think of it as the flipside of the stellar capital gains we’ve enjoyed recently. Without doing anything, property values have gone up. They’re worth more, so it’s worth spending money to maintain the value of the asset.

You might even consider releasing some of the equity via a refinance to fund a sensible long-term maintenance plan. We can help you with that.

The best gift is gratitude

Mon, 13 Dec 2021 04:03:58 GMT

I was struck by the words of Seth Godin, so I have borrowed them below.

But before you read them, I would like to let you know about the way I want to show my gratitude to you. We’re giving you the chance to win a gift pack from one of New Zealand’s most deserving charities, Will & Able .

Scroll down this blog post, and be in to win.

But first, here are Seth Godin’s thoughts I’d like to share with you this Christmas:

Entitlement is heartache.

It’s not forced on us, it’s something we choose.

And we rarely benefit from that choice.

That emergency surgery, the one that saved your life, when the ruptured appendix was removed - the doctor left a scar.

We can choose to be grateful for our next breath.

Or we can find a way to be enraged, to point out that given how much it costs and how much training the doctor had, that scar really ought to be a lot smaller. And on top of that, he wasn’t very nice. We’re entitled to a nice doctor!

Or we can choose to be grateful.

Marketers have spent trillions of dollars persuading us that we can have it all, that we deserve it, and that right around the corner is something even better.

Politicians have told us that they’ll handle everything, that our pain is real and that an even better world is imminent.

And we believe it. We buy into our privilege as well as the expectation that our privilege entitles us to even more. It’s not based on status or reality. It’s a cultural choice.

And you’re entitled to your entitlement if you want it.

But why would you?

Entitlement gets us nothing but heartache.

It blinds us to what’s possible. It insulates us from the magic of gratitude.

And most of all, it lets us off the hook, pushing us away from taking responsibility (and action) and toward apportioning blame and anger instead.

Gratitude, on the other hand, is just as valid a choice.

Except that gratitude makes us open to possibility. It brings us closer to others. And it makes us happier.

There’s a simple hack at work here: We’re not grateful because we’re happy. We’re happy because we’re grateful.

Everything could be better.

Not because we deserve it (we don’t, not really).

But because if we work at it, invest in it and connect with others around it, we can make it better. It’s on us.

It’s difficult work, counter-instinctual work that never ends.

But we keep trying.

Because it’s worth it.

- Seth Godin, 2017

I was really inspired by these words when I read it, and have decided to make my intention for Xmas 2021 to be one of gratitude.

If you need a mortgage, or to re-fix your loan, we’ll be checking our emails once daily over the holiday break.

Our office is closed from 23 December 2021 to 17 January 2022.

You can book appointments using my online diary .

Christmas Giveaway

Win 1 of 4 starter gift boxes from Will & Able.

We love the Will & Able range of eco-friendly products made by kiwis with disabilities. So we’re giving you the chance to win a Will & Able gift box for Christmas.

To go in the draw, simply like and leave a comment on our Facebook post .

I will collect the names of everyone who posted and draw four winners at random.

In the spirit of Christmas, this prize draw is open to everyone – but do make sure you like and leave a comment by 5pm on Friday 17 December 2021 .

And have a great holiday!

How to spend less on insurance – but get better cover

Fri, 10 Dec 2021 01:49:55 GMT

My mentor Dr Fred Grosse says we should review all our expenses every year and reduce them by 10%. One tip is to check your telco contracts.

Another good way to reduce your outgoings is to review any insurance policies you have.

This can be a fantastic way to dial back cover you no longer need, put more appropriate cover in place, and perhaps save money on premiums.

A free review that could leave you better off.

As advisers we’re required by law to ensure our clients have cover that’s appropriate. However, we often find people are reluctant to come in for a review because they think we’ll try to sell them more insurance.

Nothing could be further from the truth.

Instead, we will look at the cover you have, and see whether it still suits your circumstances. For instance, we often find people who have paid off their mortgage but are still paying for life cover that could easily be reduced now they no longer need to service a loan. At the same time, they may be reaching an age where a good health policy would be money well spent.

This is just one example. The point is that insurance should never be ‘set and forget.’ It should be reviewed regularly to check if you have the cover you need, and whether you’d be better off with a different mix of policies.

The first step is easy. Make it your new year’s resolution to get in touch, and we’ll go through your insurances one on one.

If you’d like to review any of your personal insurance policies, we’re always here to talk. Get in touch now .

A quick word about slow approvals

Fri, 10 Dec 2021 01:47:33 GMT

Many of us still assume a new loan or a mortgage refinance can be waved through in a day or two. The bank wants your business, right?

But it’s not quite that simple.

These days you can expect any new lending, or even a re-fix, to take ages to be approved. And there may be a nasty sting in the tail – where the bank declines to lend you the full amount you’ve applied for.

Here’s why this happens – and here’s what you can do about it.

Tip 1. Expect more paperwork.

Banks are now required by law to prove you can afford your loan. As a result, they are requesting more information about your income and expenditure.

So you may be asked to supply months of payslips, or annual accounts if you’re a business owner. The bank will scrutinise these in detail. Don’t rock up with one payslip and assume you can charm the bank into signing off the loan. They will simply put your approval on go-slow.

It doesn’t matter how long you’ve been with them. There are no shortcuts.

Tip 2. Check your spending before the bank does.

Banks also need to see you’re a solid citizen who can handle repayments. They will ask for months’ worth of current account and credit card records. If they see lots of withdrawals at the bottle store or casino, your ability to borrow may be constrained.

Now, we’re not here to be the fun police. We believe how you spend your money is up to you, but as mortgage advisers we are now all forced to make it our business. We simply want to let you know what could cause a bank approval to be scrutinised even further.

Tip 3. Get your loan prepped before you do anything else.

You can avoid most of these hassles if you get your finances in order months before you need to take out a mortgage, refix or refinance.

That’s why we advise all our clients to talk to us well before they need the money. We will go through the lending process with them to highlight any issues the bank is likely to have.

It’s a free service – and it could save you a lot of time and trouble when it’s time to do the deal.

Do you want the best doctors?

Sun, 14 Nov 2021 23:03:43 GMT

Of course you do. The whole point of insurance is to make sure you get the help you need, when you really need it.

The good news is tha t you may already have access to the world’s leading medical specialists through your current health insurance policy.

Best Doctors is a feature on many policies – but most people don’t realise they have this option. It could be a literal lifesaver one day.

For instance, we know someone who was receiving treatment from their GP. Unfortunately, things were going from bad to worse. There were issues with the medication prescribed. It got to the point where their life was at stake.

Fortunately, a family member realised they had Best Doctors as a feature with their policy. The patient called the helpline, arranged an online consultation and received expert advice from the Best Doctors worldwide pool of specialists. As a result, their medication was changed. The patient later said, “My life was saved.”

Mental health is covered, too.

With Best Doctors you can also access specialist help if you’re struggling with mental health. In this era of Covid-19 and ongoing uncertainty, we’ve seen many people suffering from anxiety and stress. A call to the Best Doctors helpline could make a real difference.

So if you’re finding things tough – or you know someone who’s struggling – it’s worth checking to see if Best Doctors is an option on the policy.

And if you don’t have this cover, maybe talk to us .

If you’d like to review any of your personal insurance policies, we’re always here to talk.

Inflation is pushing interest rates up

Fri, 12 Nov 2021 22:57:08 GMT

If you’ve been following the news, you’ll know that inflation is back . It’s happening all over the world . And it’s already having an effect on home loan interest rates in New Zealand .

So if you’re about to buy a house or re-fix your loan, and we email you a quote, don’t ignore that email. Open it, and let us know ASAP if you want to take up the offer.

That’s because every mortgage quote has an expiry date.

If you wait too long, you may find the quoted rate is no longer available. We’re seeing weekly rises at the moment, so it really is in your best interests to be decisive.

Then you’ll need to instruct us and allow enough time to work through the bank’s processes and finalise the mortgage. This takes longer than it used to, so don’t leave it till the last minute.

You don’t want be caught out with rising home loan rates when the Reserve Bank pushes up the OCR to squash inflation. Watch your inbox – and act fast.

Waiting for the market to drop? Don’t.

Fri, 12 Nov 2021 22:49:00 GMT

Recently, many people have been asking us whether they should buy a house now…or perhaps wait in case the market crashes.

Unless you’re a very numbers-driven professional investor who treats property as a hard-nosed business, I suggest this is the wrong way to look at things.

To illustrate my point, let me tell you about someone who first talked to us in 1998 about buying his first home. It didn’t happen. He got cold feet and decided to wait.

In 2013 we had the same conversation, with the same outcome. His words were, “I can’t afford to buy now.”

Today he would need a Lotto win or a very rich family member to get into the Auckland property market. After 23 years of hesitation, he’s still waiting for the perfect buying moment.

Nobody knows what will happen to house prices.

At Sue Tierney Mortgages, we don’t know when prices will rise or fall. Nobody does. There are too many factors involved – and some of them are ‘ Black Swan Events .'

Looking back over the last two decades we’ve experienced 9/11, the Christchurch earthquakes, the GFC and the Covid-19 pandemic. Each took the market by surprise. Sometimes they had a positive effect, i.e. prices went up.

But when you look past the short-term ups and downs, the pattern is clear. Statistics from the Reserve Bank show that prices have risen, decade after decade.

Now this does NOT mean you’re guaranteed capital gain – remember, nobody can predict that. But it does suggest that you’re better off getting into the market rather than watching and waiting.

The right time to buy is when it’s right for you.

If you need a roof over your head, the market is not the issue.

Instead, we suggest you focus on your own needs, get your finances in order and don’t waste too much time wondering whether the market will drop. Then buy what you can afford to buy. Remember, your first house is unlikely to be your last house.

The first step is to get in touch and tell us what you want to achieve.

If you need a mortgage, or to re-fix your loan, we’re here for you.

Take control of your mortgage to escape the month-to-month trap

Tue, 26 Oct 2021 08:42:29 GMT

Covid uncertainty has been painful, but at least it’s reminded us of all of the importance of having some leeway in our finances.

The majority of Kiwis live month to month, so some will struggle to accumulate savings. But if you do have the ability to save surplus income, then all sorts of things become possible.

You can stay afloat financially if you’re made redundant. And you can start to build the ability to be financially independent.

The first step is to stockpile three to six months of savings.

Tactics to become mortgage-free.

One option is to open a separate bank account and squirrel some money away every month. This doesn’t have to be an account with your main bank. Maybe it’s better if you set this up as a separate savings account with another bank.

Then make sure you send some money there every month. Pay yourself first.

Here’s another idea. You could use a revolving credit account to smash your mortgage debt. If you have the discipline to funnel all your income towards your debt, and don’t use it to splurge on fun stuff, you can knock years off your mortgage.

We’re suggesting these ideas because our focus is always on helping clients pay off their mortgages quickly. Covid-19 lockdowns remind us that life can change quickly – so our attitudes to money need to be conscious and nimble too.

One last thought about interest rates.

You may have noticed that interest rates ticked up recently. It’s not unexpected, and it may be a turning point in the interest rate cycle.

The thought I would like to leave with you is this: Do not click to re-fix.

If your fixed rate deal is coming to an end, you may receive an email inviting to click and refix at the bank’s ‘great new rate.’ Pause. And contact us.

We’ll focus on getting you the right deal – not just the one the bank wants you to click on. Planning ahead and understanding the market is part of that deal.

Redundancy insurance. Do you need it?

Sat, 23 Oct 2021 08:42:22 GMT

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Will homes ever be ‘affordable’ again?

Sun, 17 Oct 2021 08:42:18 GMT

In 2021, the average house price is now an eye-watering 12.4 times the average wage .

That’s not an issue if you’ve paid down your mortgage – and even better if you own a rental or two. But what about young Kiwis who are at the start of their working lives?

Many of them are resigned to never getting on the property ladder. With home ownership rates declining since the 1990s, the proportion of New Zealanders owning their own homes is now around 64%. ( There’s a comprehensive report here if you want to dig into the details .)

It seems the great Kiwi property dream is defunct for growing numbers of people. And looking at the numbers of Millennials dabbling with cryptocurrencies and investing via platforms such as Sharesies , you might conclude that first-home buyers are an endangered species.

But we’re not so sure.

How to get onto the property ladder.

We deal with families and young buyers every day, so we’ve got a pretty good idea of how to get them into their first home.

It starts with getting pre-approval for a mortgage, because you don’t want to start putting in offers until you know how much you can spend. Here’s what we advise:

Meet with us well before you look at any houses. It’s about forward planning, which means understanding your current financial position from the bank’s point of view. You may need to bed-in some changes to improve your chances of getting pre-approved for a loan.
Eliminate debts. Ruthlessly tackle those HPs and credit facilities until you have no more monthly debt repayments going out.
Minimise your use of credit cards. Or get rid of them altogether.
Start building a deposit, by making steady contributions month after month. Banks like to see evidence you’re a disciplined saver.

There are more tips and tricks, which we can share when we work with you. But with an honest appraisal of your spending, and the right habits in place, we’re confident you can get yourself into a position to buy a home.

Sure, it may not be your dream home in your dream suburb. But don’t forget, there’s a reason it’s called your first home.

And we’ll help you get into it.

The real estate market is not on hold. If you’re looking to purchase and need a mortgage, we’re here for you.

Good habits = more rewards

Wed, 22 Sep 2021 08:38:50 GMT

If you’re anything like me, you’re using this enforced stay-at-home time to enjoy walking the traffic-free streets around the neighbourhood. Perhaps you’re doing more biking or running. Good for you!

These good habits can lead to some great rewards and discounts on your insurance with AIA Vitality.

It’s a simple idea. You get a free Fitbit or similar device to measure your activity. The more you do, the more points you earn. You can convert these into rewards such as Airpoints Dollars and get discounts on your insurance premiums to boot.

As you can tell, I’m a fan. Creating healthy habits will pay off in both the short and long term, and the insurance company will reward you for reducing your health risks. That’s a win-win scenario!

If you’d like to find out more about AIA Vitality or review any of your personal insurance policies, we’re always here to talk.

Is the storm about to hit?

Sun, 19 Sep 2021 08:38:50 GMT

For some time, the government has been making noises about reining in residential property lending. A letter we received from one of the major banks this week may signal the tipping point.

This letter confirmed ‘Triple CFA’ changes that will apply from 1 October 2021. There’s a lot of technical detail, but the gist is that borrowers will find their ability to get loans even more circumscribed.

The measures are clearly intended to target property investors but they will apply to everyone. Banks will be running the ruler over all your spending before they approve any new mortgages – or even changes to your existing loans. Do not assume your next loan top-up will be waved through.

How intrusive are these checks? We’re talking detailed scrutiny of your household spending, including groceries and meat. Your spending on haircuts and dentistry will be examined.

This is now easier for banks as we’ve all got used to running these expenses through credit and debit cards. Those of you who want to get rid of cash might have a second thought about that.

Ever the optimists, we see an opportunity here. Why not use this lockdown time to create some better financial habits?

One smart idea is to have separate accounts, so your spending and savings are allocated up front before the money trickles away. You’ll need an emergency fund to cover a few months of expenses, accounts for your car, future travel, household maintenance, insurance, and so on. These baby steps can make a huge difference to your future. They’ll also put the power back in your hands the next time you apply for a loan and the bank wants to see you’re a solid citizen.

If you want to get serious about managing your finances, while still enjoying the good things in life, we’re here for you. I’m more than happy to have a one-on-one Zoom session to help you get these things sorted.

Business As Unusual

Fri, 17 Sep 2021 08:38:48 GMT

Lockdown 2.0, Week Four. What’s been happening?

It will come as no surprise to learn that I’m working from my bubble at home. Bevan and Louise are doing the same. Our working hours have been stretched, and Bevan and Louise are also balancing the needs of their families while working online.

All of the above applies to the bank staff we deal with. They too are working from home, endeavouring to do the best possible job for clients. They’re genuine people who are trying to help, so please be understanding if the mortgage process throws up some obstacles. So if you’ve been wondering why loan applications are taking a bit longer, that’s one reason. (Take a look at the article on mortgages below for further pointers on what may be coming down the track.)

At times like these, it’s vital to look after oneself. Here’s what I’ve been doing:

1. Lots of cooking.

I can’t travel the world so I’ve been bringing the world into my home, in the form of delicious recipes from Farro’s magazine. This week is Mediterranean week so my pizza dough is ready for tomorrow’s fresh pizzas. And I can heartily recommend the spinach and ricotta pasta shells with homemade tomato sauce.

I have also been watching oodles of YouTube videos, including the brilliant Baked Dane . She’s taught me how to make sourdough bread, among other things.

2. Lots of exercise.

To balance out all this eating I’ve been walking and riding my bike every day. I enjoy knocking off my 12,500 steps while exercising my two new pups, Coco and Chanel. They’re loving the walks too.

I know many of you love going to the gym, which won’t be possible for a while. Why not replace your gym habit with some outdoor alternatives, such as hill training? I’ve been taking advantage of the steep streets off Jervois Road – though I’ve steered clear of the brutal climb up St Mary’s Road to date.

Healthy habits can also generate an insurance bonus – scroll down to our Insurance News below to find out more.

What are your tips and habits to make the most of the time you’re spending at home? I’d love to hear what you’re up to, so put it on Facebook and tag me.

The real estate market is not on hold. If you’re looking to purchase and need a mortgage, we’re here for you.

The lowdown on lockdown

Tue, 31 Aug 2021 08:45:13 GMT

Level 4 lockdown has returned, and once again fear and anxiety are spreading. It’s a natural response to the situation – but remember this is all part of ensuring we comply with the policy of staying at home.

The idea is to stop further spread of the virus while the authorities get on top of the situation. So sit tight, take care of yourself and don’t panic.

That said, Bevan, Louise and I have been fielding calls from clients who are worried about their mortgages. Here’s what we’ve been telling people.

During the first lockdown last year, the banks offered three options:

Do nothing.
Revert your mortgage to interest-only (but remember this may trigger a new loan application and a review of your ability to pay).
Put your mortgage on hold. This should probably be a last resort.

You can be sure the government will be working with lenders again to provide options if lockdown continues for any length of time. There may also be more financial support for businesses and individuals who have lost revenue.

We’ll update you as soon as anything comes to light, so make sure you’re following us on Facebook.

In the meantime, it’s good to talk.

If you are alone or worried, talking to a friend or family member can help reduce stress. Left alone, it’s easy to start fixating on worst-case scenarios. Take the pressure off with a group chat, a video call and some laughs with the people you love.

Exercise is another antidote to stress. Use your lockdown time to get outside for a socially distanced walk, run or bike ride – you’ll be amazed at how the endorphins drive away anxiety. Don’t forget to mask up if you’re exercising near people who aren’t in your bubble.

Yoga can be a great way to calm body and mind, and there are many free yoga resources available online. There are also some great free exercise classes provided by Les Mills online. Find out more.

If negative thoughts are really getting you down, reach out to a helpline. I’m a huge fan of Lifeline and have volunteered for them in the past. They’re available 24/7, with qualified counsellors and trained volunteers on call.

Lifeline

Call 0800 LIFELINE (0800 543 354).
Text ‘Help’ to 4357.

If someone you know is doing it hard, calling Lifeline could be a lifesaver.

In the meantime, stay healthy, stay active and be there for each other. We are all on this planet together, and we’ll get through this together. Kia Kaha!

The real estate market is not on hold. If you’re looking to purchase and need a mortgage, we’re here for you.

Self-insurance or Givealittle?

Mon, 30 Aug 2021 08:36:57 GMT

New Zealanders are living on a financial knife edge. After accounting for all our household spending and income, there’s a surplus of just $412 per household at the end of the year.

Yes, that’s an annual surplus!

Of course, the crude figures hide a lot of variance, and you probably aren’t living hand-to-mouth. But it’s still worth asking yourself the question: What’s my Plan B if things go wrong?

Self-insurance is fine – you don’t need to pay premiums to protect against every possible risk. But that means you should have six months’ living expenses set aside if the worst happens. How long could you survive if you lost your family income or had a major health problem that wiped out your ability to earn?

Please don’t let the answer be, “I’d rely on Givealittle.” Bad things do happen to good people. You’ll need a lump sum saved to self-insure against your risks – or you can talk to us about life insurance, trauma, health or the other policies we can advise on.

The best news? It costs you nothing to explore your options.

If you’d like to review any of your personal insurance policies, we’re always here to talk.

Is the bank telling you what to do with ‘your money’?

Wed, 25 Aug 2021 08:36:55 GMT

Lately we’ve been dealing with clients who are miffed that their bank won’t let them use funds they’ve freed up when selling a property from their portfolio.

There’s a reason for this. To understand why, consider the following hypothetical example:

Imagine you own two properties worth $1.8 million all up. You have total lending against these assets of $400k. So you think, “I have $1.4 million of equity.”

Then you sell one property for $900k. You now have $400,000 of lending against your remaining property, plus the proceeds of the sale. So you think, “I’ve got $900K to give to my kids, buy a new BMW and renovate the family home.”

But the bank may not let you do this. It says you have to put the proceeds of the sale against your mortgage. So you end up with a mortgage-free house, but only $500K of spare cash instead of the hoped-for $900K.

Don’t get angry – it’s not about you. It’s about the rules banks have to follow.

All banks in New Zealand are controlled by the government and the Reserve Bank. They’ve signed up to the Responsible Lenders’ Code, which requires lenders to reassess borrowers’ ability to repay every time they make changes to their loans.

In our example above, the rules point towards paying down debt rather than letting the borrower spread the cash around. These sort of calculations are triggered every time you change your home loan arrangements.

So what to do? Get professional advice before you start planning to sell a property, change its ownership status, or change any other detail of your mortgage. Even an application to go ‘interest only’ will trigger this process, because the banks are required to re-assess their customers’ financial status.

It may seem intrusive but it’s the law. The good news is that we’re here to give you a heads-up before you hit a roadblock. And we provide this service for free.

Beware the burnout factor

Fri, 20 Aug 2021 08:36:55 GMT

I’m alarmed, but not at all surprised, at the number of conversations I’ve had recently with clients looking to make big lifestyle changes because they’re burned out.

I think it’s all to do with Covid.

We’ve had 18 months of being told what to do. For people who have always thrived on making their own decisions, this has caused enormous stress on top of the unpredictability and restrictions of the pandemic. From property investors to solid citizens in longstanding careers, I’ve been hearing about their plans to give up work, take an extended break, or change careers in midlife.

Does this sound like you? You’re not alone.

My first response is that change is not a bad thing. Sometimes we need a push to move on from a role we’ve stopped growing in. But do take a good, hard look at what your burnout-induced change might involve.

Where it gets interesting are the financial implications. In particular, you may find your ability to borrow in the future is affected by the lifestyle choices you make today. By all means, take up that new career as an organic smallholder or yoga teacher, but be conscious that some options may be closed off if you decide to pivot again.

Whatever you choose to do with the next phase of your life, we’re here to support you with your personal finances. Share your thoughts, bounce your ideas off us, and you’ll find we’re 100% supportive of whatever you need to do to restore your mental health and put burnout behind you.

Don't miss out on that tax refund

Tue, 18 May 2021 08:33:39 GMT

The financial year ended on 31 March 2021, and that means a flurry of letters from insurance companies to policy holders.

The envelopes you want to look out for are the ones containing tax deduction statements. Did you get one? You could be in luck.

In many cases, those with income protection policies are able to claim back the premiums they paid against their other tax. It’s my understanding that you can claim the cost of paying for income protection if the policy payout would be liable for tax.

It’s a discussion to have with your accountant when preparing your annual return (or keep it in mind if you prepare your own). Why not get something back if you’ve been paying an insurance premium every month against the possibility of being deprived of income?

So keep an eye out for those insurance company envelopes and emails. And if you want to go over things in more detail, give us a call.

If you would like to know more about insurance or review any of your policies, I'm always here to talk.

You have been warned

Tue, 11 May 2021 08:33:35 GMT

If you think loan approvals are sluggish now, get ready for them to become even more tortuous – and invasive.

The Ministry of Commerce and Consumer Affairs has released its new guidance on loan approval processes under the Responsible Lending Code. We’ve completed the training. Here’s what you can look forward to.

If you want to borrow for pretty much anything – whether it’s a flat-screen TV at Noel Leeming or a million-dollar house – you will now have to provide even more copious details of your finances. Bank and credit card statements will be requested. Lenders will be required to scrutinise (yes, scrutinise!) them to see whether you’re capable of managing money.

If they can see you spent $100 on Lotto tickets last month, or made regular purchases at Liquorland, that could be a red flag. As lenders or financial advisers, we will be required to note these peccadillos and the banks can perhaps decline your application if they think you have addiction issues.

Personally, I find it horribly invasive and oppressive. However, this is the new reality – so get used to it. From now on, loans will not be rubberstamped in double-quick time.

So what should you do if you’re thinking of applying for finance?

One option might be to take up an interest-free offer now, before the hammer comes down. More seriously, you should take a close look at your spending months before you let any lender go through your bank statements with a fine-toothed comb. Some people may need to adjust and tidy up spending habits if everything goes through their debit or credit card. Personally, it reminds me of why I prefer cold hard cash.

As always, we’re here to support you. We can help you start prepping your finances months before you put in an offer on a property. Better still, we can work with you to set up a budgeting system that puts you on the road to being a debt-free property owner.

There’s no cost. All you have to do is ask.

We’re always here to help you with home loans and all your personal finance questions.

The latest property tax changes: A considered response

Sat, 08 May 2021 08:33:31 GMT

As you probably know, the government’s response to runaway house prices earlier this year was to announce sweeping changes to the taxation of investment properties.

This created a predictable stir . Some investors felt they were being demonised for providing rentals. Others wondered whether they should start selling down their properties. My reaction was to take a deep breath and wait to see what the landscape looked like after the dust settled.

Now my advice can be distilled into two words: Don’t panic.

It’s clear the tax changes caught everyone on the hop – including the IRD. There was conflicting advice – your investment properties will be taxed, no wait, if they’re new builds they won’t be…who actually knows? My recommendation is to book a meeting with your accountant. So often they are there to save you from yourself.

And keep this in mind: Governments come and go, rules change, and the world keeps on turning. As my mentor Dr Fred Grosse says, “This too shall pass.” If you have a disciplined plan to invest in property, take the time to coolly analyse your plan in the light of the new rules. Don’t let media narratives blow you off course.

Personally, I have no plans to sell any of my properties right now. Fear-mongering about new taxes is beside the point. You may reach a different decision but that’s your call. Take the actions that suit you, in your stage of life.

And here’s another perspective.

I’m delighted to see that a number of our clients who had been house-hunting for over a year were successful at auctions this month. Perhaps the frenzied bidding at auctions has become a little less frenzied. How nice to see some opportunities opening for people who had been feeling shut out.

Whether you’re looking to buy your first home, next home, holiday home, or build a portfolio of debt-free properties, we’re here to help you get the finance you need, and achieve your goals.

And that’s all that really matters.

We’re always here to help you with loans and to help you get ahead in life.

A great policy for a major risk

Fri, 05 Mar 2021 12:10:43 GMT

Cancer is New Zealand’s biggest killer . Of course, many people survive a bout, but that may depend on the treatment they receive.

Now there’s a new type of insurance cover that’s expressly designed to provide you with more options in the case of a cancer diagnosis.

What we like about this policy is the way it provides up to $500,000 for things the public system may not cover. So you could give up work to fight the disease, travel overseas for treatment, or get access to the latest drugs that aren’t funded by Pharmac. Every week there seems to be a sad story of a young person who’s set up a Givealittle appeal just to have a chance of staying alive. With cancer cover, no one will need to ‘give a little.’

Because cancer care insurance is totally focused on cancer, it’s quite affordable. So if you don’t want the expense of comprehensive health insurance, this cover could be perfect.

Should parents guarantee their children's mortgages?

Wed, 03 Mar 2021 09:30:49 GMT

We’ll cut to the chase – it’s usually a bad idea.

I understand the sentiment behind it, and fully sympathise with parents trying to help the next generation onto the property ladder. In a red-hot housing market that’s rife with FOMO, many first-time buyers see house prices outmatching the deposits they have in hand. Enter the Bank of Mum and Dad. They have heaps of equity in their home, so why not guarantee the loan of an adult child?

There are two problems with this. Firstly, any guarantee needs to be backed with security. So the parents’ home is at risk if the son or daughter struggles with mortgage repayments. Many parents back away at this point.

Secondly, the bank will require the guarantor (i.e. Mum and Dad) to provide details of all their assets, liabilities, expenses and income – even if this is just the pension. In effect, the parents are applying for the loan so the bank will treat them like any other borrower under the Responsible Lending Code , and assess their ability to repay it.

Trust me, no bank wants the headaches and horrible publicity of going after retirees who have been left to clean up their children’s financial messes. This is why they make potential guarantors go through all these hoops. It’s not a soft option.

So what do you do? I always recommend a family meeting. If I’m there, I can ensure everyone knows what’s involved before any promises are made.

We may be able to suggest some other options that avoid the problems outlined above, while still enabling parents to help their children into a house. For example, if they own an unencumbered rental property, the parents may feel OK about offering this as security, rather than risking the family home.

There are other creative options, too. Get in touch if you’d like to find out more.

That was a bombshell

Mon, 01 Mar 2021 09:30:28 GMT

No doubt you've heard about the government's sweeping changes to the taxation of rental properties. Are landlords now Public Enemy Number One? I have some thoughts, which I'll share with you in the next issue of this newsletter, once the dust has settled.

In the meantime, there's another change that may have been overlooked. And this change is a very good thing, in my opinion.

The end of the unregulated Adviser.

From 15 March 2021, everyone who provides advice on loans, insurance and investments must be registered with, and regulated by, the Financial Markets Authority .

It’s the end of a Wild West era, where pretty much anyone could call themselves an Adviser and sign up clients. Now the cowboys have been kicked out of the industry. There’s a public register of Advisers and firms that meet the government’s standards, and Sue Tierney Mortgages Ltd is on it.

Our processes are changing, too. For a start, you’ll receive a written summary of your goals and expectations before we provide advice. This is to help ensure you get the cover or loan terms that fit with your life goals – so it’s clear why you’ve taken out a particular health policy, for instance, or a mortgage with a floating rate.

The overarching objective is to make sure that all involved – the Advisers, banks and insurers – are doing the right thing by you. We think that’s great.

However, you do need to be aware that this careful and considered approach will make things s-l-o-w-e-r than before. And that could change the way you buy properties.

Negotiate in haste, repent at leisure.

“I’ll do a quick deal” is no longer good practice when you’re negotiating with vendors.

Many people use this as leverage to get a vendor over the line in a competitive situation. They then rock up to their bank or mortgage broker and ask for a loan to be sorted in double-quick time. Bad idea.

We can’t rush the process. The FMA will come down like a ton of bricks on Advisers who facilitate loans that go bad. As a buyer, you need everyone to follow the rules.

That means you might promise a quick settlement, but then can’t deliver. That could be expensive if penalties are payable. We can’t make the banks go faster, so caveat emptor.

We're always here to help.

If you’re keen on a property, we’re happy to have a chat before you put in an offer. We don’t charge for this advice. So before you commit to a deal that can’t be delivered – talk to us.

One final tip: Click on the link below to book a meeting. My diary is online, so you can choose a slot for an in-person chat, phone or video call.

Cancer Care Insurance Policy

Sun, 21 Feb 2021 12:07:47 GMT

A promising development.

We’ve been advised that a new type of policy is about to be launched – Cancer Care.

This is major news because I find cancer diagnoses are the biggest trigger for trauma policy and life insurance payouts. This is backed up by statistics . One in two New Zealand men will be diagnosed with cancer in their life, along with one in three women.

The new policy should provide affordable cover for cancer – and remove a lot of stress during a difficult time.

We’ll keep you posted, so watch this space.

If you would like to know more about insurance or review any of your policies, I'm always here to talk. Make an appointment

Housing market madness. What to do?

Sun, 14 Feb 2021 12:11:54 GMT

When I wrote in early December, I said I’d be available to help with your mortgage enquiries over the summer break. That turned out to be prescient.

The housing market has continued on its frantic run, with a steady stream of deals being finalised during the holidays. These are not normal times, so I thought I’d share some thoughts on navigating the current market - lockdown or no lockdown.

Here they are, in no particular order:

Congratulations to those who kept house-hunting over the break.

Bevan and I were pleased to help a number of clients land properties over the break while other buyers were taking time out. As Bob Jones once said, when everyone is buying, he goes fishing, and vice versa.

It pays to be like Bob Jones – in this respect, anyway.

Don’t buy into FOMO.

Fear Of Missing Out is driven by the media. It can even lead people to feel that if they don’t buy right now they will never get into the market.

But remember, there will always be properties coming up for sale. Babies will be born, couples will get married (and split), older people will downsize, and deceased estates will need to cash up.

Take a deep breath. Look at all your options. And read my final tip below.

First-time buyers should look at new builds.

The traditional route into home ownership was to buy a tired house and do it up. However, these properties are being snapped up by investors looking to bowl the old dwelling and replace it with townhouses.

So where should first-time buyers look for that starter home? We suggest buying in a new development.

About 80% of the first-time buyers we’ve dealt with recently have purchased new builds. Because these properties typically aren’t sold at auction, you won’t get caught in a bidding war with cashed-up families or investors. And there’s no need to burn money on endless buyer’s reports.

LVRs are coming back…

The banks have been told, once again, to restrict lending to those who don’t have a decent-sized deposit. So they’ll be looking closely at Loan to Valuation Ratios (LVRs). If this affects you – and you need to buy soon – keep that in mind.

…but supply is catching up to demand.

The single biggest factor behind price rises is too much money chasing too few houses. We simply haven’t been creating enough new dwellings in New Zealand for everyone who wants a home.

However, the statistics show that building consents were up 4.8% in the 12 months to December 2020. That might not seem a lot, but remember we’re still in a global pandemic that has caused massive economic disruption.

Just driving around Auckland will reveal multiple new homes popping up on sites that have been zoned for intensification. Buyers should hang tight and not give into FOMO.

Our single most important bit of advice.

Come and see us before you start looking at properties.

The banks are swamped and taking weeks to process mortgage applications. You need to have your finance lined up before you start putting in offers. The really organised buyers make their lives easier by having their three latest pay slips and all the other paperwork required these days.

As my accountant friend Mark Withers says, “Winning the game means understanding the rules.” The rules keep evolving – but we know what they are.

And we’ll help you win the game.

Young people need insurance too

Wed, 16 Dec 2020 12:13:00 GMT

My eye was caught by the tragic news story of a new father who died in a freak accident while walking through a park. It’s terribly sad for all concerned. But there was one glimmer of hope – he had taken out insurance to cover the mortgage in the event of his death.

Now, at least his grieving young family won’t lose their home.

When we’re young we may think we’re immortal – but we’re not. This year, I’ve been able to help a number of clients secure large payouts from their insurance policies. It’s such a relief to know the money will make a real difference during a difficult time.

If you or any of your family members have recently got married, bought a house or become a parent, please do keep this in mind.

A typical Auckland house now costs around $1 million. What's going on?

Sat, 12 Dec 2020 09:23:32 GMT

A recent Herald story informed us that nearly half the homes sold in Auckland went for over $1 million. If you find that shocking, consider what’s been happening.

In 2013 the Reserve Bank introduced Loan to Value Restrictions (LVRs). These effectively locked out first-time buyers, who then spent years squirrelling away bigger deposits. This year the LVR rules were relaxed and what happens? A flood of first-time buyers enters the market.

We were all locked down at home for months in 2020. As a result, many people decided to change the home they were in. And since the affluent can’t spend their funds on overseas trips, there’s more money available for real estate.

Interest rates were slashed post-Covid to prevent an economic slump. The flood of cheap money has been on-lent by banks and used to bid up house prices.

The government has ruled out a capital gains tax and wealth tax.

Now let’s look at things from a different perspective.

You can still buy a house for well under the average price. The flipside of that sensationalist headline in the Herald is that half of all houses sell for under $1 million.

Private developers and Kainga Ora are frantically building more houses following the new guidelines in the Auckland Unitary Plan. Many of these new homes are pitched below $650K, to make them eligible for first-time buyer grants from the government.

Low interest rates are keeping monthly repayments down, so borrowers can afford bigger mortgages.

If you’re looking to buy your first house, remember it’s unlikely to be your last house. Don’t hang out for the perfect property in your dream suburb – be realistic. Get somewhere that ticks most of the boxes, buy it and grow your equity.

This year we’ve helped record numbers of first-time buyers secure homes. It’s been a pleasure working with them.

If you’re looking to buy, we’ll help you find a way.

A Christmas story

Tue, 08 Dec 2020 12:15:44 GMT

When I was 13 years old my father walked out on the family. He disappeared from our lives six weeks before Christmas.

My mother was an immigrant with no family support and four young children to bring up. Our household was financially devastated just as the festive season was getting into full swing. Not a happy time.

Then a few days before Christmas, I came home from my weekend job to find my youngest sister hugely excited about a parcel that had been delivered. Some anonymous stranger had tipped off the local Lions Club, who had kindly donated a box of festive food, including chocolate biscuits, potato chips and other delicious, ‘naughty’ treats. Seeing my sister so excited about this is such a vivid memory!

Fast forward to the present day. I’ve made it a habit before Christmas to ask friends discreetly for the names of local families who are doing it hard. Then I make up some parcels similar to the one my family received all those years ago.

Because Christmas is all about the children.

Paying it forward.

As you know, 2020 has been a difficult year so many people. Some of us are doing OK but other New Zealanders are struggling. Now is the time to think about the kids who aren’t having a great time.

So many of you are generous with your time and money, and I would love to hear your stories. Please do get in touch. And if you’ve been wondering how you might spread a little festive cheer, here are some ideas.

In a year that’s kept us all at home, how can we make home a better place?

The Auckland City Mission is always there for those in need. Make a donation now and you can be sure it will do a load of good.

Another charity I support is Lifeline . As you can imagine, they get a lot of calls over the holidays. They would welcome your donation too.

Here’s wishing you the very best for the festive season, and a fabulous start to 2021.

Office hours over the holidays.

Our office will be closed from 20 December 2020 until 12 January 2021. Bevan will be enjoying a well-earned break at Whangamata, so do say hello if you spot him on the beach.

Sue will be based at home (in her ‘Covid office’) over the break. She’s available for Zoom and phone calls regarding any urgent mortgage or insurance queries you might have.

Loan first, property second

Wed, 07 Oct 2020 08:21:06 GMT

The housing market is going crazy, with selling prices up to 55% above CV. Many of you are helping your kids get into their first home. They'll need your guidance as well as your financial backing.

Here’s the best advice you can give them in the current market: Don’t go house hunting until you’ve got your loan pre-approved.

Why does this matter? Because approvals that used to be turned around in an hour now take at least 10 days. This is because the banks are struggling to deal with the volume of paperwork and there are lots more legal hoops compared to 20 years ago.

With almost every property going to auction these days, a 10-day wait for finance will kill many deals. There’s nothing we can do about that – but we can get a loan approved in advance, so you can bid with confidence.

It’s a good idea to start the process up to six months before entering the market, so don’t hesitate to call us (or send your children for a bit of friendly education on the ins and outs of mortgages). For a generation used to instant responses on everything, a six-month build-up to buying a house may seem intolerable. But it's a lot more tolerable than missing out on property after property.

Remember, we don’t charge for this service. We’re here to help you and your children get all your mortgage ducks in a row, and avoid the pain of missing out.

Fatigue is the enemy

Sat, 03 Oct 2020 15:11:13 GMT

Thank goodness the election is over! Like many people, I’m looking forward to year-end celebrations and a decent break. Those Christmas carols can’t come soon enough!

What’s more, I think we’re all a lot more tired than normal. It’s been an incredibly testing year, and I’ve never seen so many worn-out people (including myself). On reflection, those winter getaways were important for recharging batteries – and we’ve all missed out this year.

So I hope you’ve made the most of the Labour Weekend break. It’s important, because tiredness is the enemy of good decisions.

When we’re tired we don’t plan properly.

When our batteries are low we often default to short-term thinking. We don’t have the energy to think through the implications of what we’re doing. We live day to day.

This can seriously affect our wellbeing – and our wealth.

In my 30-plus years in finance I’ve seen redundancies hit in the run-up to Christmas. People can also be left in a financial mess due to poor planning and festive overspending. We are currently in the early stages of a major recession. Yes, the property market is booming, but there will be many people facing a financially strained future.

That’s why it’s important to plan your Christmas spending, and don't let fatigue lead to poor decisions. Look for bargains in advance rather than giving the credit card a last-minute workout. Don’t get yourself into a situation where you’ll need to refinance your loan next year. Spend mindfully, and enjoy your time off.

Sad news about Dom.

When I was putting the finishing touches to this newsletter, I found out that my dear friend Dom Davis had passed away. Dom had myelodysplasia, which led to a bone marrow transplant in June. He was doing well but sadly lost the battle a couple of weeks back.

For those lucky enough to have had Dom as a mortgage adviser, you’ll know how much you meant to him. We will all miss him dreadfully, as will Kerry, Mick, Charlotte and Dom’s entire extended family.

Below is a picture from happier times. Rest in peace, Dom.

Fixed Term Loan: Please don't do this

Sun, 23 Aug 2020 02:14:49 GMT

If you're coming to the end of your fixed term loan, you're likely to receive a letter or email from your bank. It may contain a temptingly low interest rate. The suggestion from the bank is to act now and lock it in.

Don’t do this.

Here’s why. The bank can only put this offer to you when you have less than eight weeks left on your loan term. However, the Reserve Bank’s Official Cash Rate (OCR) is announced every six weeks . So there’s every chance rates will drop further before your loan rolls over.

In theory, of course, there’s a risk that rates could go up. However, the Reserve Bank has made it clear that New Zealand is in a low interest rate environment for now. In fact, the Governor of the Reserve Bank has asked lenders to prepare their computer systems for the possibility of negative interest rates. Truly, we live in strange times!

So what do you do when it’s time for your loan to roll over?

Call us.

During the first lockdown we moved to a new and vastly superior CRM/loan application system. Our old one didn't hold adequate information regarding loan terms, so we need you to tell us when your lender is asking you to re-fix. Just get in touch when you receive that bank letter - you could even just email a copy of the letter - and we’ll help you get the best possible rate.

I realise you may be one of those well organised people who likes to act swiftly when it’s time to re-fix. But you will lose nothing by getting our advice (which may be to wait a few weeks and see if there’s an even lower rate in the pipeline).

And remember, we don’t charge for this service. We just want to make sure you don’t end up paying too much for your fixed-rate home loan, by jumping the gun too early.

How my health insurance bought me a Bugatti

Thu, 20 Aug 2020 02:00:37 GMT

You may remember me talking about AIA Vitality in a previous issue of our newsletter. This is a new type of insurance that rewards you for healthy behaviours. As you improve your health in areas such as nutrition, exercise and mental wellbeing, you receive a range of extra benefits. So you’re covered against risks and rewarded if you reduce them.

Now that AIA Vitality has been around for over a year, many members are reaching the Platinum rewards level. This entitles them to a 12% discount on their next premium renewal.

The other benefit is the ability to choose from a range of attractive rewards.

When I joined the programme last year I opted to earn Air New Zealand Airpoints Dollars as my AIA Vitality rewards currency. Unfortunately, Covid disruption means I’m unlikely to be boarding a plane any time soon. So instead of buying travel, I recently used my Airpoints Dollars to buy a shiny new Bugatti toaster.

Ok, it’s not quite as glamorous as a Bugatti in the garage. But it looks stunning on the kitchen bench, and it makes superb toast.

And it cost me nothing, thanks to AIA Vitality.

If you would like to find out more about AIA Vitality or review any of your insurance policies, I'm always here to talk.

Life in the Covid Zone, Part 2

Tue, 18 Aug 2020 02:03:54 GMT

So here we are again. If you live in the greater Auckland area, you will be experiencing a second session of lockdown. If you live outside Auckland, you’re no doubt wondering when the viral spread will be contained.

But it’s not all bad news. Far from it.

As my mentor Dr Fred Grosse likes to say, “This too will pass.” So if you feel 2020 has been like a real-life game of Snakes & Ladders, perhaps this lockdown session will only be a small snake.

One piece of good news is that buying and selling property continues.

In the first week of lockdown, two of my clients sold their properties and achieved very good prices. One sale was half a million dollars above CV, so if you’re ready to put your house on the market, be aware that you can still get a really great result.

If you’re looking to buy – and you have a pre-approved loan offer in your hand – you can also move ahead in Level 3. So when you find a property online, or see one for sale in the neighbourhood, you can still look to purchase it. Call me and I’ll show you how to manage things.

The pandemic has also meant that this year’s CV revaluation in Auckland has been paused until 2021. That might be good news if you’re staying put and hoping for a smaller rates rise. However buyers need to be aware that CVs will be out of date, and therefore less useful as a guide to the asking price. (They shouldn't be used as a guide anyway, but people do take them into account.)

Finally, there’s the news about my new Bugatti . It came into my possession as an indirect result of the pandemic.

Don't forget to follow us on Facebook for the latest updates on interest rates and the property market.

Did you know you can book an appointment directly using our online diary? Click below.

We don't want to sell you insurance

Tue, 23 Jun 2020 02:25:08 GMT

We suggest our clients review their insurance policies every year, and I’ve noticed that some of you are less than keen to take up this offer. When pressed the truth emerges: “I’m worried you’ll try and sell me insurance.”

Nothing could be further from the truth.

Let me explain. We like to check in every year or so to find out if anything has changed in your life. Perhaps you’ve paid off a big chunk of your mortgage? Then maybe you won’t need so much life cover.

If that’s the case, we won’t suggest more insurance. We will save you money by reducing your cover.

Why do we take this approach? Because as Mortgage and Insurance Advisers, we are regulated by the Financial Markets Authority (FMA). So we need to show that every solution we recommend is justified by circumstances. We need to keep notes and show our rationales.

That cuts both ways. If your need for cover is less than it was a few years ago, then we will recommend less cover.

So if you've been hiding from us, I'd like to invite you to come in for a chat. We may well be able to save you money by reviewing your insurance. And remember that any money you save with lower premiums can be redirected to your mortgage, to help you reduce it faster.

You’ll be debt-free sooner. And isn’t that the ultimate goal?

Should you opt for a Kiwi bank?

Wed, 17 Jun 2020 20:05:56 GMT

Remember how Level 4 lockdown meant shopping at two large supermarket chains – and one of them was Australian-owned? Windfall profits ensued.

Nothing against the Aussies, but I know a lot of people would have liked to support local businesses as well. With the big four banks being Australian-owned, I often hear a similar request: “Can we look at getting a mortgage from a New Zealand bank?”

I’ve got good news – you can. And it doesn’t necessarily mean opting for the government-owned bank with Kiwi in its name. There are some excellent alternatives.

Both TSB and SBS are locally owned, and they offer home loans. At Sue Tierney Mortgages, we will look at all the options, including those offered by true New Zealand banks.

If it’s important to you to support locally-owned businesses – and if those businesses have a product that will help you achieve your goal – then we will make it happen.

We’re always here to help you with home loans and all your personal finance questions. Get in touch now.

So-called work life balance isn't all it's cracked up to be

Fri, 05 Jun 2020 20:08:34 GMT

I’ve been told by people I love and respect that sometimes I work too hard. I need more ‘work/life balance’ it seems.

This gave me pause for thought.

I thought about being 12 years old, working in a Christchurch café for eight-hour shifts. Growing up in a family where every cent counted, weekend work was a fact of life. And I remember thinking, “If I’m going to be here for the next eight hours, I need to make these the best eight hours possible.”

Years later, nothing has changed. If you know me well, you’ll know I throw myself into everything I do with huge enthusiasm.

Mountain biking.

Candle making.

Bee keeping.

And yes, mortgage broking.

The point being that we need to be fully engaged in how we spend our time – including the hours we spend working – otherwise what’s the point? The satisfaction you get from mountain biking (or gardening, or playing the piano, or doing your job) is proportional to the energy you put into it.

So what is it about being a mortgage adviser that fuels my passion?

During lockdown, I couldn’t see clients face to face. Instead, I was fully occupied talking and Zooming with clients from home. It was exhausting but I loved it.

This showed me that the point of work isn’t to be in an office. It’s about helping people. And I suspect I’m not alone in this. When you ask young people what they want to do with their lives, you often hear something like, “I love helping people.” Because it’s a fundamental drive.

Tony Robbins is right – we all have six basic needs. These are: Variety, Love/Connection, Growth, Certainty, Contribution, and Significance. Working with you, I’ve got all six covered.

So thank you for all the chats we’ve had, all the loans we’ve set up, and all the referrals you have sent me. They have kept me wedded to this profession, and I’ve got a lot out of it. Now it’s time to give back.

Five prizes for five first-time buyers.

During lockdown I wanted to support New Zealand enterprises doing it tough. Long story short, I bought five eco cleaning packs worth $33.95 each, from the amazing Will & Able.

I would like to give away a pack each to the first five first-time buyers who draw down a loan arranged by us. So if you, or someone close to you, is thinking about stepping onto the first rung of the property ladder, we’d love to hear from you.

Just give me a call, send me a message, or use the diary booking link below. And we can take things from there.

Don't forget to follow us on Facebook for the latest updates on interest rates and the property market.

Home is where the injuries are

Sat, 16 May 2020 20:10:10 GMT

Unless you were deemed an essential worker, you probably spent a lot of time at home during the last few months. Many people took the opportunity to do a bit of DIY. And that’s where the trouble starts.

Did you know that more injuries happen at home than in the workplace? ACC reckons someone is injured at home every 48 seconds. I speak from painful experience, as I gave myself a nasty cut on the finger making candles for the City Mission during lockdown.

A wobbly ladder, an unfamiliar power tool, or simply a creased floor rug – any of these can lead to a trip in an ambulance. Take care it’s not you.

To be extra safe, consider taking out Accidental Injury Insurance. This type of cover is very cost-effective. It could give you some peace of mind if an accident at home leads to time off work.

Some good news on Covid-19 cover.

If you have a policy with AIA, you’ll be pleased to learn that their insurance products do NOT contain exclusions for pandemics. So if you ever need to make a claim related to Covid-19, that’s one less thing to worry about.

While we’re on the topic, now might be a good time to review all your policies. There’s a pretty good chance your lifestyle and financial circumstances have changed recently. Get in touch and we’ll see what we can do.

Beware of this cunning trick

Thu, 14 May 2020 08:16:31 GMT

If you have a mortgage, you’ll have noticed that interest rates have dropped. Your bank may even have contacted you with a low, low rate.

Proceed with care because there may be a fish hook.

We’ve seen a trend of banks contacting customers who are due to renew their fixed loan. The email arrives 13 weeks before the rollover date, with a tempting new rate. Just click on the link and grab this great rate…

The risk is that you miss out on an even lower rate in a month or two. With two OCR announcements before your mortgage rolls over, rates could go even lower. In the current climate there’s absolutely no need to refix early.

The underlying problem is the lack of advice. Get the email, click the button, job done! It appeals to the impulse many of us have, to get things sorted without mucking around. But doing so could cost you thousands of dollars.

So what’s the alternative?

When clients are due to refix, I treat it as a golden opportunity to save them money. Instead of taking the first offer the bank sends, we go to the market and see what’s on offer. It’s part of our service, and it costs you nothing.

So when the bank sends you an email or letter with a tempting offer, what should you do? Send it to Bevan or me.

A five-minute chat can reveal all sorts of information that might lead you to a different and better conclusion. We will confirm when the OCR announcements are due and work out whether to refix immediately if rates are heading up, or hold off if they are on the way down.

As an aside, I’ve found that clients who review their loans ever year tend to be the ones who get rid of their mortgages fastest. And remember - we don't charge for this service.

What a difference a month makes

Tue, 12 May 2020 20:12:48 GMT

The last time I wrote to you, we were all reeling from the sudden decision to go into lockdown.

No need to revisit those crazy March and April days – but I think you’ll agree it was the most incredible shock to the system. Bevan and I spent many lockdown hours talking to clients and trying to keep up with all the changes to bank loans. I hope we were able to provide some helpful advice during a stressful time.

With the benefit of hindsight I can see that Level 4 quarantine gave me some valuable thinking time. How often do you get the chance to examine what you do, and ask if there might be a better way?

For instance, I’ve always been a fan of the way technology can make life better. While I was working from home clients were contacting me via phone, LinkedIn, text messages, email, and a range of messaging apps.

On the one hand, it was great to have so many means of communication. On the other hand, it was exhausting!

I’ve always been a fan of email, as it enables me to keep everything in one inbox. However, there’s no going back to the days when people only used phone and email. So I was pleased to discover some innovative software that could make life a lot easier.

As well as keeping us in touch, this clever app could make the whole lending process much simpler, with the ability to upload documents and keep track of applications. It also appears to be able to help us speed up the loan application process, which has slowed to a crawl over the last five years (mainly due to tougher anti-money laundering processes the banks must follow).

I look forward to sharing the details with you soon. Watch this space!

Could 'interest only' be a trap?

Sun, 16 Feb 2020 09:27:15 GMT

We sometimes talk to clients who want to reduce their outgoings by stopping repayments of their mortgage principal, i.e. going ‘interest only.’

Now, as Financial Advisers, we’re here to help clients achieve their goals. But we also need to ask whether best interests are being served.

The point is that there may be other ways to get your household costs down, and still chip away at your mortgage. Whereas an interest-only strategy could lead to a much larger debt in the long term. Remember, the quicker you get rid of your mortgage, the sooner you can become wealthy.

What about shopping for groceries once a month, rather than once a week? Could you switch your phone, power and internet to a cheaper plan or provider? Even finding a cheaper petrol station near your home or workplace could save you hundreds of dollars annually.

Here's something else to remember. The Reserve Bank is pressuring lenders to ensure their customers are paying down debt. So they may require the rigmarole of a whole new loan application if you want to go interest-only, rather than simply rubber-stamping the change.

None of this means an interest-only loan is wrong in every case. We’ll always work hard on your behalf to get the best deal. And we’re more than happy to spend time looking at the bigger picture and helping you achieve your long-term financial goals.

Thanks for reading. Here’s why I write to you.

Wed, 10 Jul 2019 23:02:00 GMT

If you’re anything like me, your inbox is full to overflowing. So I thought I should take the time to explain why I send out these emails every month.

A big part of my job is keeping you informed.

Yes, we love working with you to arrange a mortgage and setting up your loans. But it’s not just about finding the best rate and taking care of the paperwork. As advisers, we have a legal and moral duty to do the right thing by our clients. And a big part of that is checking in regularly.

So thank you for reading this. It’s really important to stay in touch, and I enjoy sharing financial tips and experiences with you. (You’re also welcome to forward this email to anyone you know who might find it useful.)

Keeping you informed includes the big-picture stuff, like sharing views on interest rates and the Reserve Bank rules. It can also be tips to help keep more cash in your pocket so you can get rid of your mortgage sooner, and live the life you want to live.

In this spirit I’d like to tell you about a mobile app I discovered recently.

I recently heard about Gaspy on a TV story about petrol prices. It’s a free app that simply tells you where the cheapest fuel is in your area.

Within a fortnight Gaspy had saved me $70. Apparently I work near one of Auckland’s cheapest petrol stations, and I had no idea. Now it’s my regular filling station.

Imagine saving $140 every month on fuel. That’s around $1,600 a year, give or take. Apply that sum to paying off debt, and you will soon be in a much better financial position. And you won’t have to sacrifice any quality of life.

Do try Gaspy and tell me if it improves your finances. Let me know about any other clever apps or tips, too. I’d love to share them with all the readers of this newsletter.

Do you have some great money-saving tips? Would you like to work with Sue to get the most from your money? Get in touch .

Is self-insurance a good idea?

Thu, 06 Jun 2019 22:09:00 GMT

It can be, depending on your propensity for risk.

If you’re a bit of a gambler, you might be happy to take some chances in life. By all means do so, if you’re willing to fork out when the bills come due. I’m thinking of a young man who had to use his house deposit for private surgery when a back problem was interfering with his ability to work. It happens sometimes.

At the other end of the scale, there are those who can’t relax unless they’ve covered every conceivable risk. These people may sleep easy at night but they could also be paying for cover they will never use.

Most of us sit somewhere in the middle. So what’s the best way forward?

I suggest asking yourself, “What’s my Plan B if things go wrong?”

The answer might be, “Move back in with Mum, sell my house, rely on ACC or rely on a sickness benefit.” Explore what those options actually look like in reality. (One option I strongly discourage is the one so many Kiwis seem to rely on – “I’ll launch an appeal on Givealittle.”)

Self-insurance can be an option. There are also insurance policies that could provide a useful backstop. We’re here to talk things through with you.

Would you like to have a chat about risk and how to manage it? Make an appointment .

The secret to paying off your mortgage sooner

Thu, 06 Jun 2019 22:06:00 GMT

There is no huge secret – it’s embarrassingly simple.

So why do some people manage to become mortgage-free in a few years while others on the same income somehow never get out from under their debt? Here are some tips and tricks I’ve learned over the years.

This last point is fascinating. I’ve seen two clients recently who were missing out because their pay was incorrectly calculated. They only realised this when I noticed the numbers on their loan applications did not match their pay slips.

No one will care about your money the way you do, so take the time to check everything’s in order with your pay. (You can do a quick check here .)

Simple checks like this – combined with a realistic budget – can help you knock down that mortgage in double-quick time, without having to live like a miser.

People often say to me, “I don’t want the mortgage to ruin my lifestyle.”

I say, think about the lifestyle you could have if you didn’t have a mortgage.

We’re always here to help you with home loans and all your personal finance questions. Get in touch now .

A new scam.

Thu, 06 Jun 2019 21:57:00 GMT

Just when you think you’ve heard all the tricks scammers get up to, along comes a new one.

I recently attended a business event in a hotel with a good friend of mine. The event was totally above board but what happened during was interesting. First of all, my friend noticed he’d lost mobile phone reception. He thought this was odd but assumed it was because we were in a windowless room. However, at the end of the day, outside the hotel, he realised his phone was still offline.

So he contacted his phone company – and it was just as well he did.

It turned out that someone had walked into one of the company’s stores and pretended to be him. The impersonator said the SIM had been lost. A trusting telco employee provided a new SIM, which was promptly inserted in a different phone and used to move the account to another telco (which explains why my friend lost phone service).

It gets worse. The scammer got into my friend’s emails. Fake social media accounts were set up and his contacts were spammed. Fortunately, my friend spotted what was happening and alerted his bank before anything more serious went down.

It was just as well he did, because he had recently received a large sum of money. He quickly froze the account and breathed a sigh of relief.

You could call this a lucky escape, and in a sense it was. But bear in mind that my friend then had to go through the rigmarole of re-establishing direct debits, automatic payments and other financial arrangements. He also had to spend a lot of time contacting and explaining the situation to friends and business associates.

For me, the episode underlined just how dependent we’ve become on the information sitting in our email inboxes. We’re hugely vulnerable if malicious people gain access to this trove of personal data. I thought I was aware of all the usual scams – never click on a link in an unsolicited email; never share passwords; never use an unknown computer. But now I’ve learned that something as simple as a mobile phone going offline can be a sign that criminals are sniffing around.

Perhaps we should follow the example of the banks. Their systems and protocols assume you’re dodgy until proven otherwise. As individuals, we may need to adopt the same philosophy.

We put an awful lot of trust in logins and user-friendly software. It only takes one privacy breach to realise we need to be much more careful.

Have you had anything similar happen to you? What did you learn from it? I’d love to know.

Would you like to work with Sue to get the most from your money? Get in touch .

The product you love to hate.

Wed, 10 Apr 2019 04:30:00 GMT

Most people have no problem insuring something tangible like a house or car. But they baulk at paying premiums to protect their ability to earn a healthy income.

Some then compound the problem by getting their accountant to play clever games to reduce tax liability. Self-employed people, in particular, can take great pride in maxing out every deduction and write-off to save a bit of income tax.

Sadly, when they want to protect their earning ability they find they can only cover a modest income, because they took every write-off going. That’s a bummer. But the real kicker comes when they go to claim on ACC, and find they will receive 80% of not very much.

Losing the ability to earn for three to six months, due to illness or injury, is statistically much more likely than the sudden death of a breadwinner. So it’s something you should think about.

If your budget is tight, there are affordable options such as Accidental Injury Cover that can provide peace of mind. Bills quickly pile up if you’re not working so it’s important to get the right cover in place.

Everyone’s needs are different, so we’ll happily look at your budget and risk profile, and suggest some types of cover you may not be aware of. You may not love the idea of insurance but you’ll love the security it provides.

We’re always happy to review your insurance policies at no charge. Make an appointment .

The Irresponsible Lending Code.

Wed, 10 Apr 2019 04:27:00 GMT

A few years back, the government created guidelines to stop lenders loading debt onto people who were ill equipped to handle it. The Responsible Lending Code now informs the way banks lend new money. Unfortunately, it hasn’t fully permeated down to the way they manage existing debt.

So an elderly gentleman with minimal income and next to no assets can have his overdraft extended indefinitely by the bank. When asked if the overdraft should be gradually repaid, the answer comes back: “We’ll just take it out of his estate.” News flash – there won’t be enough in the estate for the bank to get its money back.

In our opinion, a really responsible lender wouldn’t just follow the letter of the Code and ignore existing debt. It would come up with a plan to clear the debt. Whether it’s a few thousands of overdraft or a large mortgage across a property portfolio, responsible lending means looking at the long-term interests of the client.

Perhaps banks aren’t always best equipped to do this. In which case, the question shouldn’t be, “Which bank do I go with?” but “What financial arrangements will best serve my purposes?”

And that’s a conversation we’re always ready to have.

We’re always here to help you with home loans and all your personal finance questions. Get in touch now.

We need to talk.

Wed, 10 Apr 2019 04:06:00 GMT

How often do small problems turn into big problems, simply because we’re too embarrassed to talk about them? More often than you think.

I volunteer at Lifeline , and it’s astonishing (and depressing) how often I find myself talking on the phone to someone who has got into a desperate state because a problem has been left to grow larger in silence.

Strangely enough, I find the same sad syndrome in my day job. I’ll be sitting down with a client, working through their financial options, and I’ll hear this phrase:

“I’m really embarrassed by this…”

Then out it comes. Perhaps there was a life-changing event such a death in the family, or an unexpectedly large bill. Payments were missed and debt collectors were called. Maybe money was borrowed from a dodgy lender at an eye-watering interest rate, and the debt spiralled out of control. Maybe credit card bills have piled up at 22% p.a. and stern letters are now landing in the mailbox.

These are all common scenarios I encounter every week. People have been suffering in silence, panicking and making poor decisions, while friends and family remain blissfully unaware.

This culture of embarrassment and shame has to stop. We all need to communicate with those we care about.

We need open, sincere conversations about money, so the scammers and abusive lenders can no longer exploit their victims’ silence. Whether it’s your best friend, an aging parent or financially naïve offspring, they’ll be better off if they feel they can talk to someone who cares. It doesn’t mean becoming their financial saviour, but simply being a non-judgmental listener who can offer empathy (and perhaps some practical suggestions).

At Sue Tierney Mortgages we’re here to talk, too. We don’t want to see anyone scammed by loan sharks, or end up paying too much on a poorly structured mortgage. We’ll take the time to really understand what’s going on. We’ll help find a solution, and we won’t judge.

Would you like to work with Sue to get the most from your money? Get in touch .

The sins of the insurance industry – and my response.

Thu, 28 Feb 2019 02:46:00 GMT

You may have noticed there’s been an enquiry into practices in the insurance industry, leading to some rather bad publicity .

I haven’t read the full report yet – that will be on my holiday reading list – but I would like to make one simple point.

If you’ve worked with me on your insurance needs, you’ll know I’m not interested in selling you a policy. (Emphasis on the word selling.) Instead, I’m determined to ensure you don’t lose your house because you didn’t plan.

I never cease to be amazed that people will doggedly pay their rates, utility bills and contents insurance – but baulk at protecting the thing that matters most.

What is that ‘thing’? It’s you.

If you don’t look after you, you can’t look after your family, and you won’t be able to keep a roof over their heads. So income protection, accident cover and health cover should all be in the mix as part of your protection plan.

Best of all, we will look at your overall life goals, income and expenses when we recommend insurance – so any cover you receive will fit within your budget.

We’re always happy to review your insurance policies at no charge. Make an appointment .

Why refinancing (probably) isn’t the answer.

Thu, 28 Feb 2019 02:36:00 GMT

You may have noticed the banks are fighting for marketshare. House sales are sluggish so they’re using cut-price interest rate offers to win your business.

Tempted to refinance? Tread carefully.

An ad with a juicy rate in the headline may seem like a great deal. However, these rates are often available across the board. Any mortgage broker worthy of the name can get you deals that are as good or better. As we say in the finance industry, the difference between one bank and another is the colour of their cheques.

But there’s an even better reason not to jump at a low rate offer. It’s because refinancing is a costly exercise that may bring you no closer to your actual goal – which should be to pay less over the length of the mortgage and become debt-free sooner.

We know one homeowner who thought refinancing would magically get rid of his mortgage. In the end, after all the costs had been added up, he saved just 87 cents a week.

That’s right – 87 cents a week.

We think there are better ways of structuring your loan to get rid of your mortgage. To find out how, come to my one-day seminar in March.

We’re always here to help you with home loans and all your personal finance questions. Get in touch now.

You only get one life.

Thu, 28 Feb 2019 02:32:00 GMT

Last month I spent a fascinating Saturday with eight people who responded to my invitation to a one-day seminar.

We all got so much out of the day that I decided to do it all over again – and you’re invited. But before I tell you the date, let me share a little of my thinking.

You might have heard me talking about my mentor Dr Fred Grosse and his philosophy. It’s all about building a magnificent life, where you achieve your financial goals and are liberated to do the things that really matter.

Well, I’ve been looking for ways to share some of the tools and insights I’ve picked up along the way. So I put together a seminar to help people who are looking to get on top of their finances and get ahead in life.

The outcome was this one-day workshop. Drawing on the things I’ve learned from Dr Fred, plus financial tips and life skills I’ve absorbed over the years, we focused on the smart things you can do to manage costs and achieve your big, exciting goals.

It was wonderful to see people bonding when they realised they weren’t the only ones who struggled. And even better when I saw them planning magnificent holidays and other magical moments with their families.

Sound inspiring? Join me next month.

I will be holding just one more seminar this year. It’s scheduled for Saturday, 9 March 2019 and space is strictly limited. I really want to spend time one-on-one with you, so there will be just 10 seats.

Please reply ASAP if you would like to attend. I would love to see you there, so get in touch now to reserve your place

Would you like to work with Sue to get the most from your money in 2019 and achieve your life goals? Get in touch .

Get Airpoints Dollars just for having insurance.

Mon, 17 Dec 2018 23:05:00 GMT

You need insurance to protect what’s important. And if you’re with Sovereign, you can now get rewarded on top.

Since 30 November 2018, everyone who buys or holds an eligible Sovereign insurance policy can earn 1 Airpoints Dollar for every $100 of premium.

There’s also a fantastic bonus if you take out new cover. Buy an eligible Sovereign policy before 28 February 2019 and earn triple Airpoints Dollars on premiums paid for three months from the first premium payment.

You’ll need to register your Sovereign policies to ensure all your Airpoints Dollars added to your account. It’s easy – register your policies here .

That’s not all. If you take out a Life policy with Sovereign before the end of December you’ll get their Life Plus One discount for the life of the policy. Don’t delay – ask us today.

We’re always happy to review your insurance policies at no charge. Make an appointment .

Should I use my KiwiSaver to pay off my mortgage?

Mon, 17 Dec 2018 23:02:00 GMT

For many New Zealanders, their Kiwisaver fund is the single largest lump sum in their name.

And for many people in or approaching retirement, there’s the desire to eliminate monthly mortgage payments to reduce their monthly expenses.

So they ask us whether it’s a good idea to use their Kiwisaver retirement savings to pay off the outstanding mortgage.

The answer is – it depends.

That’s not a cop-out. We all have a different mix of assets and debts, and our lifestyles and personal circumstances are unique. Your financial situation is unique. You need tailored advice.

So before you go any further, I suggest you book an appointment with your financial advisor. The information below is simply an overview if you’re looking at a mortgage in retirement. (And remember, we don’t sell Kiwisaver products, so we have no skin in the game.)

Here are some things to keep in mind.

Are you in your 50s or early 60s but still working?

Remember that Kiwisaver is designed to be withdrawn after your 65th birthday. So if you haven’t turned 65 yet, you don’t have the option of using it to pay off your mortgage.

But there’s something you can do: Get an idea of the amount likely to be outstanding on your mortgage if you continue with your current trajectory of repayments. Here’s a calculator that can help you work out how much will be left on your mortgage.

Once you know that number, you can decide whether to boost your mortgage repayments, or look at increasing Kiwisaver contributions or other investments to provide more options in retirement.

Are you over 65 but still have a mortgage?

Maybe you’ve left the workforce or scaled back your involvement. Before deciding whether to pay off your mortgage early, you should figure out whether you have enough to live on.

Can you survive on NZ Super alone? Do you need your Kiwisaver to top up your income? Do you have other income sources? Think carefully about whether you should use your Kiwisaver fund to clear your mortgage. You may need that money to fund living expenses in retirement.

We know older people who still have a mortgage in their 70s. They don’t use their Kiwisaver funds to get rid of the mortgage. Instead, they live off withdrawals from their Kiwisaver and continue servicing the loan.

Their plan is to leave their mortgage in place so the lender can recover the money from their estate when they eventually pass away.

This won’t be the right option for everyone, but it might be for you.

Is your Kiwisaver earning a higher rate of return than the interest on your mortgage?

It’s also possible that you may have a high-performing Kiwisaver fund and a low interest rate on your home loan. In that case, it makes sense to keep investing in Kiwisaver while servicing your mortgage debt.

Of course, the opposite also applies. If you have some expensive debt (e.g. credit cards), then you should look to retire that debt first.

Now let’s look at some related financial decisions.

Is it best to withdraw Kiwisaver funds as a lump sum or as you go?

If you’re over 65 you can withdraw all or some of your Kiwisaver funds at any time. But if you don’t actually need this money to live on, and it’s earning a good return, it may be best to leave it invested so it continues to grow.

Alternatively, you can set up regular Kiwisaver withdrawals to supplement any other pension or income you have. That might be the difference between a penny-pinching lifestyle and a comfortable one. It depends on your personal situation.

However, there are circumstances when it does make sense to withdraw a lump sum.

For instance, if you are carrying expensive debt, then it makes sense to use your Kiwisaver to pay this off. And if you are facing a large one-off expense, such as a home renovation, it might be better to draw down a lump sum from your Kiwisaver to fund this.

And here’s a note of caution. For some personality types, getting a lump sum feels like winning Lotto. A splurge follows – and then the money’s gone. If you suspect this would be the case, then beware the temptation to withdraw your Kiwisaver in a lump sum. Drip-feeding may work better for you.

You know yourself best. Be honest about your ‘money personality’, and consider getting some guidance from a professional advisor.

Should you pay off your mortgage early?

The biggest reason to pay off your mortgage early is to reduce the total amount you end up paying the bank. Mortgage interest really adds up over the decades.

On the flipside, if you boost your monthly repayments now, you can slice years off your mortgage.

In one case, we worked out that a client could afford to repay an extra $40 per month on their mortgage. That’s the cost of a few bottles of wine or a light meal out, i.e. no big sacrifice. Yet by putting this money towards their monthly mortgage payment instead, this client knocked a staggering nine years off the mortgage term.

It follows that if you’re looking at retirement within 10 years, you might not even need to use your Kiwisaver to pay off your mortgage. Simply increase your monthly mortgage repayment now, while you’re still in the work force. Here are some tips and insights that might help.

When is it best NOT to pay off your mortgage early?

We generally advise our clients to become mortgage-free as soon as possible. However, there are some exceptions.

The first is when your retirement goal is to effectively leave the house to the bank. Some people are happy to carry a mortgage in retirement, and have set things up so the bank will get its money back from their estate…eventually.

The other exception is when you have a mortgage on an asset that produces income.

For example, you might have a commercial property that you run like a business in retirement. You service the mortgage, write off the expenses, and it pays you an income. If it’s ‘washing its own face,’ then you might be better off servicing the mortgage and also hanging onto your Kiwisaver as a separate pot of money.

Another example is borrowing to build a minor dwelling on your property. If the sums add up, it could be worth servicing this mortgage instead of paying it off with your Kiwisaver.

We also know people who have taken out a mortgage to finance share options from an employer. If these shares are paying good dividends, then you may not need to pay off the mortgage early.

In the end it’s a business decision. If the mortgage has been used to buy an asset that is generating income, then you can keep paying the mortgage, and keep your Kiwisaver too.

Some final thoughts on mortgages and Kiwisaver

Kiwisaver was created to give New Zealanders more financial stability in retirement (with an option to help first-home buyers get on the property ladder – but that’s another story).

The pros and cons of using Kiwisaver to pay off your mortgage depend on whether you have other savings, what sort of lifestyle you have (or aspire to), the possibility of financial hardship, and whether you have other debts that should be tackled first.

These are questions a good financial advisor can address, once she or he has looked at your situation.

We simply suggest you have a plan. The great thing about plans is that they can change as your circumstances evolve.

And if your plan includes having the best possible mortgage for your needs, then we’re here to help.

‘Tis the season to blow budgets.

Mon, 17 Dec 2018 22:55:00 GMT

The festive season. A time to send out party invites, uncork the champagne, dine on delicious food, and shower those we love with expensive goodies.

All good fun but it comes at a price.

I’ve been thinking about this, not because I’m a Grinch – far from it! But when the family finances come under pressure, so do family relationships. The different ways you and your partner handle money can add to the strains of life, even before you add Christmas to the mix.

In my decades as a mortgage broker I’ve seen it all. From clients who get themselves into huge financial messes because they don’t understand how money works, to those who obsessively track every dollar.

You don’t want to be at either end of the spectrum here. Ideally, you want a life packed with good things but free of financial worries. And the key to this is a thoughtfully put together budget.

This is tricky territory when you and your partner have different attitudes towards money. If one of you is the easy-come, easy-go type, while the other frets about debt, then you are not equipped to have a cool-headed discussion about it. And it’s no good if one partner hands full control of finances to the other – that’s just storing up future problems.

You have to talk about it. Alternatively, you could talk to us.

Vanessa and I have developed a unique Budgeting Tool to work through all the issues. It covers your ongoing expenses, including money for hobbies and fun stuff, while paying down debt (including your mortgage).

We’re more than happy to take you through this process at no cost. We just want to see you on top of your finances, and on the path to being debt-free.

Join us on a one-day course to master your finances.

I would like to invite you to a one-day seminar early next year to set yourself up for a great year. Seats are limited so let me know if you’d like to take part.

Christmas may be the season for budget blowouts but let’s make sure you’re set up for a brilliant 2019.

Would you like to work with Sue to get the most from your money and achieve your life goals. Get in touch .

Sick children.

Mon, 03 Dec 2018 00:57:00 GMT

This is a difficult topic, because no one likes to think of children suffering life-threatening conditions. But it happens.

About 150 Kiwi children are diagnosed with cancer every year.
Starship Hospital has 200 beds - and they are usually occupied.
If your child were unwell, would you be able to continue working?

The insurance companies have thought about this, and they’ve come up with a good response. A Trauma policy could pay out as much as $250,000 for children under age 16, so you would be free to take as much time off as you needed to get through this difficult time.

Children’s Trauma Insurance can also be very affordable, from just $1 a month per $10,000 of cover.

Think of it as a natural add-on to your own Trauma or Critical Illness cover, so you’ll have the resources to cope as a family.

We’re always happy to review your insurance policies at no charge. Make an appointment .

4 tips to lift your mortgage game.

Mon, 03 Dec 2018 00:56:00 GMT

Continuing the theme of numbered checklists, here are four things you need to know about.

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.

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.

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!

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.

We’re always here to help you with home loans and all your personal finance questions. Get in touch.

7 questions to set you up for a fantastic 2019.

Mon, 03 Dec 2018 00:55:00 GMT

I’ve just returned from Sydney, where I took part in the last of my quarterly seminars with my mentor, Dr Fred Grosse .

Dr Fred has an interesting approach. Instead of treating the end of 2018 as a time for reviewing the year, he uses it to get a head start on the coming year. And a key part of this process is tackling seven thorny questions:

What is my three-year plan for life (including travel plans)?

We all need to avoid the trap of everyday distractions. What are my big, exciting goals? What am I doing to achieve them?

Have I done my reviews?

This includes wills, trusts, banking arrangements, insurances and expenses. Nitty-gritty stuff. But so important.

How much have I got in capital assets?

…and how much will I need in retirement?

Have I completed a health check?

Capital assets mean nothing if you’re not around to enjoy them. How are my bloods, teeth, eyesight and cardiac health? Have I had the recommended screenings for preventable conditions? What about health issues that run in families, such as diabetes and certain cancers?

Is there unfinished business I need to attend to?

This could be anything from jobs around the house to investigating the wishes and plans of aging parents.

Are there relationships that need healing? This one speaks for itself.

Have I completed my Chart of Accountability?

This is a tool Dr Fred has developed. It’s not something we can go into here, but stay tuned and we’ll explore this subject in more depth next year.

So what do you do now?

You find someone – perhaps Dr Fred, or perhaps another mentor whose message resonates with you. Someone who will help you clarify your life goals and hold you accountable to them.

And if you are interested in exploring these topics in more detail, I have a suggestion. Register now for my 2019 kick-start.

Would you like to take part in a one-day seminar in early 2019 to set yourself up for a great year? I invite you to contact me now.

I’ve just returned from Sydney, where I took part in the last of my quarterly seminars with my mentor, Dr Fred Grosse.

We all need to avoid the trap of everyday distractions. What are my big, exciting goals? What am I doing to achieve them?

This includes wills, trusts, banking arrangements, insurances and expenses. Nitty-gritty stuff. But so important.

…and how much will I need in retirement?

This could be anything from jobs around the house to investigating the wishes and plans of aging parents.

This one speaks for itself.

This is a tool Dr Fred has developed. It’s not something we can go into here, but stay tuned and we’ll explore this subject in more depth next year.

So what do you do now?

You find someone – perhaps Dr Fred, or perhaps another mentor whose message resonates with you. Someone who will help you clarify your life goals and hold you accountable to them.

And if you are interested in exploring these topics in more detail, I have a suggestion. Register now for my 2019 kick-start.

Would you like to take part in a one-day seminar in early 2019 to set yourself up for a great year? I invite you to contact me now .

‘Special events’ are an easy way to boost your cover.

Thu, 18 Oct 2018 02:36:00 GMT

What are special events? They’re the life-changing moments, like becoming a parent, starting a new job or getting married. They can also be less happy times like ending a relationship or seeing someone close to you die.

Special events are important for insurance policyholders, because many companies allow you to increase your cover without extra paperwork or medical checks. They give you the chance to bump up cover when you need it most.

Facebook is great for sharing good news, like weddings, babies, new jobs and kids starting Uni. We love seeing these happy events, because they provide an easy way to adjust insurance outside your annual review. But if we don’t know what’s happening, we can’t help you take advantage of the opportunity to increase your life, trauma, progressive care or total permanent disability cover. So make sure you keep us in the loop.

Please add us to Facebook – there’s a link below. And keep us in the picture when something big happens in your life. It could provide the perfect opportunity to ramp up your cover without the hassle of extra tests or paperwork.

We’re always happy to review your insurance policies at no charge

The secret to being mortgage-free.

Thu, 18 Oct 2018 02:34:00 GMT

It’s a boring word – budgeting.

Actually, budgeting isn’t boring at all. It’s beautiful. It’s the key to living a wonderful, happy life, where you spend money on the things that add value and bring you joy, while steadily paying down debt.

Or if you’re looking to buy your first home, budgeting will put you on the path to saving a viable deposit. That’s a great feeling, too.

I’ve been in business for 35 years and it’s been fascinating to see the way people approach budgets. I think millennials get a bad rap – many young people I know have a really good handle on their finances. But it’s also true that there are plenty of people (of all ages) who just live week to week.

There’s a tendency to blame schools but I think parents are the real key here. When I was 10 my parents planned a trip back to Greece to visit family and meet my grandparents, aunts, uncles and cousins for the first time. I was told I would need to save all my own spending money, so I gave up sport, got a weekend job and saved my money. It taught me a vital lesson at a formative age.

Do you have children who you would love to see on the path to home ownership? Are you a bit sick of never getting ahead? Vanessa and I have worked with a number of clients (thanks guys, you know who you are!) to develop a smart budgeting tool. It’s getting great results for the clients who use it.

Here’s the best part – there’s no cost. We’re happy to sit down with you, free of charge, to help you get a grip on your finances, and create a budget to achieve your goals.

We’re always here to help you sort out personal finances with the help of our free budgeting tool.

Is this the next ‘leaky building’ or ‘meth testing’?

Thu, 18 Oct 2018 02:30:00 GMT

Over the past decade or two, thousands of homeowners have been financially wiped out when they bought houses that were later revealed to be rotting from within. Others have seen their equity take a hit when P residues from dodgy tenants caused widespread alarm.

Now I’ve heard whispers of a new construction issue – asbestos.

Someone in the industry told me he was re-training as an asbestos inspector. Does he know something the rest of us don’t? It’s early days, but there is a precedent.

In 2015, the government of Australian Capital Territory (i.e. Canberra) released a list of 1,022 properties affected by asbestos contamination. The scale of the problem, and the risk of asbestos fibres floating free, meant piecemeal clean-ups weren’t feasible. So the ACT and Federal governments set up a $1 billion purchase and demolition scheme.

Swathes of houses were demolished. The empty sites were then re-stocked with brand new houses on smaller sections, and these were sold off to finance the cost of the scheme. If you were one of the unlucky homeowners, you were paid out by the authorities and required to vacate. Many family homes were destroyed, including some heritage buildings.

Just to be clear, I have no information that anything of this nature is brewing in New Zealand. However, a quick Google search will reveal all sorts of recent scandals involving fraudulent products that have entered the construction supply chain. Would you bet against the possibility of asbestos, or something equally dodgy, showing up?

So how can you protect yourself? First, get a reputable builder’s report on any property you’re looking to buy. Make sure the firm compiling the report has comprehensive Professional Indemnity insurance.

Ask the real estate agent if there are any known issues, and if in doubt, discuss things with your friendly lawyer.

As I’ve said before, your lawyer is there to protect you from yourself. Good legal advice may cost you money in the short term, but poor advice (or no advice) can have seriously adverse affects on your wealth.

Are you looking to get into the market this summer? Do you know someone who’s buying for the first time? Get in touch .

This could be a great offer – or a terrible one. It depends.

Mon, 20 Aug 2018 00:36:00 GMT

Did you know you can fix your life insurance premiums so you pay the same amount every year until the age of 80?

Imagine paying the same premium for 30 or 40 years. It could be an absolute bargain if you took out insurance in your early 20s. You’ll get the cover you need, and a few decades of inflation later, you’ll be paying peanuts for it.

So do we recommend this for all our clients? No, we don’t.

These policies costs more early on, so they may not be affordable for everyone at every life stage. While some of my clients end up getting dirt-cheap cover years down the track, others may not need much life cover in old age. Perhaps they’re on track to be debt-free earlier, so they won’t need a mortgage backed by life insurance. They’ll end up cancelling the policy just when it becomes really cheap.

It all depends on your circumstances and personal goals. Insurance has to be considered in the context of your mortgage and life plans, so it pays to look at the bigger picture.

We’ll take the time to fully understand we’re you’re at (and where you’re headed), and only then will we recommend a policy.

Even one that costs peanuts in the long term.

I’m always happy to review your insurance policies at no charge. Make an appointment .

Beware of the mid-40s trap!

Mon, 20 Aug 2018 00:31:00 GMT

A weird development this winter.

Mon, 20 Aug 2018 00:26:00 GMT

Winter is normally our quiet time. Most people aren’t looking to buy a house so they don’t go shopping for a mortgage either. But this winter has been different.

I have lost count of the number of phone calls and emails from people who want me to “just have a look” at their finances. From young couples to those looking at retirement, they feel financially frustrated. They’re not in hot water but they feel they’re just living from month to month.

What’s behind this? I have no idea – although the recent talk of recession or house price crashes may be playing on a few nerves. Many are in a good place moneywise, and it’s been great to see how many younger clients are financially savvy. But there’s a real sense that they could be smarter with their money.

This is a good thing. Sitting down with an outsider and going through your finances line by line is a fantastic way to identify opportunities to trim costs. You won’t be worse off – and you may even be better off – if you find ongoing expenses that could be replaced with a superior, cheaper option.

Here’s an example from my own life. By reviewing my own finances I’ve identified monthly savings of $520, primarily from my broadband and telco bills. I’m appalled that the telcos don’t proactively contact customers to let them know they could have a better plan at a lower cost. You have to find these savings yourself – so that’s what I’ve been doing (and helping clients to do).

Mortgage debt is a big deal too. Are there opportunities to refinance or fix at a lower rate? If so, we can talk about that, but in any case, you’ll be reassured you’ve done due diligence on your loan.

Here’s the bottom line. We can get so caught up in daily life that we let our finances drift and end up paying a hefty price years later. My goal is to help you become mortgage-free as soon as possible, so don’t be shy about reviewing your finances. It’s not weird and it’s not hard.

I’m always happy to meet at no charge and look over your finances, even if you’re not looking to buy a property. Or do you have a friend who could do with a helping hand? Send Sue an email .

PS. Some readers have asked if they can forward these emails to friends. Feel free to do just that. In fact, I encourage it!

Guest article: Goal setting is the key to getting where you want to be.

Tue, 17 Jul 2018 01:10:00 GMT

Many of you will know of Dr Fred Grosse , who has mentored me for a number of years. Last year we ran a survey asking what sort of articles you would like to see. ‘More articles from mentors and property experts’ was high on the list, so we shoulder-tapped Dr Fred to share his wisdom

Here’s a thought-provoking piece he has kindly provided:

Goal setting is the key to getting where you want to be.

First comes the dream – ‘I’d love to climb Mt Kilimanjaro,’ or ‘I want to be rich,’ or ‘I’d love to be fit and have a six-pack.’ It’s a comforting fantasy, with no real form or consequences.

So what’s the difference between having a dream and setting a goal? And how do you move from the dream to the creation and achievement of a goal?

Setting a goal is the first step towards making a dream come true. A goal is a dream or desire, defined within different parameters such as time frame, quantity and quality and with an in-built expectation of realization. Take the dream of climbing Mt Kilimanjaro, for example. Making this dream a goal would transform “I’d love to climb Mt Kilimanjaro” into something like: “My goal is to climb Mt Kilimanjaro, safely, in August 2019, with a guide and two good friends and to drink Dom Perignon at the summit.” Can you see the difference?

When we stay at the dream level we’re maintaining ourselves in a state of limbo.

It means accepting what comes to us in life, and if we don’t get to climb that mountain we say, “Oh well, maybe it just wasn’t meant to be.” I’m sure you’ve heard that from people who’ve expressed their dream to be the best performer in their peer group, and then, after putting no form to the dream, have made no behaviour changes and sighed, “Oh well” at the end of another slow year. Once a person takes on responsibility for making a dream a reality by stating their goal, and giving some thought as to when and how the dream is going to take form, then other, invisible, forces are set in action which will support and guide them (and that’s another story in itself).

There’s another very important part to the process of goal setting, and that’s the part that will have the most impact on determining whether the dream that became the goal will indeed manifest as reality. This is what I call, “Making commitments towards the fulfilment of the goal.”

The power of making commitments.

A commitment is a step towards achieving a goal that is completely within our own personal power and is not dependent on another person or external forces. Its purpose is to carry out an activity we know is essential for a goal to be achieved.

What’s the major difference between a commitment and a goal? In my terms, a commitment is an action that we entrust ourselves to do, with an obligation that is as powerful as making an oath. In the olden days, when you made an oath you said, “May God strike me dead if I don’t do this”- it was a do-or-die thing.

For example, if we were to set a goal to climb Mt Kilimanjaro in August 2019, what would be some of the activities that we might have to undertake or set in action, in order to find ourselves at the base of the mountain ready to go?

One of the first issues might be the level of fitness required to undertake such an adventure. An appropriate first commitment could be to consult with a climbing/fitness expert by a certain date and to map out a programme for achieving the required fitness.

Subsequent commitments could then be around going to the gym a certain number of days each week at a specific time each day to carry out specific physical exercises, committing to the diet most appropriate to maintaining the fitness, getting 8 hours of sleep a night, and getting information on related issues such as altitude precautions, inoculations, travel details, visas.

Commitments must have consequences – and rewards.

You can make commitments and then still fail. Why does this happen, time and time again?

It’s because we don’t set any consequences in place for when we lapse and fail to meet our commitments. Nor do we provide for any rewards when we do fulfil them. You’ll hear me say time and again, our soul is our most important ally, whatever we’re doing. So, setting in place rewards and consequences when we make commitments towards fulfilling our goals, is an important way of getting the soul alongside.

Some examples of rewards to help you stretch towards a goal could be buying a new designer outfit, private coaching to improve your golf game or fishing skills, or buying a fine bottle of wine that you wouldn’t ordinarily buy for yourself.

The purpose of a consequence is to put in place something you have to do, if you don’t fulfil your commitments, which would be unthinkable. It could be buying that gorgeous designer outfit and then giving it away immediately, sending your competitor the voucher for the coaching programme with a note from you saying he/she is much better than you, buying the fine wine and having to pour it down the drain in front of the people you had planned to share it with!

Your soul ally will make sure that there’s no way you’re going to have to clean the neighbour’s car for a month, or write a check to a former spouse as a consequence of not doing what you committed to. So, challenge yourself during this process and release the power of the formula!

Dr Fred Grosse is an internationally recognised coach and mentor to some of the highest performing real estate agents in the world. He is also a sought-after keynote speaker at national and international conventions. To find out more visit his website at: www.drfredgrosse.com or call (602) 956-6893.

Who’s more important – you or your pet?

Mon, 02 Jul 2018 03:05:00 GMT

When working with clients I spend a lot of time going over budgets to get a clear picture of their finances. I’ve been impressed recently by the number of first-time buyers who are really focused on what they’re spending. This is great!

I’ve also noticed a lot of people – not just first-time buyers – who are devoting a significant chunk of their monthly income to things like pet insurance.

I understand why they spend this money. Pets are a huge part of our lives, and their health costs can be expensive. But I have to question the priorities here.

If you are paying for pet or contents insurance, but haven’t taken out income protection or trauma cover, you’ve got things the wrong way round. An income protection, health or trauma policy is vital because it gives you the ability to stay afloat if you can’t work.

Look at it this way. If you’re not able to earn an income, you won’t be able to feed your pet or keep a roof over its head, let alone pay for its cancer drugs. First things first!

I love my dog – many of you know that Bella is an ever-present part of my life. But people have to be Number One! Before you sign up to that pet insurance policy offered by your friendly local vet, make sure you protect yourself.

Do you have income protection or trauma cover? If not, make an appointment

“I’m young – it won’t happen to me.”

Sat, 02 Jun 2018 03:43:00 GMT

Youngish and healthy? I have some sobering news for you.

More than 20% of claims for disability income protection with a major New Zealand insurer were paid out to policyholders under the age of 40.

What’s more, 28% of claims for people in this age group were for ‘musculo-skeletal injury.’ (Read: bad back.) Yes, there are significant numbers of 30-somethings who can’t work due to a bad back.

Think cancer only happens to old people? More than 40% of claims for life insurance involving people under 40 were for deaths from cancer.

I don’t want to be a downer. You’ll probably be fine. But what if lightning strikes, and you have to leave the workforce for a lengthy period, or for good? You’ll want a rock-solid insurance policy to pay out.

The best time to take out insurance is when you’re young and healthy. You’ll lock in cover with no exclusions because you won’t have pre-existing health conditions. If you haven’t done so – do it now.

Whatever your age.

I’m always happy to review your insurance policies at no charge Make an appointment

Think you can afford it? The bank might not agree.

Sat, 02 Jun 2018 03:42:00 GMT

Every week I meet clients who proudly tell me, “I’ve done my numbers and I can afford it.”

Really? The bank may not agree.

That’s because banks in New Zealand operate under the Responsible Lenders’ Code, which means they look at all your potential liabilities and assume the worst case.

Say you have home loans fixed for five years at 5% interest p.a. The bank will assess these loans at 7.25%. They will also look at all your credit cards and assume you have maxed them all out. It’s called sensitivity analysis, and it’s a way for banks to assess your ability to service debt in the foreseeable future.

When I take clients through this they often say, “That’s ridiculous – my loans are fixed for five years at 5%. Why assume the worst?”

It doesn’t matter. That’s the rule the banks apply, under the guidance of the Reserve Bank, which is determined to minimise the risk of a credit blowout.

Here’s the way forward. Minimise short-term debt. Don’t take out those Gem Cards, Q Cards or other consumer debt. Decline the beguiling offers to increase your credit limit. Maybe cancel a card or two.

If there are young adults in your family hoping to buy property, let them know that debt is not their friend. Take a long, hard look at any student loans.

As my mentor Dr Fred Grosse says, “This too will pass.” The banks will eventually change their lending rules, but for the time being their hands are tied. So be prepared.

Are you looking to restructure your mortgage or apply for a new one? Make sure you talk to us first. Make an appointment .

Putting things off, Part 2.

Sat, 02 Jun 2018 03:38:00 GMT

Last month I talked about making your will, and how it’s human nature to put it off. Sadly, procrastination isn’t limited to legal documents that set out your future wishes. It can affect your wellbeing in the here and now.

Want a real-life example? I know someone who received bad news about a leaky building she owned. The bill to fix it was estimated at $150,000…five years ago.

She put off making a decision. Now she’s faced with a $1 million bill.

It happens every day. I see clients whose businesses are going through a “quiet period” or “a bit of downtime.” They shy away from the reality of a reduced income. Instead, they put bills on the plastic, increase their credit limits, take out new cards, and somehow end up with $40,000 of high-interest debt. It’s not pretty.

Others are gripped with anxiety when they see an envelope with the bank’s logo. They know it contains bad news so they stuff it in the drawer unopened. What happens next? The bank has a non-responding debtor. Eventually it has no option but to call in the debt. This is a shame, because in my experience most banks will respond sensitively to a customer who is struggling but willing to make an effort.

This talk of debts and problems may be downbeat, but don’t worry, I have good news. If you resist the tendency to procrastinate you will be surprised at what turns up. I can confirm this from my own experience.

A property I own has a geotech land issue. This could be serious and it’s something I need to raise with Council. I know this will be a battle, with potentially eye-watering sums at stake.

What’s worse is that I have no expertise in this field. I don’t know where to begin. Where can I find help?

I turned to Google but that didn’t help. I was on the point of giving up, but then I remembered a lawyer I had once chatted to. I gave him a call. He couldn’t help but referred me to another solicitor. Scanning the information on this second lawyer’s website, I saw some details about a case involving a close friend. I called that friend. She then referred me to a barrister who turned out to be a bona fide expert in this field.

I contacted the barrister, and now we have a plan for tackling the problem. I can’t tell you how relieved I felt once this weight had been lifted.

Thank you for staying with this story. I appreciate it’s been a bit of a saga. The point is that solutions aren’t always easy to find but you have to get started. The motivational thought for me is, “If I don’t get deal with this now it will be 10 times more difficult later.”

I don’t like conflict, and like most people, I will put off problems if I can. But I promise this: You will be much happier if you tackle the issues you’ve been putting off. The universe has a habit of suggesting solutions to those who seek them out.

Just do it.

PS. Someone asked me if it was OK to forward this newsletter to a friend. Please do! I encourage it.

Got a question about property or life in general? Send Sue an email .

Drafting a Will, some points to consider…

Mon, 28 May 2018 03:59:00 GMT

Below is a handy advice sheet from Steindle Williams Legal http://www.swlegal.co.nz on what people need to provide their lawyer when writing their wills:

Please also advise:

Thousands of dollars wasted on cover that never would have paid out!

Wed, 02 May 2018 03:33:00 GMT

This happens more often than you might think.

I recently reviewed the insurance polices held by a couple who had a change in their financial circumstances. I noticed they were paying income protection premiums for a hypothetical income that was much higher than they had ever actually earned.

If they ever tried to claim on this policy, they would not receive such a high payout. The insurers would have asked to see their real incomes and then base the payout on those figures.

Why pay thousands of dollars over a decade on insurance premiums to cover non-existent income? I suspect poor advice at the time the policy was sold. I’m not naming names, but the policy in question was sold by a bank.

A good adviser will want to ensure you get value from your premiums, and that means recommending a policy that will actually pay out. So think hard before you sign on the dotted line of an insurance policy that is casually placed in front of you. And don’t be afraid to ask for regular reviews of your insurance.

Don’t put it off. Book an insurance review now.

I’m always happy to review your insurance policies at no charge Ma ke an appointment

Don’t fall foul of anti-money laundering rules.

Wed, 02 May 2018 03:32:00 GMT

Are you a crook? Of course not.

But you could still end up in a sticky situation thanks to Anti-Money Laundering (AML) legislation.

A bit of background. Since 2015 New Zealanders have been obliged to follow global rules designed to stop criminals and terrorists sending money through the financial system. The gist of it is that you must be able to prove your identity and reside at the address you say you live at.

If you can’t do this, the banks will not accept or release money on your behalf. When you’re arranging a mortgage, this matters.

If you’re like me, and live in a house owned by a family trust, your name may not be on the bills sent to that address. The same applies if your bills are mailed to a PO Box.

The solution is to make sure you always have at least one regular invoice – be it a telco, utility or rates bill – in your own name and mailed to your home address. Then make sure you have some recent bills on hand when you apply for a mortgage. This helps the bank comply with AML requirements. (You will also need another form of ID such as a current passport or driver’s licence.)

My second tip when arranging a mortgage is simple: don’t have the settlement date at a time when you’ll be out of the country. I am continually amazed at the number of clients who breezily tell me they’ll be in Fiji when the settlement occurs. You need to be on hand to manage the paperwork and deal with any last minute snarl-ups. The simple solution is to shift the settlement date so it takes place before or after your holiday.

One last tip. You can register and get your ID validated at the NZ government website RealMe . Do it now, and you won’t have to run around at the last minute when the bank asks to see your ID.

Once again, as Nike says: Just Do It!

Are you looking to restructure your mortgage or apply for a new one? Make sure you talk to us first. Make an appointment .

Making a mountain out of a molehill.

Wed, 02 May 2018 03:26:00 GMT

It’s only human to avoid irksome tasks, such as updating your will. I know this all too well!

I was in my late teens when I made my first will. Entering fulltime employment and taking my first steps into property ownership, I thought I should leave some instructions in case I was hit by the proverbial bus.

Over the next few decades I went through many changes – getting married, getting divorced, starting a business and acquiring assets. At some point I should have updated my will but I kept putting it off.

It was Dr Fred Grosse who brought the issue into focus. I still giggle to myself when I think of the seminar where he told us to put our affairs in order. What was that all about?

So I put off reviewing my will for two whole years. Who wants to contemplate their own passing when they’re in the middle of life? But Dr Fred had a point. A will clarifies the legacy you want to leave and helps bring focus to your life. So finally, I dug out my old will, photocopied it, crossed out the stuff I wanted to delete, and added some new bequests and instructions.

I scanned the scribbled-on document into my computer and emailed it to my lawyer. Job done! Then I wondered why on earth I had procrastinated over this simple task for so long.

That set me wondering. How many other things do we put off for months or years? Just last month I sat with a client who needed to contact his phone company to sort out a billing issue. The thought of being stuck in call centre purgatory was putting him off. Finally he made that call – and secured a $2,500 refund. I’m proud of him!

In the words of Nike: Just Do It! So if you’ve been avoiding making or updating your will, be more sensible than me, and don’t procrastinate. My lawyer friend Megan Williams of Steindle Williams has created a simple tip sheet to help you pull together all the information your lawyer needs. Check it out here

Don’t delay. Just Do It!

Got a question about property or life in general? Send Sue an email .

How $46 saved me $3,425.

Mon, 02 Apr 2018 03:23:00 GMT

In last month’s newsletter I mentioned the need for travel insurance. I don’t sell these policies (so I have nothing to gain from promoting them) but I strongly believe you should never leave the country without one in your luggage.

Last month I found out just how important it can be.

Heading to Sydney for a week with my partner, I reminded him several times to arrange travel cover. Eventually I gave up and took out a policy for myself. Then we had a week in the bright lights and sunshine of Sydney. All went well, right up until we were preparing to board the flight back home.

We had cleared Australian customs and immigration and were standing in the tax refund area of the airport when, without the slightest warning, I fainted. An ambulance was called and we were whisked away to the nearest hospital. Our luggage was taken off the plane and we missed our flight.

Thankfully, my fainting spell was not a serious health problem. But we still had to check into a hotel and arrange a new flight at twice the cost. By the time our luggage was tracked down, one night had become two. And then the kicker – a $875 bill for the ambulance.

The total bill came to $3,425 for the hotel, ambulance and new air tickets, all covered by my $46 travel policy. All I can is that I’m thankful it was me who fainted, not my uninsured partner.

This is why travel insurance is a must-have. Many Kiwis don’t bother when travelling to Australia, as hospital costs are covered by the government. But don’t risk a big loss – always travel with insurance!

I’m always happy to review your insurance policies at no charge make an appointment

Thinking of being a guarantor? Be careful.

Mon, 02 Apr 2018 03:22:00 GMT

I recently talked to someone who was looking to buy a property in New Zealand. The budget was tight, but no worries – their parents in Australia were happy to go guarantor for the mortgage.

Then I explained what this actually meant. There was a sudden lack of enthusiasm.

The New Zealand government spells it out. A guarantor is “anyone who promises to be responsible for the debt of a borrower. They make the promise to the lender and if the borrower doesn’t pay what is owed, the guarantor may be called on to pay, or the lender may repossess any of the guarantor’s property listed as security for the debt.”

So if you ask a bank to give you a mortgage with a guarantor backing up the loan, here’s what will happen. The bank will need the guarantor’s own property as security, with the right to sell it if you bail on your loan repayments. They will ask your guarantor for a list of their assets, liabilities, income and expenses in order to check creditworthiness. It’s pretty heavy stuff.

It’s good when families back each other up, and it may seem tempting to help a younger relative by guaranteeing his or her loan. But there are better ways of achieving the same result. Talk to us.

Are you looking to restructure your mortgage or apply for a new one? Make sure you talk to us first. Make an appointment .

Property cycle? Get real.

Mon, 02 Apr 2018 03:16:00 GMT

You may have heard so-called property experts, coaches and gurus of various stripes talking of the ‘property cycle.’

These people – who usually have an expensive course, seminar, book or mentorship to sell – like to say there’s an infallible cycle that dictates when you should jump in or out of the market. They’re wrong.

If anyone asks me whether now is a good time to buy, I have a stock answer. “You buy when you are ready,” I say.

My observation based on 35 years of buying property and advising clients is that people sell houses because they need to, not because there’s a cycle that controls their decisions. Here are the real-world reasons people sell houses:

People sell houses for these reasons, not because it’s ’12 o’clock in the property cycle’ or some other arcane reason.

Buyers are driven by similar motives, plus the need for first-timers to set up home. This is the stuff of life and it goes on year after year.

So is now a good time to buy? If you’re ready to buy, then of course it is. You will need a deposit, of course, and you’ll need to do your homework on the areas and types of property you can afford. In my research for Realyeti I’ve come across some stunning properties just outside Auckland, where a young family or first-time buyer could have an excellent lifestyle. One of these might be ideal for you – or perhaps you have different priorities.

Whatever the case, you should put in a bid because the property meets your needs, not because some self-appointed expert says there’s a property cycle that tells you when to buy.

Cast your net wide and see what you come up with. We’ll be here to help when you need to finance it.

Got a question about property or life in general? Send Sue an email .

Guest article: Be good to yourself. By Dr Fred Grosse

Wed, 28 Mar 2018 01:21:00 GMT

I don’t sell this insurance – but I recommend it

Fri, 02 Feb 2018 03:13:00 GMT

Travel insurance is a must-have. It’s on my pre-travel checklist, along with packing my passport and booking Bella in to stay with her favourite auntie.

Even if it’s just a visit to family across the ditch, I firmly believe you should never board an international flight without a good travel policy in your luggage.

Many people think they’ll be okay because of reciprocal entitlements with foreign countries. But if you’re discharged from a Sydney hospital and unable to fly for weeks while you recover, you will be facing hefty expenses. Givealittle is a terrible substitute for a good travel insurance policy.

As you know, I’m big on minimising debt. For a very reasonable premium, you can avoid the risk of a crippling debt caused by misfortune overseas.

So while I don’t offer travel insurance, I reckon it’s one policy you should never skimp on. The world is a wonderful place – make sure you explore it safely in 2018.

Why not start the year by reviewing all your insurances? I’d be happy to take a look at any policies you have and provide a no-obligation opinion. make an appointment

How the Responsible Lenders Code could derail your loan application

Fri, 02 Feb 2018 03:10:00 GMT

All banks in New Zealand must adhere to the Responsible Lenders Code. It’s a set of rules designed to stop borrowers taking on loans they can’t afford to service.

So far, so good. However, I’ve noticed that many financially solid citizens are finding their mortgages declined because of the way these rules are applied.

It’s to do with affordability. When assessing your loan application, the bank must take into account all your day-to-day expenses – from groceries to insurance premiums to holidays. Child maintenance, school fees and credit card limits all come under scrutiny.

This last item trips up many people. They have been offered higher credit limits over the years, and the Code now forces banks to assume you’ve maxed out your cards. Even if you don’t carry any credit card debt, simply having a card with a high limit will be counted against your mortgage.

There’s also something called Sensitivity Analysis. Think of it as stress testing. The bank applies a hypothetical higher interest rate against all your debts, including the proposed mortgage. If this puts your finances underwater they will reduce the amount on offer.

Fore-warned is fore-armed. If you’re looking to buy a property, talk to us early in the process. We can help you get things in order, so your loan application doesn’t fall foul of the Responsible Lenders Code.

Are you looking to restructure your mortgage or apply for a new one? Make sure you talk to us first. Make an appointment .

We’re back – and so are the first homebuyers.

Fri, 02 Feb 2018 03:06:00 GMT

It’s been a proper summer break. I enjoyed a relaxing staycation, catching up on excellent Netflix documentaries such as ‘Dirty Money.’ Louise also had a stay-at-home summer, while Bevan took a good long break with his family. Vanessa went camping with hers.

Now we’re all back – and so are the first homebuyers.

As you know, they’re absolutely vital to the property market. No one can move up the property ladder if there aren’t new homeowners getting onto the bottom rung. 2018 has seen a rash of mortgage applications from young buyers, and it’s interesting to speculate why this might be.

Here’s my take. The government has very little to do with it, and neither does the so-called property cycle. What has changed since late 2017 is the easing of Reserve Bank rules. These mean that banks can only place a small portion of their lending with borrowers who need loans over 80% of the property’s value.

Until recently, only 10% of loans were allowed in this low deposit category. Now the Reserve Bank has relaxed the chokehold slightly – to 15%.

It’s a small tweak, and in my opinion it only makes a tiny difference. The real change is that house-hunters took a break from the market last year while they waited to see how things would pan out. Many took the opportunity to save hard and get their finances into good shape. Now they’ve decided to jump in and buy that long-awaited first home.

So it’s been a busy first month processing loan applications, and now it’s time to take off. When you read this, I will buzzing from my Sydney catch-up with Dr Fred Grosse. Four times a year, I join a group seminar that helps us all stay focused on getting the most from our lives. It’s the most effective way I know of staying on track to achieve your goals.

But enough about me! I’m keen to hear what’s happening in your life. What would you like me to cover in this newsletter in 2018?

Got a question? Get in touch .

What’s happening with house prices?

Mon, 02 Oct 2017 02:59:00 GMT

Many of you have asked my opinion on this. The answer is I honestly don’t know.

Despite the election, the fundamentals haven’t really changed. We still have a growing population. Housing supply is not keeping up with demand. The Reserve Bank has already taken some of the heat out of the market by requiring first-time buyers to have a 20% deposit. Investors have been forced to find 40% deposits.

In my opinion, the local market is more vulnerable to offshore events, such as a global leap in interest rates, than anything the New Zealand government might do. But here’s a possible pointer to the future.

In early October I attended an auction in west Auckland to support a client who was bidding. The property was very ordinary – just a pair of tired-looking houses with no outstanding qualities. The price expectation was under a million.

The hammer fell on a winning bid of $1.205 million dollars. I was astounded.

With more than 30 people at the auction, huddling under umbrellas on a miserable spring day, it was clear that buyers were back in the market. I can’t tell if the interest came from offshore, but who knows? The latest figures from Barfoot and Thompson suggest that house prices are not slipping – if anything they’re moving sharply upward.

So what are the implications for homeowners? My advice is to be wary of selling a house in Auckland and expecting to get back into the market at a later date. You may be left behind.

If you’re a first-time buyer or planning to move, the fundamentals still apply. Strip out wasteful spending, save all you can, and don’t commit to a house purchase until you’ve got finance lined up

Above all, talk to us first. It costs you nothing, and it could save a lot of extra expense and heartache later on.

Are you looking to change your mortgage or apply for a new one? Make sure you talk to us as soon as possible. Make an appointment .

A spring clean-out can bring good things your way.

Mon, 02 Oct 2017 02:56:00 GMT

The days are getting longer and the garden’s looking greener. I find this the ideal season to tidy up around home and clear away clutter.

Many people pay good money for a storage lock-up to hold their surplus possessions. I follow a simple mantra instead: Donate it, dump it or sell it.

Will someone else get good use out of something you no longer need? The City Mission or another charity should be your first port of call. (But bear in mind they have their own requirements, so my size 6 shoes are not on the City Mission’s wanted list.)

Is it broken or obsolete? Look to recycle it, or send it to the dump as a last resort.

Could you turn it into cash? Put it on TradeMe. Even if you advertise that tatty couch for a dollar reserve, and the winning bid is $1.50, then at least you’ve found someone to haul it away.

More often than not, stuff I thought was junk attracts keen buyers. I’ve recently sold old headphones, clothing and a bike. Someone else got a bargain, and I had the joy of letting go.

And that’s what it’s all about, really. To move forward in life, sometimes we need to let go.

Have the kids moved out? Are you thinking of shifting house in the next year or two? Don’t hold onto surplus stuff until you run out of time. Donate it, dump it or sell it now. The cash you raise can be used to pay down debt or treat yourself to something you really want.

In my case, an upcoming reclad means I’ll be moving out some time in the next year. My spring clean has lightened the load, raised some cash and uncluttered my life. Maybe you could do the same.

Would you like to find out more or work with Sue as a mentor to help achieve your goals? Get in touch .

The worst possible insurance policy.

Wed, 02 Aug 2017 02:53:00 GMT

It’s called Givealittle.

I have been appalled recently to see stories in the media of well-know people who have died unexpectedly, and the response of their grieving families has been to set up a web page asking for donations.

No one should ever be in this position. I mean no disrespect to the bereaved but it is sad to think that people who have lost someone dear to them should be driven to seek anonymous gifts from the public.

How has this come about? In my experience, it’s often because people don’t know what their insurance actually covers. Perhaps they have turned a blind eye to letters from their insurance company, and in particular arrears on policies that subsequently lapse. Or perhaps they’ve simply neglected to ask questions.

I frequently receive phone calls from clients who are in a specialist’s clinic, asking whether their policy covers the expensive procedure they need. I don’t mind dropping everything to check but surely it’s better to be fore warned? Life insurance, income protection and health policies can be confusing to understand in all their details, so it’s best to have a firm grasp on what you’re covered for, before you actually need to claim. That’s where we come in.

We keep all the policy information for our clients on file and are always happy to explain it. Even if your policies were set up by another adviser we’re happy to keep the details on record and will share it with your loved ones in the event of an emergency. Just make sure they know we are your broker so they can call on us for assistance in your moment of need.

If you haven’t done so already, get in touch. We’re here to help – no obligation.

Have you reviewed your insurance recently? If not, make an appointment

First time buyers: Is this your moment?

Wed, 02 Aug 2017 02:50:00 GMT

The property market has entered an interesting phase. I’m told the volume of houses sold in central Auckland is 30% lower than at the same time last year. In South Auckland the numbers are 50% lower.

The upcoming election will be a factor in this sales pause, along with a general climate of uncertainty. Some people are wondering whether interest rates will move upwards. It seems buyers and sellers are sitting back to see what happens.

If you are a first-time buyer – or the parent of one – winter 2017 could be the ideal time to get into the market. There’s a lot less competition now, so you’re unlikely to be outbid in a runaway auction process. The vendors in the market right now may be keener than previously to sell to a buyer who has his or her lending lined up.

You will also be viewing houses in midwinter conditions; in other words, when they’re at their least appealing. Without the distractions of sunny days and indoor-outdoor flow, you’ll be able to see if it’s a home where you could enjoy living all year round.

Right now, you can also lock in a pretty good interest rate. While there have been hints of an upward movement, there is still lending available at rates that are very competitive compared to the long-term average.

As always, the key is to talk to us first. Line up your finance before you commit to a purchase. We’ll make sure everything’s sorted so you can go house hunting with confidence.

Are you looking to change your mortgage or apply for a new one? Make sure you talk to us as soon as possible. Make an appointment .

If you only focus on what’s in front, you will crash.

Wed, 02 Aug 2017 02:45:00 GMT

I have just returned from a few days in Sydney with my mentor Dr Fred Grosse . A group of us meet regularly throughout the year with Dr Fred, with a small part of the seminar that involves focusing on our goals.

A winter session with your mentor is a great way to escape the midyear doldrums. What’s awesome about these group catch-ups is the way we all share the highlights of our lives since we last met three months earlier.

While you might assume people at a business seminar would frame their achievements in terms of financial or material milestones, I’ve noticed it’s the magic moments with friends and loved ones that are most important to us. Sharing our highlights is also a great way to learn about places and experiences that we might not hear about otherwise.

This has certainly been the case with me. Reflecting on the last few months, my personal highlight was a trip to Queenstown. Fun in the snow, you might think – but that’s not what stands out. Instead, I found myself looking back at something spontaneous – an afternoon go-karting at the Highland Park track.

Racing round a track isn’t really my thing as I tend to get motion sickness. But this time I found real joy in simply competing and pushing myself to the limit. I was thrilled to come second in the go-kart race. Ok, there were only two people racing, but it was a lot of fun!

Thinking about it, the buzz came from pushing myself beyond what I’d normally do. Racing one-on-one in friendly competition, you find yourself looking to push the boundaries. In those adrenaline-fuelled moments I realised you have to look ahead and anticipate the corners, accelerate at exactly the right time and choose the right line before you drive it.

In short, you have to look way ahead. If you just keep your view narrowly focused on the area in front of your go-kart, you’ll be caught unawares by a twist in the track. And you will crash into the wall.

It’s a pretty good analogy for life, isn’t it? Goals have to stretch us beyond our normal limits, and they require us to lift our eyes beyond what’s immediately in front. At first it’s a bit scary but then it’s exhilarating. And then you find yourself going faster and further than you ever thought possible.

That was the magic moment that helped me re-focus my energies during the depths of winter. As I said, it wasn’t about money or material success but good times spent in good company.

Now might be a good time to ask yourself: When was the last time you sat down with the special people in your life and asked them about their magic moments? The answers could be rewarding.

Would you like to find out more or work with Sue as a mentor to help achieve your goals? Get in touch .

Accelerated Cover vs Stand Alone

Sun, 02 Jul 2017 02:44:00 GMT

Choosing Accelerated Cover for your insurance can help you become mortgage-free faster. Here’s how.

When you take out a policy such as Life, Income Protection or Trauma, you can opt for Accelerated Cover or Stand Alone. Let’s say you have $550K of Life Insurance and $100K of Trauma Insurance.

With Accelerated, if you need to claim on your Trauma cover, then the amount paid will be deducted from your Life cover. So any subsequent payout on your Life Insurance would be $400K. As a quid pro quo, your premiums will be lower, because you’re not doubling up on cover.

This can be a great option if you use the money saved on premiums to reduce your mortgage debt. You could become debt-free much earlier and save a significant amount in loan repayments while still having the peace of mind you get from insurance.

It’s a personal decision, and we can help you work through all the options. The goal is to make sure you have the right policies for you, for now. And if your circumstances change, we’ll be there to help you deal with them.

Have you reviewed your insurance recently? If not, make an appointment

Your bank doesn’t hate you – it just feels that way.

Sun, 02 Jul 2017 02:34:00 GMT

There’s a complaint I keep hearing. It goes like this:

“I’ve been a loyal customer for 30 years, but when I asked to change my home loan, the bank said no. What’s the matter – don’t they value me?”

Your bank probably does value your business, but the decision is out of its hands. Blame the Reserve Bank instead.

The Reserve Bank is the government authority that controls all banking in New Zealand. For several years it has been worried about levels of debt in the economy. To avoid a crash it has imposed tough rules on all lending.

As a result, your bank may have its hands tied when you apply for a new loan or a change to your existing one. It might not be able to grant your request for a switch to interest-only. It might turn you down for borrowing on a rental property, despite having lent large sums for your previous investments.

The solution is simple. Talk to us early.

If there’s a change in your life, such as going down to one income, make sure you let us know before things become critical. It may be possible to alter loan terms or make other changes, but we might need to consider a range of options. Don’t leave it until the last minute, and then get upset because your current bank says no.

There’s almost always a solution, but it may take some expert lateral thinking and restructuring. That’s what we’re here for.

Are you looking to change your mortgage or apply for a new one? Make sure you talk to us as soon as possible. Make an appointment .

What do a pedicure and a three-course dinner have in common?

Sun, 02 Jul 2017 02:21:00 GMT

They’re both things you wouldn’t indulge in every day – but once a fortnight feels like a real treat.

Why does this matter? Because having something you can look forward to is one of the keys to staying on track to achieving your goals.

Last month I talked about the concept of 10s, i.e. the small daily moments you should build into your routine to make every day a ’10 out of 10 day.’ This is a concept my mentor Dr Fred Grosse has instilled.

But we need more than those daily 10s to energise us. We need something that Dr Fred calls ‘25s.’

A 25 is a fortnightly highlight. It can be anything at all, but it must be something you anticipate with pleasure – and something you wouldn’t appreciate so much if you did it every day.

A pedicure, a fantastic meal at a restaurant, a morning on your kiteboard or mountain bike, a meet-up with a mate at the Film Festival. They can all be 25s.

25s really come into their own during winter. If you’re someone who loves skiing, then winter will be your happy time, but I find many people struggle to stay positive when they’re trudging through drab, rainy days. Having a 25 in your diary is a powerful way to boost your mental health and keep operating at your best.

Volunteering with Lifeline has only underscored the importance of this simple but profound concept. I’ve learned that one of the foundations of good mental health is the ability to look beyond the everyday and find joy in anticipating the future. By consciously building in a regular (but not too frequent) reward, we empower ourselves to grab opportunities and stay focused on achieving our long-term goals.

And isn’t that what life is all about?

Would you like to find out more or work with Sue as a mentor to help achieve your goals? Get in touch .

Finding gold when it’s dark and cold.

Fri, 09 Jun 2017 23:36:00 GMT

The midwinter blues are real. The calendar confirms it.

We’re now well into June, and Kiwis have returned to work after the last long weekend until October. Unless you’re lucky enough to be planning some fun in the snow or a break somewhere tropical, for most of us, the next four months of winter are often a grind.

It can be hard keeping your spirits up – and focusing on achieving your long-term goals – when the days are wet, dark and cold. So how do you hang onto your passion for life and stay in the best mental shape? Here’s a tip from my mentor Dr Fred Grosse.

Dr Fred tells us to focus on our ‘10s.’ That’s shorthand for the little things we can do to make every day a ‘10 out of 10 day.’

It’s about making time for the simple, life-giving activities that provide pleasure every day. If you love animals, make sure you play with your cat or take the dog for a walk. If you need the endorphin boost of exercise, make the gym a regular habit. Love music? Pick up that guitar, lift the lid on the piano or make sure you get your daily dose via Spotify.

Don’t let anything get in the way. Find time for life’s simple pleasures – whether it’s the humorous tweets from a comedian who makes you smile or a great coffee from your favourite barista.

Your daily 10s shouldn’t cost a lot – in fact they can be free. Most of all, they should be things that are special to you. I personally love cleaning my mountain bike after a muddy weekend ride. (That reminds me – time I got back on it!)

So what are your 10s? Why not write out a list of 10 things you can do on a daily basis?

By making each day a ’10 out of 10 day’ you’ll be building up a store of positive energy to help you find gold in the dark winter months and stay on track to achieving your life goals.

Once your 10s are part of your daily routine it’s time to go to the next level, with fortnightly, six-monthly and annual treats and targets. These can really unlock the magic. I’ll share these insights with you next time.

Would you like to find out more or work with Sue as a mentor to help achieve your goals? Get in touch .

If you can’t afford insurance, you can’t afford a home.

Tue, 09 May 2017 23:39:00 GMT

I’m not talking about house and contents insurance. I’m referring to the insurance that protects your ability to earn a living.

Health and income protection insurance should be the priority if you’re providing for your family or taking on a big financial commitment such as a mortgage. All too often, clients take out pet insurance to cover vet bills but forget about the most important person in the household.

Winter, with its colds and illness, is a gentle reminder that no one is immune from poor health. And you don’t have to be in your sunset years to suffer a cancer diagnosis or heart attack.

Accidents happen as well. A slip-up on a wet path or a mishap on the ski field could take you out of the workforce for months (or forever). Every week I hear of clients who have been struck by something out of the blue. When it happens, the last thing they want is financial stress.

The good news is that cover can be easily arranged. With some smart advice, it can even be highly cost-effective.

Have you reviewed your insurance recently? If not, make an appointment

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

Tue, 09 May 2017 23:37:00 GMT

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 .

Short term pain for long term gain

Sun, 09 Apr 2017 23:35:00 GMT

It can be tempting to make life insurance choices based on price. Who wants to pay a bigger premium, especially when you’re young and money is tight? That’s why many tick the option that costs less in the early years but is re-adjusted every year.

However these stepped or ‘rate for age’ policies can become seriously expensive. Many people in their 50s and 60s see their annual life insurance bills climbing year after year. This is the flipside of cheap premiums in their youth.

The alternative is level cover. This sets a flat premium, which may be more costly early on but generally only goes up by the CPI rate. After 30 or 40 years your annual premium will seem like an absolute bargain. It’s like choosing a three-year fix for your mortgage instead of the cheaper six-month rate that could jump several times in subsequent years. You pay more initially but save over the longer term.

There are many life insurance options so get in touch to find the best one for your stage of life. It may not be the policy with the cheapest initial premium!

Have you reviewed your insurance recently? If not, make an appointment

You are not entitled to a home loan.

Sun, 09 Apr 2017 23:35:00 GMT

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 .

3 ways to help your kids into property (and 1 mistake to avoid)

Sun, 09 Apr 2017 23:33:00 GMT

It’s natural to want your children to do well in life, and that could mean helping them onto the first rung of the property ladder. I see this with many of my clients. So what are the best ways you can give them a leg up?

1. Start a secret savings account in their name.

It doesn’t have to be totally secret but it should be an account they have no access to. The earlier you start, the better.

When my nephews and nieces were babies I opened accounts in their names and – here’s the kicker – set up Automatic Payments of $1 per week into each account. On birthdays and Christmases I added another $100. It doesn’t seem much but over the decades compound interest works its magic. The goal is to have a lump sum ready by the time they’re thinking about buying a home.

It takes a bit of discipline but if you use APs, as I suggest, you’ll never have to give it a moment’s thought. If you worry it might be used as a slush fund, simply set up the account in joint names with someone you trust, such as a grandparent. You will keep each other honest.

On a side note, I am saddened when I see young children given large sums of cash for birthdays or Christmas with no guidance on managing it. They don’t understand money so it will likely be frittered on a whim. Why not give them a bank account and teach them effective saving habits?

2. Be smart with student loans.

Student loans are totally interest-free. This tempts some young people to load up with debt on the never-never. Well-meaning parents may offer to pay off the loan on graduation. My advice is simple – don’t.

Instead, encourage them to make regular payments off their interest-free loan. While they’re doing it, you should set aside the same amount of money in an interest-earning account. After graduation you can gift them this sum as a first home deposit.

The student is still incentivised to pass exams but not to go overboard with student debt. Meanwhile you’re earning interest on their behalf, which should result in a larger sum when it’s needed for a first home.

3. Let them inherit early.

If you’ve done well in life you might want to provide your children with an ‘early inheritance.’ Instead of waiting until you pass away and leave an estate, they can access some capital now to buy a first home.

This can be a great way to help the next generation, and it’s something I see many of my Asian clients doing. They often have an inter-generational view of wealth, and the idea of ‘paying it forward’ can make all the difference.

The caveat is obvious – don’t strain your own finances. ‘Inheriting early’ should be for families that already have a significant capital base. If you’re still paying off your own home, don’t dip into the equity or load yourself up with a bigger mortgage just yet.

4. Don’t be lax – see a lawyer.

Finally, a mistake to avoid at all costs. If you decide to release capital or guarantee a loan for your son or daughter, make sure you sign a binding legal agreement. Pay a lawyer to draft something that protects your child if things go pear-shaped.

Sadly, relationships break up and bankruptcies happen. You need peace of mind that the money you provided won’t disappear into the back pocket of the soon-to-be ex.

We all want the next generation to do well. We just have to be smart about how we help them.
Want to help your kids get on the property ladder, or get onto it yourself? Get in touch .

10-foot tall and bulletproof..

Thu, 09 Mar 2017 23:32:00 GMT

If you’ve raised teenagers you know what I’m referring to. They emerge ready to take on the world and gloriously ignorant of life’s pitfalls. As a priority, insurance comes in about 88th place, below learning Esperanto and studying actuarial tables.

This is a risky time – but also a moment of opportunity.

If your young family members have had the benefit of insurance throughout their young lives, consider extending it. They will never be healthier than they are at this time, so now’s the time to lock in cover with no exclusions or loadings.

Maybe you could gift them a 21st birthday present of three to five years’ premiums on life and health insurance. It may not be the coolest birthday present but it could provide continuity of cover before they start chipping in from their own resources.

It can be seriously good value too. A 21 year-old male non-smoker could get $250,000 of life cover for just $28.50 a month. His 21 year-old female equivalent gets an even better deal – just $20.10 per month. Comprehensive health cover would cost $53 per month for a male or $59 for a female.

That might seem a bit steep for someone in their first job but I have seen clients in their 20s and 30s faced with bills over $20K for operations not funded by the public health system. If that happens, say goodbye to your house deposit.

At the other, cuter end of the scale, a newborn baby can be added to your health insurance very easlly. The cost is minimal and the benefits could be considerable.

Have you reviewed your insurance recently? If not, make an appointment

What’s happening with interest rates?

Thu, 09 Mar 2017 23:31:00 GMT

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 .

Ignore the media. They’re in the entertainment business

Thu, 09 Mar 2017 23:30:00 GMT

Oh dear. The Generation Wars have started up again. A few weeks ago we read about Gary Lin and his opinion that young would-be property purchasers should stop moaning, join the army and knuckle down.

Then a chorus of opposing voices jumped in, explaining why Gary was wrong. This futile argy-bargy only proves that first-time buyers have become a political punching bag.

It’s time to put away the boxing gloves. The newspapers, TV stations and social media sites are only interested in controversy. If you’re a 20-something looking to get on the property ladder – or if you’re the parent of one – it’s not helpful. Here’s what you should do instead.

First of all, ignore the media. They use property stories as sensationalist click-bait. They are not particularly interested in giving you insights on the best route to home ownership in today’s climate.

Secondly, focus on your own goals. If your vision includes property ownership, there are some smart steps you can take.

I advise first-time buyers to break down their goal into achievable chunks. Let’s say you want to live on the North Shore. Don’t set your sights on Takapuna as your first goal. Look at the other Shore suburbs that might be within your reach. What about Glenfield or Birkdale?

Then look at the kind of property that’s right for you. Are you someone who loves wielding a drill and paintbrush? Look for a do-up. If you’re not that handy, don’t despair. Your route to home ownership may involve a unit or flat.

Could you go halves with a sibling, another relative or a BFF? Consider it. You already know each other well, which reduces the risk of a wealth-endangering personality clash.

Next, you’ll probably need a 20% deposit. The key to this is the same as it’s always been: focus. You have a KiwiSaver account (of course), so that will help. But don’t stop there – set up a separate savings account. Calculate how much you will need for a deposit, and then pay a fixed sum into savings each month. Set up an Automatic Payment from your bank.

My advice is to direct these savings into a different bank from your usual one, to give yourself more options. When funding is tight banks prefer to look after existing customers, so be one of those.

Saving that 20% deposit may take seven to ten years. That is exactly how long it took when I started saving for my first property. I hate to use the phrase “back in my day”, but back in my day, that’s how it worked. The good news is that it still works.

Last but not least – let’s all encourage first time buyers!

Every generation has faced challenges, so let’s lay off the millennials. If you’re the parent of a 20-something, perhaps you could add $10 on top of every $50 they save. I have some more suggestions for parents who want to help their offspring into property ownership, which I will share with you next month.

Want to help your kids get on the property ladder, or get onto it yourself? Get in touch .

A painful reminder that insurance matters.

Thu, 09 Feb 2017 23:27:00 GMT

A few weeks ago I was enjoying a video chat with an old friend. I laughingly mentioned the mosquito bite I had somehow received on my forehead.

She took a closer look, and told me it might not be a mosquito bite. The conversation turned serious and she asked me to send some pictures to show to her doctor friend. Within 15 minutes I was booking a same-day appointment with my own doctor. The diagnosis: shingles.

This painful viral condition is not uncommon in people who have had chicken pox in childhood. The virus re-emerges after decades and can wreak havoc. A friend of mine spent two months in hospital with shingles. Others have been known to lose their sight from a facial flare-up – which is what I had.

What’s the lesson here? I lead an active life and have a healthy diet. Some people might say I work too hard – I respectfully disagree! But despite my healthy lifestyle, I found myself on the verge of a serious problem. Only an early diagnosis saved me from a lot of trouble. If my friend hadn’t alerted me to the seriousness of my ‘mosquito bite’ I might have been facing months off work.

The unexpected can strike at any time. You don’t want find yourself battling a health issue or losing vital income at a critical time. For peace of mind, you need to have health, disability and income protection insurance tailored to your circumstances and ready when you need it.

If you procrastinate with insurance, the result may be even more painful than a case of shingles.

Have you reviewed your insurance recently? If not, make an appointment

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

Thu, 09 Feb 2017 23:26:00 GMT

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.

Silicon Valley, here I come.

Thu, 09 Feb 2017 23:26:00 GMT

When this email hits your inbox I will be getting ready to network with some of San Francisco’s brainiest inventors and investors. I have been invited to take part in Google’s Cloud Next conference.

It’s exciting, and more than a little bit surreal. And it all started when I had a Eureka moment a few months ago.

I shared my bright idea with a friend who happens to be a strategist. He then talked to someone who knows the ins and outs of technology. Connections were activated, and all of a sudden we’re heading to California to meet some big names in the digital world.

Who knows – we could be sitting on the next Xero or Uber. Or perhaps nothing will come of it. But right now we have the opportunity to get Silicon Valley on board with our venture, and that’s exciting.

As well as being an incredible adventure, this episode has reminded me of the importance of acting on ideas.

How many time have you had an intriguing idea, and then the voice in your head pipes up and says, “Don’t be silly!” That’s one way to guarantee it will come to nothing.

Or perhaps you’ve hugged your ideas to yourself, afraid to share them with others? That can be a big mistake. As someone once told me, it’s better to have 50% of something than 100% of nothing.

Interestingly enough, I find young people understand this. They think in terms of collaboration and start-ups. They’re energised by the possibility of changing the world, and they embrace its possibilities with an open mind and open heart.

I hope you feel inspired to act on your own ideas and share them with the talented people around you. Who knows what great things you might achieve?

A spring clean can turn up insurance savings.

Tue, 10 Jan 2017 03:03:00 GMT

Insurance isn’t something you should skimp on. That said, we find many people are over-paying for policies, or even paying for cover they don’t need. In this era of rising interest rates, a ‘spring clean’ of your insurance policies could uncover some useful savings.

It’s not chicken feed, either. Just $10 per month spent on unneeded cover could be applied to your mortgage to save more than $18,000 over the life of your loan. In this era of rising interest rates, that’s a bonus well worth having.

Here are some smart ways to trim your insurance bill:

I can sit down with you and explain how this all works. It’s not about selling new policies – instead it’s about making sure your insurance matches your real requirements.

Don’t be shy! I can see you hiding, so come on in and we’ll get your insurance sorted for 2017.

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

Tue, 10 Jan 2017 03:02:00 GMT

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:

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 .

You’ve achieved your goal. Now what?

Tue, 10 Jan 2017 02:39:00 GMT

How was your Christmas? Mine was a bit dull.

I could blame the December weather, which certainly wasn’t anything to get excited about. But the truth is I found myself feeling a bit deflated after the thrill of trekking to Base Camp at Mt Everest in October.

I’d achieved my 2017 travel goal, and the aftermath was an anticlimax.

Reflecting on this, I remembered something our expedition leader Mike Allsop had mentioned. He said the slopes of Everest are littered with the bodies of those who reached the peak – but then either died at the summit or on the way back down. All their efforts had been focused on reaching the summit. They forgot to plan for what came next.

This applies to much of life, not just lofty things like mountain climbing. I know someone who has had the goal of completing a leaky building remediation project. This horribly expensive process took 10 years but he eventually reached a successful outcome. Now he’s relieved to have completed the project, but not quite sure what to do next.

The ‘what comes next syndrome’ can apply to anything that consumes our attention and efforts. It might be raising children, completing a university degree, creating and selling a business, or even paying off your mortgage. It’s one reason the All Blacks are now encouraged to build skills and gain qualifications for life after rugby. Your current passion may be incredibly exciting and worthwhile, but the nature of goals is that they’re eventually achieved. You need a plan for the next stage.

Have you made the same mistake as me? Putting so much effort into an exciting short-term objective that you neglected to build a vision beyond it? There can be only one solution: go back to fundamentals, and ask yourself what is really important to you now. Then set some new goals.

Thank goodness I’m off to Sydney soon for one of my regular catch-ups with my mentor, Dr Fred Grosse. We’ll be focusing on what to do after you achieve your goals. I’ll let you know what comes next.

YOUR BEST CHRISTMAS PRESENT COULD BE AN INSURANCE REVIEW

Sat, 10 Dec 2016 03:01:00 GMT

It’s not what you hope to find under the Christmas tree, but a thorough review of your insurance could be a very good idea right now.

We’re approaching that time of year when people relax and let their hair down. There’s fun in the sun, boating, barbecues and inevitably, some alcohol. It’s not unknown for this to lead to a nasty accident or even a bereavement.

Please take care during the festive season – and make sure you’re well protected from the unexpected. Think how awful it would be if you or someone close to you were facing disability, a loss of income or worse. On top of that, the happy time of Christmas would be spoiled for years to come.

I know this is a busy time of year but I strongly encourage you to get in touch with your insurance broker for a review of any health, income protection or life policies you have. Do it now.

The right cover could be life changing. Think of it as a Christmas present to yourself and your family, and please, stay safe at this time of year.

Have you reviewed your insurance in the last few years?
If not make an appointment!

OUR NO. 1 TIP FOR FIRST-TIME BUYERS

Sat, 10 Dec 2016 03:00:00 GMT

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

The most exhilarating thing I discovered at Mt. Everest? Kindness.

Sat, 10 Dec 2016 02:37:00 GMT

Last time I wrote to you I was shivering at Base Camp, 5,364 metres above sea level. I was expecting some discomfort at this altitude. What I wasn’t expecting was the extreme, bone-penetrating cold.

Temperatures sank to minus 14 degrees at night, and we were sleeping in unheated lodges and tents. I learned to stow the next day’s clothes in my sleeping bag at night where they would be warmed by body heat, so getting dressed in the morning was slightly less of an ordeal.

Everything is harder and takes longer in these conditions. You become much more vulnerable and dependent on others. That’s why I was warmed and cheered beyond belief by the happy, caring attitude of the Nepalese Sherpas who were such an integral part of our expedition.

Their practical help, always delivered with a smile, reminded me that positivity is the best way of coping with harsh conditions. Every night they would hand out drinking bottles filled with hot water so we didn’t have to drink icy cold water in the freezing night. And this attitude was not just limited to the employees – it’s woven throughout the Sherpa culture.

I learned that even under extreme conditions there’s always something you can do to make things a little better. One highlight was handing out woollen New Zealand beanies, complete with silver fern, to 36 kids at Pangbouche School. It felt good to give something back to this community, which lives permanently in the extreme Himalayan conditions. I brought 50 beanies in my baggage – thank goodness for compression packs – and was pleased to see them worn with such pride and appreciation.

Back home in Auckland, I find that just about any problem is a ‘first world problem’ by comparison. We are so lucky, and have so much. It’s something I’ll remember long after my memories of Himalayan ice have faded.

Something else that takes the chill away is the advent of summer. I don’t know about you, but I’m looking forward to a relaxing Christmas in Auckland, with some mountain biking treks around Woodhill Forest. Bevan and his family will be enjoying a well-earned break at Whangamata so say ‘Gidday’ if you see them at the beach.

This time of year is also a great time to set new goals for 2017.

What is it that you want to achieve next year? I encourage you to come up with a stretch goal, whether it’s getting back into education, training for a sports event or learning to play the harp. Do that thing you’ve always wanted to do – and do it for yourself. You’ll find that everyone around you benefits when you are happy and fulfilled in a project.

Do share your goals too – I’d love to hear what you’re up to.

How an insurance review can save you money?

Thu, 10 Nov 2016 02:59:00 GMT

Many people are a bit wary of checking in with their insurance advisor. They fear they’re going to be sold new policies.

However, a good advisor knows that your needs change over the years. The insurance you took out five years ago was for a previous version of you. Since then, you may have started a family, changed careers or made all sorts of decisions that increase or decrease your need for insurance.

That’s right – sometimes your need may decrease cover. In that case, you can safely downgrade your sum assured or even cancel a policy. I see this all the time.

Recently, a couple I know asked me whether they should keep their income protection policy, as they were moving to Australia. They had avoided calls from their insurance broker so had not received up-to-date advice for several years.

In the meantime they had retired – but they were still paying premiums for income protection. They were forking out for cover they couldn’t claim on.

This is just one example of how an insurance review can save you money. There are many more, and I’d be happy to share them with you.

Smart buyers do their homework before an auction.

Thu, 10 Nov 2016 02:58:00 GMT

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:

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

Greetings from Base Camp, Mt Everest

Thu, 10 Nov 2016 02:35:00 GMT

When this email lands in your inbox, I will be 5,360 metres above sea level, breathing the thin air at Base Camp in Nepal.

‘Peak experiences’ aren’t always metaphorical. In my case I’ve had a passion for far away places since my childhood growing up in Christchurch with no extended family. A friend’s grandmother took an interest in me and gave me an atlas – perhaps she had noticed my curiosity about geography. I don’t recall why but I’ve never looked back.

At 15 I booked my first solo holiday, flying to Australia on a three week holiday that I had saved up and paid for. Since then my travels have just grown more and more adventurous. I’ve been mountain biking in Mongolia, skiing in Norway and now, trekking in the Himalayas.

I set this trip as my goal when I heard Mike Allsop (Google him) give a TED talk in Auckland two years ago. He has climbed Everest and regularly returns there. He mentioned that he had taken his children to Base Camp – one of his kids was just seven years old at the time. “Well,” I thought, ” if a seven year old can do it, so can I!”

In July this year I saw Mike speak again, this time at a conference. At the end of the presentation he mentioned he had one space left on his next Himalayan trip. As he left the stage I was mentally packing my bags and the vacancy was filled that night. I won’t be tackling the peak, but just making it to Base Camp feels amazing in itself.

To my mind, this proves that opportunities present themselves all the time. As we’ve explored in previous editions of this newsletter, there’s a simple process to making the most of them:

When did banks become insurance specialists?

Mon, 10 Oct 2016 02:57:00 GMT

Trick question. They’re not.

However if you’ve spent any time in a bank recently, you may have encountered friendly staff who recommend the bank’s house, contents or life insurance. Here are some reasons to hesitate before signing on the dotted line.

While banks are great at lending money, providing credit cards and many other financial services, they are not insurance specialists. Their policies may not be suited to your requirements and they are generally not sold with personalised advice.

Insurance policy wording can be quite detailed and it may require some expertise to understand what benefits you’ll receive. You may think you’re covered but you won’t know until its time to claim. And then you’re on your own.

If your bank suggests you buy its insurance, by all means take a look at the policy they offer. Then get a second opinion. It costs you nothing to ask for our feedback. We’ll be happy to provide it at no cost to you.

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

Mon, 10 Oct 2016 02:56:00 GMT

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

Your only real wealth is health.

Mon, 10 Oct 2016 02:31:00 GMT

You can have a portfolio of investment properties, an overstuffed bank account and a house full of expensive toys, but if you don’t have good health, you’re not well off.

We all know this on some level – but how seriously do we take it?

I certainly didn’t for decades, working long hours and taking very little exercise, but in learning how to define and achieve my personal goals, I’ve become increasingly aware of the importance of health. And I’m not alone in this. My mentor, Dr Fred Grosse, is always asking about my wellbeing whenever we have one of our regular catch ups.

So what are the practical steps we can take to optimise health? Here are some things I’ve learned on my journey.

My first tip is to break the habit of being reactive. We tend to regard good health as a default setting and only pay attention when something goes wrong. A smarter approach is to have regular check ups with your trusted health professionals. One of my friends avoided seeing the dentist for years, only to end up in A&E, followed by a week in hospital, when an undiagnosed abscess led to blood poisoning.

Interestingly, some health insurers have seen the light. The new Healthy By Sovereign policy rewards you for having regular check ups and taking an online health assessment. Get in touch if you’d like to know more.

My second piece of advice is to find the exercise habit that works for you . If you know me well, you will know that I avoid the gym but I love music. With Spotify streaming great tunes it’s a joy to go running in the morning. Its a 10/10 start to my day.

Of late I have been using my wind trainer, out running, and walking, as I aim to hopefully get fitter ready for a 3 week adventure in Nepal and then on to base camp later this month.

You may move to the beat of a different drummer. Perhaps you love the group energy of a class, the pleasure of dancing, or the satisfaction of pushing beyond what you thought were your physical limits. I know someone who is turning his fascination with Japanese culture into a goal to walk the 88 Temple Pilgrimage Trail on the island of Shikoku. How awesome would that be? A goal like that would certainly get me moving. Just do whatever works for you.

The funny thing is that paying attention to your health often has a flow on effect to your wealth. You save on avoidable expenses – I have lost count of the loan top ups arranged for clients facing a huge dental surgery bill caused by long term neglect. You will also have reserves of energy and positivity to focus on your investment or career goals.

So what do you do to maintain good health? What are the tips and practices you’d recommend? I’d love to hear your stories.

Do you really need life insurance?

Sat, 10 Sep 2016 02:54:00 GMT

You would be amazed at the number of clients I talk to who have taken out life cover and have only the vaguest idea of what they’re paying for.

In many cases they were sold life insurance by their bank. They were chatting to the bank manager about a mortgage or business loan and lo and behold, a life policy was suggested. It only cost a few dollars a week and so they signed on the dotted line.

But when I dig a little deeper it’s clear that they have the wrong policy. Perhaps they’d be better off with a mix of trauma cover and income protection. And it’s not uncommon to find their life insurance policy is a bit of a dud, riddled with exclusions. One client remarked sadly “I can only die of a small number of conditions”.

Not understanding the fine print is a common error. Another is buying on cost. The important thing with insurance is not so much what you pay each month but what you’ll be paid in the event of a claim.

However there is one group who can benefit from life insurance and that’s your teenage children. Pay for cover until they’re established in their careers and then they can take over the premiums. By starting them young you’ll lock in a good level of cover with the fewest exclusions.

We’re very happy to look at any policies you have and give a considered opinion. All you have to do is ask.

Have you reviewed your insurance in the last few years? If not, make an appointment

Interest only loans – a trap for the unwary

Sat, 10 Sep 2016 02:53:00 GMT

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

Why high earners can’t retire.

Sat, 10 Sep 2016 02:30:00 GMT

Recently I took part in a financial seminar. The presenter asked the 25 people the room a simple question: how many of us could afford to retire right now and live off their passive income.

Only three people put up their hands.

I was one of them and I know for a fact that I had one of the lowest incomes in the group. Many attendees earned very good salaries or owned successful businesses, but were unable to get off the financial treadmill. Why should this be?

If you’ve ever played Robert Kiyosaki’s Cashflow Game you will have an inkling. I call it ‘Monopoly on Steroids’ because it teaches many lessons about wealth. After playing the game many times I was able to predict that the person on the lowest income would invariably get out of the rat race first and win the game.

This is because low earners are forced to live within their means. They don’t develop a ‘spending lifestyle’. They minimise unnecessary expenses which is the first step to success.

The second step is to find investments that deliver income and then maximise the revenue you earn from them. Low earners who follow this path will end up retiring with more income than those who have enjoyed a lavish salary.

I can confirm this from my own experience. Newly divorced in my early 30s, I was left with just a block of downmarket flats in Christchurch with the minimum equity required to keep them. I was still an employee at the time, and to save costs I was flatting with a guy who has become a lifelong friend. By buying income producing assets I was able to start laying the foundations for financial independence.

Next I sat down and asked: what’s my financial goal? I decided on a dollar amount of annual income I wanted in retirement and calculated the number of rental properties I would need to generate that.

From then on my property purchases were based on the numbers. I looked at rental yield and the value I could add and worked out how much I would offer. Sentiment played no part.

This is a strategy you can follow for any income producing asset, be it residential property, commercial property, shares or a business. First put a dollar figure on the outcome you desire 10, 20 or 30 years from now. Then look for assets that can help you achieve your goal and only buy them if the numbers work.

The idea is to be in the happy position of raising your hand if anyone asks whether you have enough passive income to retire with the lifestyle you want.

Would you like to work with Sue on defining and achieving your wealth goals? . Get in touch .

Why goals matter and how to achieve them.

Sat, 13 Aug 2016 02:14:00 GMT

Buying property is a goal many people have. I’m lucky to be able to help them achieve it and it’s one of the most satisfying parts of my job.

I’ve also seen the flipside – how relationship break ups can take people backwards. They find themselves dealing with new financial and personal challenges. This can be a critical turning point with the opportunity to take decisions that ensure success in the long term.

So we can all agree that goals are important. The question is how do you find the ones that matter to you? And most importantly, how do you achieve them? Here’s what works for me.

My first suggestion is to write down your goals. This makes them real. It brings them into the foreground of your mind.

But here’s where I depart from the accepted wisdom. Don’t pin your list of goals to the wall and focus on them. Put the list away. Then write a new list in a few months’ time. And keep on writing new lists.

Over time you’ll find that certain themes emerge. And one day – bingo! You’ll know its time to act on that desire that keeps manifesting itself.

I had to laugh when talking to a client recently about this. I pulled out my diary from 10 years ago and checked an old list of goals. There they were – visit Bhutan and learn to plan the piano. Well, last year I went to Bhutan and this year I started piano lessons with a lovely 23 year old who has to listen to my fumbled renditions of Jingle Bells. I have no natural talent for the instrument but I’ve always had the desire and 2016 is the year when I’m acting on it.

By writing regular lists but not being too rigid about time frames we can free ourselves up. It stretches us to try things we can’t currently do but takes away the grim determination that sometimes gets in the way.

Growth is fun. Goals are fun. So make sure you have fun achieving them.

Would you like to work with Sue on defining and achieving your life goals? . Get in touch .

Having no trauma cover could be traumatic?

Wed, 10 Aug 2016 02:52:00 GMT

Do you plan to never get ill? That’s a great ambition and I hope you can pull it off. But if, through no fault of your own, you develop a health condition that prevents you from working while you receive treatment, you’re going to need trauma insurance.

This type of cover pays a lump sum if you’re diagnosed with a serious health problem such as a heart attack or cancer. The exact details will depend on your policy wording but the idea is to relieve financial stress while you focus on getting well. You can use it to cover your mortgage, get rid of debt, take a holiday or even fund treatments the health system won’t pay for. It’s your money to spend how you like.

Even if you’re not in paid employment this is cover you should have. Don’t undervalue yourself. You may be a caregiver so why not give yourself the ability to pay for outside help while you concentrate on your own wellbeing?

Have you reviewed your insurance in the last few years? If not make an appointment

Fixed or floating? Which is right for you?

Wed, 10 Aug 2016 02:51:00 GMT

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

Be prepared to live longer.

Sun, 10 Jul 2016 02:49:00 GMT

Life expectancy has steadily increased for the last few decades. In New Zealand we can now expect to live into our 80s as a matter of course and many will live longer.

There are also many more treatments available to keep us alive. New drugs such as Keytruda are now available to tackle life threatening issues such as melanoma.

That’s the good news. The bad news is that this all costs money.

There has never been a generation as populous as the Baby Boomers and they are all growing old together. We have an excellent public health system in New Zealand but there is no way it can fund every last hip operation and advanced drug treatment. To fill the gap you’re going to need health insurance.

Perhaps you have enjoyed excellent health to date and don’t see the need. Consider getting health cover now before any conditions make themselves known. Health insurance generally won’t cover pre-existing conditions so the time to take out the policy is before you need it.

And remember – not all health policies are equal. Some offer extras such as non Pharmac approved drugs, so you aren’t completely reliant on the public system. It’s worth spending some time sifting through the policy wordings or getting us to do it for you.

If you’d like to take steps to enjoy a longer, healthier life talk to us today.

Responsible Lending Code makes things slower and safer.

Sun, 10 Jul 2016 02:48:00 GMT

You may have noticed that taking out a loan is not as fast as it used to be. One reason is the Responsible Lending Code which was introduced in 2015.

This Code which applies to all lenders in New Zealand, is designed to make sure no one is saddled with a loan they can’t afford to service or repay. Banks and mortgage advisers now ask more detailed questions when handling a loan application. The Code requires us to make “reasonable inquiries” into a borrower’s financial circumstances so borrowers can’t access credit as readily.

The main focus of the Code is to stamp out bad practices at the shadier end of the market and all lenders have agreed to the same principles. The result should be fewer people signing up for a loan they can’t really handle. Unfortunately in the short term it does make the process slower and more detailed.

At Sue Tierney Mortgages we will always invest the time to listen carefully to your needs and help you get the most appropriate loan. We’ll take care of the paperwork and guide you through the process. Its all part of our service.

Here is something you can do to speed things up. Talk to us as early as possible.

Start the process of applying for a loan well before you put in an offer on a property. It will take much of the waiting and stress out of the process.

Thinking of taking out a loan? Make an appointment

The Power of Two

Sun, 10 Jul 2016 02:27:00 GMT

You’ve knuckled down and figured out your life goals. You’ve found a coach or mentor who can help you reach them. Now all you have to do is stick to the plan. There will be times when you find it hard to progress. Life has a habit of throwing up obstacles. When things get sticky you’re going to need some outside assistance.

Step 1. Partner up with someone who’s on the same journey.

That person could be a work colleague, personal friend or someone you’ve met through your coach or mentor. It probably shouldn’t be your life partner as the personal dynamics can be tricky. Above all it should be someone who can hold you accountable while you do the same for them.

Step 2. Training in tandem.

When one person is flagging the other person provides perspective and motivation. This dynamic works for all sorts of activities from training for a marathon to learning a language. Committing to a programme to fulfil your life goals is no different. Its not just about gritting your teeth and doing the hard yards together. You and your partner will enjoy plenty of laughs and rewards along the way.

Step 3. Live the dream.

As well as checking in regularly with my mentor Dr Fred Grosse, I Skype once a week with my training partner. Its a cast iron commitment we both stick to. When one person is having a tough week chances are the other will be buzzing with vigour. And we’re both constantly amazed at how much fun we can pack in to our lives.

We know each other’s goals and we hold each other accountable. That’s the power of two.

A healthy change in the insurance market.

Fri, 10 Jun 2016 02:46:00 GMT

Traditional health insurance is reactive. You pay your premiums and if you have an accident or develop a condition that needs treatment you put in a claim.

However this doesn’t recognise the value of staying healthy by doing all the things that keep you out of hospital.

So Sovereign has decided to shake up the market. Healthy by Sovereign includes proactive features to help you stay in good health. It incentivises you to be smart with your lifestyle so you can minimise the risk of an avoidable and expensive condition, such as heart disease.

Of course the policy includes all the health insurance features you’d want including access to private hospitals and specialists. No one wants to be stuck in a queue while their health suffers. Sovereign’s new policy offers so much more.

If you like the sound of health cover that rewards your efforts to stay healthy I’d be more than happy to discuss it with you.

Avoid this common mistake that holds up loan approval.

Fri, 10 Jun 2016 02:45:00 GMT

Some borrowers have been surprised and a little put out by the fact that their loan now takes longer to work its way through the approval system. Here’s why.

The Anti-Money Laundering Act was passed in 2013 to clamp down on dubious transactions in New Zealand. Borrowers now need to provide proof of their identity with a passport or utility bill. There are heavy penalties at stake so the bank will thoroughly scrutinise your paperwork.

When we work with you we will go through the paperwork and help you prepare a strong application. The tricky part comes when the borrowers are using a trust or some other structure that doesn’t receive mail at an address. Another issue arises when people receive utility bills via a P O Box or work address.
These won’t be acceptable to the bank as proof of identity.

Your loan approval may be stalled while you change the address on your utility bills or rejig your trust arrangements. That’s a severe nuisance if you need to buy at short notice.

Here is one solution. Make sure you have a current passport and are receive at least one utility bill in your name at your residential address.

Line up your loan in advance – don’t wait until you find a property.

If you need help to get the right loan at the right time, get in touch sooner rather than later.

Who’s the right mentor for you?

Fri, 10 Jun 2016 02:25:00 GMT

Who’s the right mentor for you?

In the last Issue of Matters of Interest I talked about choosing a mentor to keep you on the path to your goals. But not all mentors are equal. And how do you find one who’s right for you?

I have been working with a mentor for over 10 years and have found the process a great way to turn vague desires into action plans. Here’s what I’ve learned along the way.

Step 1. Choose your mentor

Be the person who makes the approach. You may come across individuals with the title of Coach or Mentor, who knock on your door and pitch their services. They may be great people but this is not the way to go about finding a mentor.

You need to unearth someone whose message and actions resonate with you. Perhaps you’ll hear a speaker at a conference and find yourself transfixed by their story. Maybe you’ll read a book or watch a video series that introduces you to some new ideas. Be open to the opportunity and then reach out to the person.

Step 2. Think of mentoring as an investment

It will involve a commitment of time and energy over an extended period. It will involve spending some money. That’s exactly what you should expect from a process designed to unleash personal growth.

I found my mentors Terry Caboon and Dr Fred Grosse this way. Tragically my connection with Terry was cut short by his unexpected death but I have been working with Dr Fred for many years now. I first saw him deliver a presentation at a conference where he talked about designing a magnificent life for yourself. This was exactly what I was looking for so I introduced myself and started the journey.

Step 3. Live the dream

Here’s how the process works. Every fortnight Dr Fred and I have a Skype session where we check on progress towards goals, tease out obstacles and recommit to the plan. Having an independent outsider to keep you on track is a powerful motivator and one of the reasons that mentoring works.

On top of these fortnightly check-ins I fly to Sydney four times a year for a two day catch up. This is where we deal with the bigger issues that can get lost in the day to day. Working with Dr Fred this way has let me move decisively in the areas I wanted to develop.

For example Dr Fred and I focused on my goal of inspirational travel. He encouraged me to seek the opportunities and make them happen. Just months after getting on a bike for the first time, I left for a mountain biking tour of Inner Mongolia. I traveled on my own, overcame obstacles and had an incredible experience. Without Dr Fred’s input it might have stayed a hazy “do it someday” idea that never came to fruition.

Your goals will be different of course. The important thing is to start achieving them. I strongly recommend finding the right mentor to kick start the process.

Would you like to work with Sue as a mentor? Get in touch .

An alternative to “give a little” campaigns

Wed, 25 May 2016 23:36:00 GMT

It seems to me that the alternative to people forward planning and taking responsibility for themselves is begging via “give a little campaigns” Here is a good article on how to avoid the need to beg:

http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=11490116

When did you last review your insurance?

Tue, 10 May 2016 02:42:00 GMT

If you don’t have an insurance broker who’s regularly in touch, there’s a good chance you’re paying for insurance you don’t need.

Even worse – you could be forking out for insurance you’ll never be able to claim on, while failing to cover risks that apply to you.

One of our clients had an Income Protection policy but he wasn’t even working. He had no regular income to protect so his monthly premiums entitled him to a big fat zero. However, he did need travel cover – but didn’t have it.

Don’t fall into this trap.

If you aren’t really sure what cover you have, or haven’t heard from your insurance broker for a while, I’d be happy sit down with you to review your policies. I can help you check your cover against your lifestyle and risks, and then review your policies if you don’t have an insurance broker to assist you with this.

Make an appointment

Low interest rates – windfall or opportunity?

Tue, 10 May 2016 02:41:00 GMT

We seem to have entered an era of persistently low interest rates. Who would have predicted several consecutive years during a time of economic growth with home loan rates below 5%?

You can treat these low interest rates as a windfall and cruise through life with a higher debt load than before. Or you can use low rates as an opportunity to pay down debt while the economic climate is sunny. I recommend the latter.

Here’s the process I have followed to get rid of debt faster.

First, look at all the small, regular expenses that leave your bank account each month. I reviewed my outgoings and realised I was paying for satellite TV I hardly watched. $100 a month to Sky to watch one game of rugby hardly screams ‘essential.’

Identify these lazy expenses (I can help you with this) and then cut them.

Next, put the money saved against any debt. Get rid of any credit or store card balances, and then ramp up your home loan repayments. You may have to change the structure of your home loans, and this is something I can assist you with.

Now is the time to take steps to pay down debt. If you follow the process outlined above, you’ll hardly notice any difference in your lifestyle.

If you would like to review your household expenses, come in for a sit-down session, and we’ll put together a plan that enables you to pay down debt faster.

Make an appointment

What worked for me (and might just work for you)

Tue, 10 May 2016 02:22:00 GMT

I’ve spent several decades in the financial sector and written hundreds of millions of dollars of loans. Being financially literate is a cause I passionately believe in – but money has never been the driving force.

Instead, I’ve found that life decisions are best made when you work out what you really want, and follow a logical process to get there.

Here’s what worked for me. Maybe it could work for you too?

Step 1. Choose the personal goals that inspire you.

Newly single at the age of 33, I asked myself where I wanted to be in 25 years. The answer was that I wanted to own property, be debt-free and have plenty of opportunities for adventurous travel.

Your answers might be different – but it’s important to ask the big questions. You might put it like this: “How do I have a great life?”

As Steve Jobs said, “Your time is limited, so don’t waste it living someone else’s life.”

Step 2. Create a financial plan to get there.

I suggest you work backwards from the end result, and calculate the amounts you’ll need to get there. For me, the process involved working out the average rent I’d need on a property portfolio to cover my desired income at 60. This provided the basis for creating my property portfolio.

Having a plan with a concrete goal took sentiment out of the property buying process. Decisions were made on rental yield. If the numbers added up, I put in a bid. If they didn’t, I moved onto the next opportunity.

Step 3. Live the dream.

Your financial plan is only a means to an end. It’s simply what gives you the freedom to live your own, unique dream.

My dream lifestyle involves regular time off in places like Bhutan, the Maldives and Norway, where the culture is very different and the challenges are real. In the last five years I’ve been skiing in Japan and mountain biking in Inner Mongolia. I learned to ski at 50 and in the same year completed my first duathlon (which I’m proud to say I won) and took part in my first triathlon. I won my age group in that competition, and if the ankle biters hadn’t been in my race I’d have been 2nd overall!

Of course, there are a few tips and tricks you can use to help you achieve your own particular dream. One is to find a mentor and ask to be held to your commitments. I’ll cover this in next month’s edition of Matters of Interest.

Avoiding scams – Future Crimes

Sun, 29 Nov 2015 21:18:00 GMT

A friend of mind had $30,000 scammed from his credit card last week, but his credit card limit was only $12,000!

It was a pretty elaborate scam involving his mobile number, mobile provider and his emails, so I thought it timely to share these few instructions that came to me from business banking at ANZ last week:

Phishing emails - there are some simple rules that can help you avoid becoming a victim of a phishing scam
Never respond to an email that asks for personal or financial information, even if it appears to be from ANZ
Always phone the bank or visit in person when updating financial and personal details or sent electronically via Secure Mail in internet banking
Keep your computer software up to date and regularly check your home computer for malicious software to ensure that their system is not being scanned for persona details without your knowledge
Contact the bank immediately if you feel you have become a victim of phishing
Check your financial statement regularly for any unexplained transactions

I've downloaded this book to read over my Christmas break that might help teach me more about protecting myself - Future Crimes Book

Too many people are pretending to be rich – Are you one of them?

Wed, 04 Nov 2015 03:48:00 GMT

Here is a brilliant article sent to me printed in www.businessinsider.com by Trent Hamm, that I thought was worth sharing:

http://www.businessinsider.com/too-many-people-are-pretending-to-be-rich-2015-10?IR=T

Wills and trusts

Fri, 30 Oct 2015 02:56:00 GMT

Ok. Its that time of year where the Xmas party invites start to come in, the sun is out and we head out to enjoy all of the activities to go with it.

The fitness freaks amongst us start participating in great events, – The Auckland Marathon, K2, Lake Taupo Cycle challenge and the list goes on. So, its a huge concern when I’m talking to clients and discover that they have had their heads in the sand and still haven’t prepared a will.

Sometimes it feels as though it is just too hard, so in the interests of making it a little easier for you I asked Megan Williams of Steindle Williams Legal to provide me with a check-list of questions that I could share to ensure you put this job at the top of the list and sort it now.

Yes, there is a cost to create a will, but the cost far out way’s the hassle that you impose on family and loved ones, if you don’t have a will. Please check the cost with your own solicitor.

Below is a list of questions. All you need to do is print this form, hand write the answers and scan it to your lawyer and ask them to prepare a will for you. How easy is that!

If you dont have a lawyer you could email to either megan.williams@swlegal.co.nz . or hilary.jenkins@swlegal.co.nz or call them on 09 3615563, I am sure they will be happy to help.

Details Required for Preparation of Will

1. Full names and any previous names (e.g. maiden name)?

2. Current occupations?

3. Where were you born?

4. Your address and brief description of your assets.

5. The full names of those people you want to be the executor(s) of your Will, and their relationship to you. This is the person or people who ensure the wishes of your Will are carried out. If you have a spouse you usually appoint each other for this role and then another person or people if you died together. A partner of a law firm can act in this role if you wish too.

6. Do you have children, if so, their ages and full names. Do you wish to appoint a guardian or guardians of any children below 18 years of age if they were ever without legal guardian and if so, their full name, address and relationship to you.

7. Details of any specific gifts you wish to make to anyone. (e.g. jewellery, art, furniture, money?)

8. Details of any burial, cremation or funeral wishes.

9. Your estate usually passes to your partner/spouse then to any children, then to any grandchildren. Please give details if this is not what you intend or if there are any “blended” family issues.

10. What age should your beneficiaries/children receive – (ie 25 years)

11. Do you have a family trust? Details will be needed of the Trust Deed and any variations (including any Deed recording a change in Trustees)

You should also advise them:

1. If you have an earlier Will, where is it held in order to be collected and/or destroyed

2. If you/ your partner/spouse and any ex-partner have formally divorced and/or a Separation Agreement has been entered into. It is important to be aware that until you formalise your division of property, even if a former spouse or partner is not included in your Will, he or she may be able to make an estate claim upon your death under the Property (Relationships) Act.

Fixed mortgages – How are break costs calculated?

Thu, 01 Oct 2015 20:48:00 GMT

A very common question when clients are looking to fix their mortgage is: What if I want to break it, how much will the bank charge?

The banking ombudsman have put together this information to help:

https://bankomb.org.nz/news-and-publications/quick-guides/item/early-repayment-costs-on-fixes-rate-loans

Divorce Property – North and South magazine

Sun, 13 Sep 2015 22:25:00 GMT

This article was published by the North & South magazine, and I think it is so good it needs to be shared.

DivorceProperty

Setting up a Budget based on Your VALUES

Mon, 10 Aug 2015 20:49:00 GMT

Here’s A fascinating article printed Aug 10 2015, in the New York Times by Carl Richards

Setting up a Budget based on Your VALUES

At a recent breakfast, a friend shared the process he and his wife use in place of traditional budgeting. It takes them less than 15 minutes a month, and after the first month, it’s already had a massive impact on the way they use money. Think of this as a little case study, one that shows exactly how easy it can be to align your spending with what you say is important to you.

First, they started by tracking their spending. You might call it budgeting. You might even use budgeting software. It doesn’t matter. Write it down. Use a spreadsheet. Download your credit card statement. Print your bank transactions. Whatever you do, put together a simple list of all your monthly spending.

Second, they went through every transaction, one by one, and asked a series of three questions for each:

1. Does this expense align with our values?

2. What value does it align with?

3. Is there a substitute that might cost less?

As they went down the list of transactions, they answered the first question with a “yes” or “no.” I suggest physically doing something for this part of the exercise. For example, if you printed your transactions, mark each transaction “yes” or “no” with a pencil. If you’re using a spreadsheet, you could add a column and type in “yes or “no.” I find the physical act tends to make the intangible nature of money a bit more real.

At this point, it’s really important that you don’t get caught up in shaming or blaming. Just answer the question and give your spouse or partner room to do to the same. You are simply noticing what aligns with you values and what doesn’t.

The second question challenged them to define what they valued and why. This conversation was eye-opening and helped them better understand each other’s buying decisions.

The third question represented a shortcut to finding a “third way.” Remember the third way? It’s a great tool for discussions that get stuck in “my way” versus “your way.” Asking what they could substitute offered a third, better way forward.

My friend shared a great example of the process with me. He has a close friend, the next closest thing to a brother, in fact. But this friend always seemed to be experiencing hard times and never had any money. Every time they got together, they went out to eat. No surprise, my friend always paid. After looking back at their expenses over the years, my friend and his wife discovered that those meals were costing them about $70 a month.

So they used their three-question process to work through this expense. My friend made the case that buying those meals aligned with their values. Then they moved to question 2 and explored what value it was aligned with.

“I just want to be there for him,” said my friend. “He’s there for me. There’s value in that relationship.”

This is super fascinating.

Notice that the value he expressed — spending time with someone — had nothing to do with spending money at all, let alone $70. In this case, it wasn’t about the money. It was about the time together. The money just happened to be the default setting for how that value was expressed.

With the third question, my friend and his wife found a third way, a substitute that delivered the same desired value without the expense. Both men loved to hike and mountain bike, so they decided that instead of meeting for a meal, they would find an activity to do together that didn’t cost money, or at least cost less than $70.

It’s important to point out that this was not a negotiated settlement between my friend and his wife. This was not a fight between his way and her way. This solution was not “between.” It was better! By exploring what was actually valuable about the experiences with his friend, they found a better way to honor that value, independent of the financial considerations.

But they didn’t stop there.

They are supersmart people, and what they did next confirms it. They were wise enough to know they needed behavioral guardrails to keep them on track. Instead of just looking at that $70 and saying, “Cool, we won’t spend it,” they immediately went to their automated investment account and increased their monthly savings by $70.

In effect, they made the savings a mandatory expense. The money is already spent. The next time he hangs out with his friend, the temptation to go out for “just one more meal” is gone because the money is already “spent” on their low-cost index fund. That’s really cool behavioral engineering.

We know that $70 matters. Add up $70 every month for 10, 20, even 30 years, and it’s a lot of money. Throw in compound interest and that measly $70 can make a huge impact.

At the end of our conversation, my friend made it clear that they weren’t done looking for more money to save. They were fired up to see how much they could find the next month. And it took them all of 15 minutes.

Maybe it will take you an hour, or even three hours, each month, but I doubt it. Once you create that automated process, the results will start to build over time. Even if it’s only $10 extra every month, that’s $10 more than you saved before. Track your spending, ask the questions, and when you find the savings, do everything you can to automate the best behavior possible.

Wonders of the world. How many can you tick off?

Sun, 01 Feb 2015 21:31:00 GMT

One of my major goals in life is to see them all… Only 13 so far, so there is a few still left to do.

Wonders of the world

Forgotten wonders of the world

Abu Simbel temple in Egypt
Angkor Wat in Cambodia
The Aztec Temple in Tenochtitlan Mexico City
The Banaue Rice terraces in the Philippines
Borobudur Temple in Indonesia
The Colosseum in Rome Italy
The Great Wall of China
Inca City of Machu Picchu
The leaning tower of Pisa
The Mayan Temples of Tikal Northern Guatemala
The Moai Statues in Rapa Nui Easter Island Chile
Mont-Saint-Michelle Normandy France
The throne Hall of Persepolis and Iran
The Parthenon in Athens Greece
Petra the rock carved city in Jordan
The Swedagon Pagoda in Myanmar
Stonehinge in England
Taj Mahal in a Agra India
The temple of inscriptions in Pakenque Mexico

Modern wonders

The channel tunnel
The clocktower Big Ben in London England
The CN Tower in Toronto Canada
Eiffel tower in Paris France
The Empire State building in New York City
The gateway arch in St Louis USA
The golden gate bridge in San Francisco
The high Dam in Aswan Egypt
Hoover Dam in Arizona
Itaipu Dam in Brazil Paraguay
Mount Rushmore National memorial in South Dakota
The Panama Canal
The Petronas towers in Kuala Lumpur
The Statue of Christo Redentor in Rio de Janeiro Brazil
The Statue of Liberty in New York City
The Suez canal in Egypt
Sydney Opera House

Natural wonders

Angel Falls in Venezuela
The Bay of Fundy in Nova Scotia Canada
the Grand Canyon
The Great Barrier Reef
A Iguacu Falls in Brazil
Krakatoa Island in Indonesia
Mount Everest Nepal
Mount Fuji in Japan
Mount Kilimanjaro in Tanzania
Niagara Falls in Ontario Canada & New York state
Paricutin volcano in Mexico
Victoria falls in Zambia

Hobsonville Point – Affordable homes research lab

Sun, 16 Mar 2014 23:24:00 GMT

This is really good news, not only for 1st home buyers, but single people wanting a home of their own, not an apartment.

http://nz.news.yahoo.com/a/-/top-stories/21972719/smaller-more-affordable-home-research-lab-launched/

Holiday Homes – Sweeping IRD changes!

Mon, 14 Oct 2013 21:06:00 GMT

If you own a holiday home and rent it out sporadically to earn a few dollars to cover rates and insurances etc, please read the following article by Withers Tsang – Chartered Accountants.

IRD have radically change the rules for mixed use assets which a rented holiday falls into the category. These changes may affect you.

Mixed Use Assets – Holiday Homes

Life is a journey

Mon, 05 Aug 2013 23:24:00 GMT

First it was the T42, Mongolia, and now the “Ride to Conquer Cancer”

I have a great friend who constantly tells me that New Zealand is just a big adventure playground. How true that is, and over the past year or two I have finally set aside time to start “seeing my own country” as well as throwing in some overseas travel of course.

Last year I wrote about my trip to Mongolia, and also riding the 42 Traverse – Central Plateau. Since then I have been itching to mountain bike everywhere. I have read about tours Mountain Biking in Bhutan, Uzbekistan, Kazakhstan, Japan, Kenya, or the route of the Vines – France…..Oh so many choices, what to do 1 ^st ?

Why choose one? If you know me well then you’ll know that actually I plan to do them all. It’s just a case of when….

So, my latest adventure is now for a good cause.

I have only been a mountain biker not road rider, but I spotted an ad a few months ago for “the ride to conquer cancer”. It is a charity fun ride and not a race (thank goodness) leaving Auckland, and riding out of the city for 100 kms on a Saturday 16 ^th November spending the balance of the day camping, and then riding back into the city another 100 k’s on the Sunday 17 ^th November this year.

My mountain bike rides at Woodhill are usually only a max of 20 ks at a time, so 100 k’s in one day seemed pretty hideously long to me. Can I sit on the seat that long?

My second challenge is that I live in a gorgeous but little apartment, with a serious lack of storage so my bike lives in my spare shower. Visitors to the bathroom get to admire the bike!!

Where on earth could I store a road bike? My friend Spyda came up with a solution. I am now the proud owner of 2 fat boy tyres (actually they are very skinny) that interchange on my bike.

So if you are out of the road early in the morning you may see me riding very slowly around Auckland City. I’m the one that everybody else passes at great speed. I have to remind myself that the ride to conquer cancer is a charity ride and not a race!

How you can help?

I am the least sporty person I know, so if I can ride a bike, I’m sure anybody can. The ride to conquer cancer is a totally charity focused event. As soon as you make a donation the funds are actually credited to The Cancer Society even though the event doesn’t take place until November. So you can either help by sponsoring me and making a donation here:

Enter my name

Suzanna

Mihakis

At this link… Sue’s donations to help conquer Cancer

or join me on the ride.

Every rider is committed to raising $2500. If neither of these options appeal you could become a volunteer on the weekend. You can read All about the Ride to Conquer Cancer

I consider myself extremely blessed. My mother, sisters, brother and all of my immediate family in Greece are all still alive. Cancer is not something to have hurt our family.

This is the very reason I want to do this ride. I know I am one of the lucky ones.

I have lost a couple of girlfriends to cancer when they were far too young and also had to watch how devastating it is for their children, beginning their adult lives without their Mum to attend their weddings, meet their grandchildren, watch them grow old.

Even though it is only a small gesture. I’m thrilled to be able to do something to help fund research that we hope will help find a cure. Any help you can give me towards by donating to my ride is very much appreciated.

The last 5 years have certainly been very interesting for me, full of challenges that I proud to say I’ve worked through and the new biking adventures are all part of the new life my business mentor Dr Fred Grosse is helping me design.

We love to hear what adventures you are designing for yourself, and if we can be of help in anyway, setting plans and budgets, paying off the mortgage early so you can achieve your goals, just let us know.

We would also be thrilled if you would Like us on Facebook so we can watch and help you meet your challenges and goals and generally having fun.

And, if you can a little donation can go a long way

Suzanna Mihakis Sue’s Donations to help Conquer Cancer

1st Home Buyers

Sun, 28 Jul 2013 22:31:00 GMT

Should 1 ^st home buyers stay out of this market?

Over time property prices always rise. There a sometimes a few dips, but even a Global financial crisis didn’t manage to halve the property prices that some people predicted, so should the alleged current frenzy put you off buying ? Absolutely not!

Tony Alexander is an economist for BNZ. He is a brilliant speaker, entertaining, factual and manages to get a message across to the audience in a manner easily understood by us all. Whilst he admits that he doesn’t personally have a mortgage he does give some insight into what he would do if he did.

I’ve been reading his commentary on property prices. Interestingly he predicted a housing crisis several years ago occurring in Auckland. And he is right on the money.

Whenever there is a shortage of houses, prices go up as people fight their way into the market

In my opinion messing around with bank ratios won’t halt the growth. I think there is a really easy answer, and one sure way to solve the “crisis” and that is increase the supply! Is this likely to happen? I doubt it.

Council should be forced to get their act together and allow the opening up of subdivisions in a hurry. Instead of being bogged down by bureaucracy, follow Nike’s lead and Just do it! Its amazing how some countries manage to cut the red tape and get major projects happening quickly. If Politicians believe we have a housing crisis on our hands, then why can’t we do that here? I personally like the idea of minor dwellings being built on large properties, We don’t all want or need big sections, and just because we are si ngle doesn’t mean that we necessarily want to live in an apartment. So allowing smaller properties and higher density in many cases, I think is a good thing. Like myself, many of my single friends and clients want to live in a house but don’t need a massive section and want to feel as though they are part of a small community and neighborhood.

This market has been really interesting for me to watch. I’ve been out helping friends look for both homes and rental properties. I’ve lost count of the number of auctions I have attended and been mortified watching foreigners clearly very new in NZ buying up house after house after house. However, I also know that this frenzy is limited to specific area’s in Auckland and is definitely not a blanket issue across the whole city.

I don’t know where their money comes from, but wherever it is, there’s no shortage of it. I suspect it is simply years of hard work, discipline and a good savings habit that us kiwis have been lacking, over decades now? Will we follow their lead and start working and saving harder?

What I find fascinating about watching some foreigners buying is that they don’t appear to have any strategy whatsoever, and will just outbid each other so as not to lose face. A house in their target area is often selling for way over what would be considered common sense.

The First Home Buyer

what I have observed

what opportunities I see them create and are available in this market

Kiwi saver – our younger generation have started saving and now many of them are able to buy their 1 ^st home making use of the grants available. I also think it has created a savings culture beyond kiwi saver as I have witnessed many of them choose to leave their kiwi saver balances alone and just use their own savings as the deposit. They then get creative and continue to live with family while they rent their first home out to build more equity into the property.

Quality of our property stock – You know its bad, when your friendly real estate agent doesn’t want to take you to look at a house, and tell’s you “Sue – its a dog””. Usually, I get excited at buying properties that need a little bit of TLC. But some of the houses I have seen just deserve being bulldozed.

One of my own properties that I purchased years ago had fencing that was simply packing pellets turned on their side.. Boy did I have fun. When I knew nobody was watching I karate kicked the fences down (well if you’ve seen the size of my arms, you know I couldn’t push them down).

So, I’ve come to the conclusion that there is an awful lot of property on the market at the moment that needs work to improve them. This is always a good opportunity for the 1st home buyer to get in at a more affordable price and in time add value, building equity through hard graft. Its probably also the reason so many younger ones stay at home for longer. They don’t want to live in the houses that they can actually afford!

Some clients have taken 6 mths to find a suitable property being outbid at an auction is usually why its not just one month! but the great news is, one by one, everybody does get there in the end. It might take 10 auctions, but my advice is, definitely don’t give up.

Buyers Advocate – Many clients have used the services of one of our team member’s Stu Mcloughlin – he’s a licensed auctioneer. Stu tells us that because of the fantastic energy in an auction room, people are often like the possum caught in car headlights. There is so much going on they don’t hear what’s being said or see what’s being done. He’s been a long time in the game and has a great calming influence with a steady hand at the wheel. Our clients say Stu’s support is “price less” . This is a free service we offer to all of our clients however Stu is happy to help non clients as well, but he will charge a flat fee for that service

Clients often asked, where do I buy, where do I start?

We have a saying in our office – “Fish your feet first”. So we recommend that you start with the area you know. I would focus on

Are you in a job you intend staying in? None of us like spending hours in traffic, and having commuted from Devonport to Newmarket for years, I love now living only 5 min away from the office, so, look at your work location and draw a circle around it, and decide on some locations based on how much time you are comfortable spending in traffic commuting to work.

Set up your criteria on trade me, ensuring that you only receive the emails of new listing on that set criteria. If your criteria is too broad, I find people get bogged down with too many options and can’t make decisions.

I’ve even suggested to some clients to do a letter drop, but miraculously every time we have gotten to that point, the right house has actually come along.

So far any client that has actually been committed to buying is either still hunting or has managed to find the right property. None have given up yet.

Happy hunting.

P lab’s

Sat, 27 Jul 2013 03:01:00 GMT

Sadly many property investors self manage their properties because they don’t want to pay a property managers fee. At the same time they don’t bother doing the 3 monthly inspections.

My own house insurance policy states that I must prove we have completed 3 monthly inspections, so my property managers all complete reports and include photographs for me. Without this, the insurance would be invalid.

Discovering you’re rental property has been used as a P lab would have to be you’re worst nightmare as a landlord wouldn’t it?

Read all about one landlords experience here….. P Lab .

Our favourite APP’s

Fri, 26 Jul 2013 03:31:00 GMT

I turned up for an appointment recently and laughed when my client got excited that I had arrived. Her Mum had just purchased her 1 ^st iphone and they wanted to know all of my favourite apps. We spent the 1 ^st half hour talking about the phone!

Apart from the standard, “Mirror” and “torch” that every phone should have, here are a few of our favourite AP’s and they are all free.

Need to send a document but you aren ’ t in the office or at home?

You don’t need to be. This APP turns your phone into a mobile scanner. Scan Pages

Its been a great way for clients to sign and return documents to me.

How did we survive without Shazam ?

Sitting in a cafe with friends for lunch, listening to music, and having a great time. The music was outstanding, but what was it?

Shazam takes the guess work out of it. You simply open the APP hold it close to the music and “tag it” What I love about the app, is that it saves your “tags”, so when I’m in need of new music I have a list read to buy, or of course borrow.

Another favourite APP is Strava

Its a great one for cyclists and runners. A few of my clients are on it, and we have a very friendly rivalry going on. If you need a challenge and want someone to beat, I’m a pushover. You’ll find me as “Suzi M” I actually find it really inspiring when I see a friend has just ridden 100 km’s around the hills and I’ve only managed a little ride around Woodhill!

Love sudoko but want more of a challenge?

This is one way that I stay in touch with my friends who live off their rental property income and are now away 6mths every year living the dream. We can online chat while playing a game. Bevan and Stu read the paper at lunch time, and fill me in on … the more bad news, while I play words with friends and sudoku.

What are your favourite apps?….we’d love to know and share them.

Reserve Bank hurting 1st home buyers.

Wed, 17 Jul 2013 21:10:00 GMT

Yesterday I was interviewed by Marcus Lush – describing how 1st home buyers would be kicked in the teeth with the proposed interference by the Reserve Bank on Banking deposit/lending ratios. You can listen to the interview on Radio Live here , or read some of the transcript posted on Interest.co.nz here . I am pleased to note that I am not the only one with these views:

Are you covered?

Wed, 08 May 2013 04:35:00 GMT

Any good landlord has house insurance cover for their rental property. Some even take out additional landlord cover for extra protection.

Most insurance companies expect owners of rental properties to undertake certain tasks as part of their policy.
We agree to this when we sign the policy agreement.

These can include 3-6 monthly inspections, formal credit & reference checks of tenants & written documentation of all of the above.

A professional property management company will do all of these as part their regular duties.

But does a self-manager?

We often think we don’t need to do a regular formal inspection and don’t think we need to write it all down. (We know it’s OK, right?)
Similarly, we don’t always do 3 (or more are ideal) reference checks, or feel the need to call the referee whose name is on the written reference for example.

If the worst happens, we would go to our insurance company & make a claim. They will check we have undertaken all of the obligations we agreed to.

We all know we have to disclose accurately all our information or we will not be covered. But what about if we have not met our landlord obligations?

If you are a self-manager of a rental property, now would be a great time to check your insurance policy and make 100% sure you are meeting your insurance obligations.

It could be too late if you wait until claim time!

Karen Withers
Nexus Property Management
PO Box 47785,
Ponsonby,
AUCKLAND 1144
Tel 09 360 4506 Mob 021 292 0878

Tony Alexander and Singapore – one of my favourite cities.

Mon, 25 Mar 2013 04:55:00 GMT

I always enjoy reading Tony Alexanders weekly report and this one was no exception.

With Singapore being one of my favourite cities in the world and one I would definitely like to live in for a while, the comments were pertinent and funny of course.

http://tonyalexander.co.nz/regular-publications/bnz-weekly-overview/weekly-overview-lead-article/drought-and-why-i-gave-away-10/

Help me achieve my goal

Wed, 13 Mar 2013 20:32:00 GMT

You may already know that this year, I am participating in The Ride to Conquer Cancer, a 2-day, 200km cycling event that raises funds for cancer research and treatment. All proceeds from the event go to Cancer Society Auckland, whose primary mission is the discovery and development of new drugs for cancer treatment.

I will be raising funds and training hard so I can make a huge impact in the fight to conquer cancer – but I need your help.

Please make a donation to my fundraising account today.

http://ak13.conquercancer.org. nz/site/TR?pg=pfind&fr_id=1040

You’ll find me under Suzanna Mihakis

Cancer is something that has touched all of our lives in some measure. It’s my goal to help put a stop to that and The Ride is how I am doing my part. Any donation that you can give is greatly appreciated.

With the help and encouragement of Sue Blayney, I starting my training yesterday….My first road ride since high school. I wasn’t impressed, she made me ride up Mt Eden and One tree Hill 3 times!

Despite living in Auckland 16 years I had never actually been up One Tree Hill, so I was allowed a 5 minute rest to take in the view. Amazing. My training has to be on my Mountain bike – My shower isn’t big enough to fit another bike in it. The joy of living in a little apartments…

Thank you in advance for your generosity!

Auckland boom: blessing or curse? by Kieran Campell: NZ Herald

Thu, 21 Feb 2013 19:14:00 GMT

Here’s an interesting article on Auckland’s future growth: As an ex Cantabrian, I’ve never regretted the move to Auckland. Its a gorgeous city to live in, and for me, a perfect city to buy property for rental.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10866945

Barfoots – new Ipad app

Thu, 13 Dec 2012 21:29:00 GMT

Wow, this new app has been forwarded to me. Its amazing. You can explore homes for sale in our stunning city

Here are the details:
Barfoot & Thompson’s iPad app helps you find the perfect home or investment property. See homes for sale nearby or use the easily adjustable filters to find homes that match your criteria.

Key Features:
✔ Interactive map: see homes for sale around you, and tap them to see more details.
✔ Custom filters: adjust your filters for price, bedrooms and bathrooms to see only those homes that match your criteria.
✔ High-res photography: flip through beautiful full-screen photos of homes for sale.
✔ Videos and floor plans: for those homes that have them available.
✔ Locality search: type the name of the street or suburb that you are interested in to be taken straight to that locality.
✔ Explore schools: show the schools in your area, and view their enrolment zones on the map.
✔ Bookmark your favourite homes or share them with friends via email.

The Barfoot & Thompson iPad app includes only properties for sale in Auckland and Northland, New Zealand

The app is free to download:

https://itunes.apple.com/nz/ app/barfoot/id545234218?mt=8

I love the fact that you can look at a map, and isolate an area that you want to buy, click on the pin marking houses for sale, and find the details of that property. Its awesome if you are really focused on a specific area because of school zones, or public transport. Enjoy

Property Management news

Wed, 05 Dec 2012 19:42:00 GMT

How often do you inspect your property?

I know many people who manage their rentals themselves – and do a great job too. When owners are doing inspections, they are usually looking with a very practical eye at their investment as well as keeping it in optimum condition for their tenants.

Some tenants like the fact that they are dealing directly with the owner – the person who decides the rent & authorizes work. Many are on very friendly terms with their landlords. Because of this they don’t always do inspections as regularly as professional property managers & this can lead to problems in the long run.

Owners like ‘good’ tenants who pay their rent & aren’t constantly calling them with small issues. But what if these ‘good’ tenants forget to tell you about the leaking tap or the broken smoke detector?

Is your insurance company going to cover you for remedial work if you haven’t been doing regular inspections? You might want to check the fine print on your insurance policy. Done properly, a regular quarterly inspection should achieve the following:

Confirm that the tenants are looking after your property & gardens

Bring to your attention any maintenance that hasn’t been completed or new issues that need attending to

Check that tenants are adhering to the terms of their tenancy agreement

Show the tenants that you take the management of your investment seriously

Indicate to the tenants that you are committed to providing them quality premises – they are respected & involved

A professional property manager is obliged under contract to do regular inspections. If you choose a good property manager, they will know what to look for at your property and will be your eyes & ears on the ground – pro-actively addressing issues before they become major maintenance problems. They will also be a middle man – tenants may not want to risk offending the owner directly, but will happily discuss it with a third party.

A great property manager will make the time to meet with you to discuss the individual requirements for your property. Getting the experts to manage your investment could be a great investment in itself.

Even if you decide to do the managing yourself, make sure you carry out regular inspections – you will reap the rewards in the long run.

If you prefer to have a property manager – Karen Withers owns & operates Nexus Property Management, a Ponsonby-based residential property management company. It offers personalized service and a practical, pro active approach to property management. Servicing the Ponsonby, Grey Lynn, Herne Bay & St Mary’s Bay area. Karen also owns rental properties in Ponsonby.

Property Management – the way it should be www.nexuspm.co.nz

How often do you inspect your property?

I know many people who manage their rentals themselves – and do a great job too. When owners are doing inspections, they are usually looking with a very practical eye at their investment as well as keeping it in optimum condition for their tenants.

Some tenants like the fact that they are dealing directly with the owner – the person who decides the rent & authorizes work. Many are on very friendly terms with their landlords. Because of this they don’t always do inspections as regularly as professional property managers & this can lead to problems in the long run.

Owners like ‘good’ tenants who pay their rent & aren’t constantly calling them with small issues. But what if these ‘good’ tenants forget to tell you about the leaking tap or the broken smoke detector?

Is your insurance company going to cover you for remedial work if you haven’t been doing regular inspections? You might want to check the fine print on your insurance policy. Done properly, a regular quarterly inspection should achieve the following:

A professional property manager is obliged under contract to do regular inspections. If you choose a good property manager, they will know what to look for at your property and will be your eyes & ears on the ground – pro-actively addressing issues before they become major maintenance problems. They will also be a middle man – tenants may not want to risk offending the owner directly, but will happily discuss it with a third party.

A great property manager will make the time to meet with you to discuss the individual requirements for your property. Getting the experts to manage your investment could be a great investment in itself.

Even if you decide to do the managing yourself, make sure you carry out regular inspections – you will reap the rewards in the long run.

If you prefer to have a property manager – Karen Withers owns & operates Nexus Property Management, a Ponsonby-based residential property management company. It offers personalized service and a practical, pro active approach to property management. Servicing the Ponsonby, Grey Lynn, Herne Bay & St Mary’s Bay area. Karen also owns rental properties in Ponsonby.

Property Management – the way it should be www.nexuspm.co.nz

Why Insurance Is Necessary In Our Debt Driven Lives

Tue, 13 Nov 2012 05:27:00 GMT

After attending the funeral of a dear client at only 44 yrs of age today, it has really brought home to me the importance of insurance and protecting our most important asset, ourselves.

Sadly most of us take on debt for many different reasons but the most common being the family home. Debt is an essential financial tool that allows us to leverage our personal assets to invest in growth and income producing assets such as commercial and residential property.

For the younger generation most property is purchased by way of a combination of debt and equity. As we get older and pay off mortgages then eventually homes are bought and sold without a mortgage.

In today’s’ financial climate debt is typically financed by a mortgage to a bank. The equity (or deposit as it is commonly referred to) is sometimes funded by cash or savings. Occasionally I have clients who have the fortune of being able to borrow any shortfall they need from family.

Invariably lenders these will be getting you to sign a guarantee to protect them if you defaulted on the loan.

So why does this pose a potential risk to the you as a borrower?

In it’s simplest form A Personal Guarantee is an obligation for the borrower to pay an obligation to the lender, on demand.

Personal Guarantees expose an individual’s personal assets in the event of unforeseen circumstances.

Whist we cannot protect against economic downturn causing vacant tenancies, we can protect against the risk of a borrower being unable to meet an obligation due to Death, Serious Illness or the inability to fund a shortfall from rental income due to Disability.

Many clients will say to me that they aren’t concerned because they don’t have children, and of course, nor do I so I can relate to that. This isn’t my main concern.

My main concern is: What if you have a serious illness that is not covered by ACC and you live!

If I am not in a position to work due to poor health I sure need to be doing something with my time, and I certainly want to maintain as much of a reasonable lifestyle as I possible can.

An example of this is when I was away overseas in Thailand, one of the guests at the Hotel was in a wheel chair, severely handicapped, he had a full time nurse with him. He is still able to travel, clearly had his wits about him, he just physical couldn’t take care of himself.

Borrowers should look to cover their debt, particularly if it is subject to Personal Guarantee, in tandem with a balances risk-management plan based on sound insurance advice.

If you have been feeling guilty reading this blog knowing you havent had a full review for a while please call us urgently on Sue 021 776 222, 09 9147555 or sue@stml.co.nz or alternatively Please call Warren Storm 0800 478 676 or email him warren@lifebrokers.co.nz for a no-obligation solution to your personal needs.

Rent or buying, – an economists view point

Tue, 06 Nov 2012 03:16:00 GMT

I was fascinated to read the article in NZ herald on line today – Rent don’t buy, says economist – Shamubeel Eaqub, by Anne Gibson

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10845394

His argument seems to be based on the belief that a home is a business. An interesting view point. In all of my years in lending and finance I have never had a client come and tell me that the want to borrow money to buy a business – a residential home that they were going to live in. Many will ask to borrow money to buy a rental property, and I would totally agree with Mr Eaqub, that is a business. But this is not basis of the article. He refers to your own home as a business.

I also couldn’t understand why Aucklander’s were singled out as having a love affair with property in the article. During my time as President and on the board of the Auckland Property Investors Association I was fortunate to meet many amazing, astute property investors from all walks of life, living in all parts of our country. This love affair with property is not an Auckland issue.

So why do we want our own home? We all have our own reasons but for most of us:

Its part of growing up and becoming an adult. To plant our gardens. Invite our friends over for a BBQ, bring up a family, have pets, do the things we like doing at home. Ultimately, we all want some level of certainty. To be able to come home at night to a place we call our own. Owning our own home does that for us.

Only last week I was driving through the North Island for a couple of days skiing at Turoa. I was saddened to see the state of many properties, run down, badly in need of a good paint job. Again this is not a provincial issue, and I am sure there are many homes like it in our major cities. So again Mr Eaqub I disagree, not everybody spends a fortune maintaining their homes.

The article uses buying shares compared to buying a home (business). Well I have very clear memories of buying shares in 1987 when the market was going crazy. Hard earned cash invested in the share market. I haven’t seen a cent of that money since. It was a hard lesson but one I needed to learn. In 1996 I was fortunate enough to buy a block of flats in Christchurch. The total purchase price was borrowed using the security of my own home. I still own the flats today and yes as we all expect they have increased in value significantly.

I don’t have an issue with anybody buying shares. That’s an investment strategy in itself, but I cannot see how us ordinary New Zealander’s would even consider renting for life and investing in a share market that we don’t understand and don’t have any control over.

I’m going to stick to my current strategy of owning my own little apartment and buying rental properties. It works for me.

Latest Property values statistics from Property IQ for Sept 2012

Fri, 12 Oct 2012 02:13:00 GMT

Residential property values have continued to gradually increase at a nationwide level according to the latest PropertyIQ index for September. Values are up 1.8% over the past three months and 5.3% over the past year.

As a result values have now edged ahead of the previous market peak of late 2007.

Jonno Ingerson, PropertyIQ Research Director said “while nationwide values have been slowly increasing for over a year now, we need to put this into context. The rate of value increase is relatively slow, currently around 5% per year compared to the 10% to 15% we saw during the mid 2000’s”.

“The current value increase is also being driven largely by Auckland and Canterbury. If those two areas are excluded then values across the rest of the country have only increased by around 1.5% over the past year. Furthermore, although values are now just above the 2007 peak, when adjusted for inflation they remain 12% lower.”

“The number of sales in the last few months is higher than in 2010 and 2011, but the years since the global financial crisis have been characterised by very low activity. There is a lack of listings in many areas, particularly Auckland, which is also likely to be constraining sales numbers” said Jonno Ingerson.

“First home buyers and investors are definitely more active in the market now than has been the case for several years. However, in general buyers are acting carefully, doing their research and not overpaying. This is despite the lack of listings, which would ordinarily mean increased competition and prices” said Jonno Ingerson.

“Spring is usually a time when the number of listings increases as people prepare their property for sale during the warmer months. There is some evidence of this seasonal lift, but it is only slight” said Jonno Ingerson.

Old Auckland City continues to have the steepest increase over the past 12 months, up 8.4%, with Manukau and North Shore close behind, up 6.8% and 6.3% respectively. The increase in these areas is reflective over the past three months also, with old Auckland City rising the most, up 3.6%, and Manukau up 2.8%.

Values continue to rise well above the previous peak of 2007, with the wider Auckland area up 7.8%, another 1.2% increase on last month. Old Auckland City now sits 11.2% above peak, with the North Shore 5.9% and Manukau 4.7% above. When adjusted for inflation no area has reached the previous peak, with Old Auckland City the closest at -2.8%.

Growth in Auckland continues, and while the volume of listings has increased we are still seeing a shortage of suitable stock for both improved properties and vacant residential land. This is leading to limited choice for potential buyers in an already heated market. As a result, further competition for quality properties that come onto the market is likely to increase.

With the strong, sustained period of growth recently, and the typical expected lift over the coming months, property values are not expected to slow.

ASB Spring Home Lending

Sun, 30 Sep 2012 22:51:00 GMT

ASB have joined Sovereign with a spring Home lending campaign

New home lending offer

and exisitng clients are not forgotten in this campaign

*As always the campaign does have terms and conditions so call us now to find out how you could benefit from this campaign ph 360 6995

Sovereign Spring Lending

Sun, 30 Sep 2012 22:44:00 GMT

Sovereign have today announced their Spring lending campaign.

If you become a new Sovereign customer:

And for existing Sovereign customers:

Terms and Conditions apply and approval must be given before 16th December and funds advanced before 31 March 2013

Frustrated house-hunters turn to experts

Tue, 04 Sep 2012 22:20:00 GMT

An interesting article in the Herald this morning.
Im not so sure that I agree with the comment “Harcourts New Zealand chief executive Hayden Duncan said there were few buyer’s agents in New Zealand because buying a house was relatively straightforward.” Stewart Mcloughlin helps my clients with the sales process and going by the questions he is asked, its obviously not that straight forward.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10831783

Interest rates

Thu, 08 Mar 2012 21:32:00 GMT

We were absolutely thrilled yesterday to hear the Reserve Bank Governor announced that he was keeping the OCR the same.

As I have mentioned in past newsletters, it is reviewed every 6 weeks on a Thursday. Sometimes it is a live telecast and we all sit in the office and use it as team time to watch and listen. We find the Journalists questions and therefore the answers far more enlightening than the basic announcement (and some Journalists questions more entertaining from their stupidity).

There has been a lot of talk, speculation and crystal ball gazing about when to fix, or keep floating. What we all sure do now know is that newspapers sell by feeding us stories, fact or fiction.
I have wondered whether we should keep an annual diary of the headlines, because it seems to be the same headlines at the same time of year, every year. Property investors now know that having a empty property at the beginning of the student year is a good thing! The media will report it and run it for several days. Ho hum…it’s the same old same old.

However, the media certainly do cause many clients stress and any indication that rates could rise causes concern. The simple answer is you fix when you are happy with the rate being offered and can live with it. If funds are tight and you cannot take the risk that the rates will rise – fix. Fixing your mortgage is just like taking out insurance. You are buying security.

This Global Financial crisis and certainly the issues in Greece and the rest of Europe are a major headache for many. This is history in the making and not something we can look to the past and predict any specific behaviour because we have seen it before. I personally believe politicians and economists do not really know what is going on. They can make as many assumptions as they like, but ultimately money is spent by human beings, this crisis is not a repetition of the past and our behaviour can change simply by what we are being fed by the media.

As you are aware, interest rates are at the lowest levels for many years. These times present good opportunities for borrowers to reduce debt by repaying their loans off faster. Many clients are quite happy to coast along and risk a floating rate. Others are now starting to want some level of certainty.

Banks are now knocking on our doors wanting to negotiate rates for clients. We have come to the conclusion if you need some certainty in your life and your expenses are one area that you want to control, then it is probably time to fix your mortgage.

As always we do not charge to review your mortgage and we will help by obtaining some good longer term fixed rates to guarantee that certainty.
just click here to send us an email or you can contact Bevan directly on bevan@stml.co.nz , or Sue on sue@stml.co.nz

Accidents and New vehicles

Thu, 08 Mar 2012 20:24:00 GMT

You may wonder what this has to do with mortgages?

Its simple really. Most of us cannot survive without our wheels, and it’s one common reason for clients needing loan top ups. Having had 2 car accidents in December I am well aware of the inconvenience of being without a car.

Sadly my beautiful Volvo convertible, that I have driven for the past 12 years, was written off, after a male (staff member at the National bank), drove straight into it while parked on Tamaki Drive. Not only did he hit me but managed to send the Volvo with (my little dog) Bella inside, into the back of Fergs Kayaks. In turn the trailer smashed into Fergs car. I’m not sure if the Kayaks survived, but both the Volvo and trailer have been written off.

oops – it\’s dead

Bevan had been using my Toyota Rav as his company car, so that was returned to me quick smart. In this instance I did not have an excess to pay because I was not at fault, so all is well you think?……sadly not.

Roll on to accident no 2: ….

It was New Years Eve, and after having purchased a new fishing Kayak for Bella and I to go out and catch snapper in our gorgeous harbour I was frustrated that the kayak was just being driven around looking good on top of the RAV waiting for the perfect opportunity to have its maiden voyage. If you were still in the North Island for Xmas you will recall the weather had packed a sad.

Whilst I was enjoying suddenly sitting up so high in the car, (the sightseeing is so different up there) after the low Volvo for so long, I completely forgot that the Kayak was perched on top of the RAV. An attempt to drive into down town carpark taught me one very important lesson!

Kayaks not only float they can fly! Oops.

This time the car accident cost me the insurance excess and I was left waiting another month before I could test my new Kayak. The Kayak didn’t suffer any damage thank goodness, but the story has kept all of my friends entertained.

We are frequently asked to assist with loan top ups to buy new vehicles. In both accidents I have been lucky and have had a vehicle to fall back on, but some clients are not so lucky, and a loan to buy new wheels is the only option.

We are very conscious that road rules are changing shortly, so to ensure you do not need to make a phone call to us for a loan top up, here is a very quick test that we hope keeps you safe on the roads, and your money in your pocket.

Give way rule quiz

It is only 9 questions and takes just a minute or 2. Bevan and I both scored 8 out of 9 without reading the new rules, so I would recommend you stay clear of little girls driving a Toyota Rav, with either a mountain bike on the back or a Kayak on the roof until I have learnt the last rule and can get 9/9!

Take the test now

Inland Revenue Department – Online Services

Thu, 08 Mar 2012 19:47:00 GMT

It is often frustrating for clients wanting to apply for a loan that one of the requirements is to provide evidence of your past income. Did you know you can access this yourself online using the IRD website?
I have recently helped several clients set up a free online account at IRD and obtain past tax summaries. All you will need is your IRD tax number.

This is what you do: Click on the link below:
ird register a login

Follow the instructions, which take about 1 minute to complete.
Then make the call to the IRD direct line (yes believe it or not, they answer it quickly!). They will help activate the account, and then you are all good to go.

You will need an access code, and password. Using the theory of keeping things simple I was able to use an access code and password that I use for internet banking….and of course…as with all access codes and passwords, you do need to keep these details confidential.

Chocking the economy: OCR drops to help the economy.

Thu, 10 Mar 2011 00:51:00 GMT

The Reserve bank has today announced a .5% decrease to the OCR down to 2.5%. They stated that they found it difficult to determine how large or what the long term effects will be from the recent earthquake, but it was clear our economy would be negatively impacted, and that even before the earthquake our GDP growth was weaker than anticipated with consumer and business confidence down. The drop in the OCR was a clear message to us, an attempt to build up our confidence, and translates to a savings of $42 per month for every $100k you have borrowed.

Our philosophy is always to utilise these savings where you can and instead pay the extra amount off your principal. If you believe you can afford to do this please just send an email and we can facilitate the process with your lender. At some stage these rates will increase again, so planning and utilising the savings now could well help you in the future.

It appears that the “ powers that be” believe that the rebuild in 2012 could stimulate growth and be inflationary. At today’s media announcement, journalists were able to ask their own questions. We were particularly interested in the ones regarding the building industry and how we would attract tradesman back from across the ditch to repair and rebuild Christchurch.

The focus of their attention seemed to be on the higher salaries able to be earned in Australia. Whilst we don’t disagree we have a couple of issues that may also be worth considering:

1. Will the government now realise that decision to stop allowing depreciation to be claimed on chattels for landlords is having a detrimental effect on the Housing industry. Landlords were providing a service that the government cannot do on its own with spending large amounts of tax payer funds – that is provide social housing to those that cannot provide it for themselves.

Landlords were happy to step in and fill that gap, but they can only go so far. The government has to come to the party as well.

The majority of landlords have mortgages and are paying the banks higher interest rates than the tenants pays them (we call it yield). This means that on a weekly basis they must subsidise their tenants, add on insurances and other costs and then the random repairs and maintenance that always seem to happen at the most unforgiving and inopportune time. I know far too many landlords who have had fires in their properties caused by tenants. This is the sorts of issue that we cannot predict. Yes we do budget for the unexpected but you can only do so much planning.

The depreciation claim was always just a “loan from the IRD”. You could claim depreciation on the chattels but all landlords knew full well that we would pay the tax on this depreciation back to IRD on the sale of the property. Every house gets sold at some stage. Always. This claim has been an important part of the cashflow and assisted many landlords to help make ends meet when the yields reduced so badly.

To remove depreciation has without a doubt caused landlords to exit from the market. This exit then causes a smaller pool of rental property (Landlords aren’t flocking to the market to buy properties that lose them money). A smaller pool of rental properties and a greater demand from prospective tenants simply equates to rent increases. We have had to laugh at the recent media article about 100’s of applicants all seeking the same property and tenants offering more than the advised rent to secure the property. We are only laughing at the naivety of those writing the articles. I think it was clearly obvious to everyone involved that this scenario would eventuate.

The 2nd concern we have and question we are asking ourselves is:

Why would you want to be a builder or tradesman in NZ. I don’t have a single builder client that doesn’t just want to earn a decent salary for a decent days work. The blame that they shoulder when things go wrong seems to be too much for many to bare. Their point of view is that their workmanship is signed off by the council, the tools and products are supplied by the building companies and designs by Architects.

Many have or are getting out of the industry because the risk is too great. Whilst the consumer may think that’s a good thing to get rid of shonky players, it never catches all but instead some good people leave the industry as well, and a shortage is created. At the end of the day we as consumers will pay for that shortage and increased regulation in the form of higher building costs.

Is that that we really want? When is enough, enough. Too much regulation seems to be chocking this whole industry.

Westpac offers its support to Earthquake victims

Wed, 02 Mar 2011 03:08:00 GMT

Westpac’s announcement to brokers yesterday will be very much appreciated and will certainly be of help to some clients.
…………………………………………………………………………….
The Christchurch earthquake last Tuesday as you know has been a significant natural disaster.

Westpac’s top priority has been the well being of those affected and we are truly committed to supporting our employees, our valued business partners, customers, and the community in Christchurch.

Westpac has financial relief packages available to assist customers impacted by the Christchurch earthquake which include:

Personal Customers

Access to an emergency overdraft facility for a 45-day term at a special interest rate of 5%, with a further 45-day term if required, under the same terms and conditions. All establishment fees will be waived.
A 90-day mortgage repayment holiday (please note that interest will continue to be added to the loan for the repayment holiday period)
No early repayment costs for customers who have had a home destroyed or have suffered major damage as a result of the earthquake and wish to repay their fixed rate home loan
No adjustment fees for customers wanting to restructure a home loan as a result of the earthquake

Business Customers

For small business customers impacted by the earthquake – access to a temporary overdraft facility of $20,000 for up to 90-days at a special interest rate of 5%, with no application fees or penalty interest to apply.

For commercial/corporate/agribusiness customers – access to a temporary overdraft facility of $500,000 for up to 90-days at a special interest rate of 5%, with no application fees or penalty interest to apply.

For commercial/corporate/agribusiness customers – a waiver of early withdrawal costs for term deposits.

Westpac would like to acknowledge the well wishes and enquiries we have received from many of you in regards the welfare of our staff in Canterbury, it has been truly heartwarming and most appreciated by the team.

Earthquake appeal

Tue, 01 Mar 2011 23:03:00 GMT

We have received this email today and felt compelled to share it with you all. Penny and Lucy you are amazing and we will be helping….

Dear Friends

We want to help the people of Christchurch.

We are reaching out to our friends to send boxes of essential non perishable goods from families in Auckland to families in Christchurch. I am sending this email to 50 Friends, hoping you could you please forward this email to 10 of your friends and ask each of them to fill a box. So that put simply 50 friends x 10 friends = 500 FRIENDS. The aim is together we will reach 500 friends so we’ll have 500 filled boxes with food and love to donate to the people of Christchurch.

So far in less than 24 hours we are amazed at the generosity, and with one person saying YES , it has turned from an idea to reality.
A 20 foot container and transport and fuel have kindly been donated. (Thanks to Eddy at Eagle Transport in Tauranga)
Waiwera Water has generously donated more bottled water that will also be sent down to Christchurch in the container and Allied Pickford thank you for the 500 plus boxes that are on the way to us today.

The plan is:
· 500 standard sized boxes have been kindly donated by Allied Pickford. Each box is 500mm wide x 420mm high x 260mm deep (roughly 2 wine boxes in size)
· the boxes can be filled with non-perishable goods (a list of items recommended by Christchurch ground staff is below)
· the container will be at a downtown Auckland location (location TBC) on Friday 4th March (from lunchtime until late afternoon), Saturday 5th and Sunday 6th March (the exact times and location will be on the boxes). We will also confirm this via email in the next few days.
· we can deliver 10 boxes to you on Wednesday (tomorrow) and Thursday for you and your friends to fill and drop off at the container in downtown Auckland or please bring goods to this location to pack (we will provide tape and empty boxes)
· we want to photograph some of the boxes and put the photos on our facebook page so please put messages, pictures of love, hope and support on or in the boxes
· the container will be transported down next week to the New Brighton distribution centre and the amazing people at the RANGIORA EARTHQUAKE EXPRESS have provide advice and assistance to make this possible www.rangioraearthquakeexpress.com

You being one of our friends we would really like your help. So 500 FRIENDS has started.

The people at RANGIORA EARTHQUAKE EXPRESS assisting with helping the people of Christchurch have stressed that most of following items would be really beneficial. Please try to adhere to the following list:
12 x Canned food – baked beans, tuna, salmon, spaghetti
2 x packets of dry soup
2 x 2 minute noodles
2 x Dried food – rice, pasta (500gm packets)
2kgs Cereal – Weetbix
2 x Tube of Toothpaste
2 x Toothbrushes
4 x Bars of soap – personal
1 x Shampoo (please wrap in a plastic bag in case it leaks)
1 x Conditioner (please wrap in a plastic bag in case it leaks)
2 x Wet Ones (packet)
1 x Dog/cat Food (dry food) *
1 x Deodorant
1 x Tea towel
4 x Roll of toilet paper
2 x Paper towels
1 x Tea bags or coffee (packet)
2 x Rubbish bags (pack)
2 x Box of matches
1 x Can opener
1 x Packet of Lollies (no chocolate it will melt)
1 x Sanitary pads (packet) *
1 x tampons (packet) *
1 x Tin of baby formula *
Please put messages, pictures of love, hope and support in the boxes for families in need
*optional

A photo of all the food that you can fit into one of the boxes is below. We shopped at New World and the above items cost about $150, which included baby formula which cost about $25.

An inventory of the above items are attached to the side of each box. Can you please tick off the items in your box as this will facilitate easy distribution of the boxes in Christchurch. If you don’t have time we can make a box on your behalf for a donation of $150. Please email me on ph@pennyhay.co.nz if this is how you would like to help.

So we are asking with BIG hearts that you please get involved and get back to me with hopefully a YES that you can take 10 boxes…or even more if you wish. We want this to get there fast!!
Please get back to me today (Tuesday) if you would like us to deliver 10 empty boxes or you can arrange a central pick up with us.

Many thanks with love and hope for the Christchurch people.

Penny

Penny Hay Phone: 473 6031 or 021 678 252 Email: ph@pennyhay.co.nz
Lucy McKenzie Phone: 473 5052 Email: lucyestelle@gmail.com

Christchurch Earthquake and bank penalty policy

Wed, 23 Feb 2011 21:32:00 GMT

The Earthquake in Christchurch has caused devastation not only to the city and its citizens but to our country as a whole. As New Zealand and the world watch and wait for hope, our thoughts turn to Canterbrians, to the loss of their homes and the destruction they are faced with.

In every situation where a mortgage is placed on a property, the lending will not advance the funds to purchase the house without evidence of house insurance being in place and the lender noted as having an interest in the property. If EQC are going to condemn a house and not allow residents to move back in, that would normally result in a payout on the insurance. Whenever there is a lender noted as having a mortgage on the property the cheque would go to the lender to repay that funds off the mortgage. This is all fine and most of us would want the mortgage repaid.

My concern came when I realised that many clients still have fixed rate mortgages. I have only ever in all of my years in finance known of the fixed rate penalty being waived on one occasion. This was in fact due to EQC paying out becuase the property was condemned due to a landslide. The lender was going to impose the penalty until we intervened on behalf of the client and appealed to their common sense.

We have been in touch with lenders to ask this very question now, and I am absolutely delighted that both ASB and Sovereign have confirmed that they would not charge break costs on receipt of the EQC payout.

Their email goes on to state…

“”We have also decided that when the loan is re-established, after the property has been repaired, we will re-instate the loan at the original rate if that is what the customer wishes to happen. These principles also apply if we receive interim payouts from the customer’s general insurer.

The policy applies to both ASB and Sovereign.””

Well done ASB and Sovereign. It is really great that they lenders have appreciated that rules should sometimes be broken. We all understand that when we sign fixed rates agreements, it is a contract, but sometimes contracts have to be broken, and common sense should prevail.

We do expect to hear from Westpac and trust they have taken the same view.

Saving money at home and freebies in Auckland

Wed, 09 Feb 2011 03:00:00 GMT

With the gorgeous summer weather its a great time to enjoy our city, reconnect with great friends, and family. Many of us have witnessed first hand the stress that the financial crisis has caused others. I personally have wanted to catch up with some friends but need to be mindful of the fact that the catch up may have to be at little financial cost. Something as simple as a movie is not always in the budget, so with that in mind here is a link to free movies being provided by Auckland City Council at various locations in Auckland this year, and even better if its fun, free and can involve friends and family.
movies in parks
I am particularly thrilled to see our New Zealand films being shown. Home by Christmas was distributed by my flatmate Gordon, Boy was loved by so many, and of course The Rocky Horror Picture show is being presented. (which I still have not seen!). If you intend to go and watch it, I will probably see you there.

For those of us that enjoy music the Auckland City Council have even offered a series of free musical events. You can check these out at Music in Parks I was lucky enough to go along to Auckland Zoo recently, and despite the rain the Dave Dobbyn concert was outstanding!

It was great to see the OCR left as is last month. It has now been 3% since 29th July 2010, and some commentators are picking that it will be left alone until late this year. For that reason we do not see any urgency fixing mortgages at present. The floating rate is most often the lowest rate. If you have any expected changes happening in your household and you feel the need for certainty please do not hesitate to contact us. Both Bevan and I believe in the need to be able budget and monitor your cashflow so there are always situations that require a fixed mortgage. Just call us on 09 9147555 or email sue@stml.co.nz The next review is not until 10th March, and it will be a live telecast if you want to watch it and hear the questions from reporters. The link will be up soon but this should lead you to it :
OCR live telecast

We are always mindful of the fact that to become financially free we need to make and save more than we spend. If you have any great practical ideas on how to reduce your expenses we would love to hear of them and share them with others.

Feel free to email one of the team sue@stml.co.nz

Are you a budding TV star?

Tue, 08 Feb 2011 02:20:00 GMT

I received an interesting email this week that we thought we should share. Both Stu and Bevan have homes only very recently renovated so neither are keen to start the process again, and I certainly have no desire to be on television, however if you would like to be a TV star and renovate your […]

Landlords – Water charges

Thu, 03 Feb 2011 22:03:00 GMT

The ability to pass on the cost of water charges to tenants has been a bone of contention for landlords for many years. The Residential tenancy Act amended last year now has some clarity around the charges.
It is a question we are frequently asked so here is the extract from the act that we hope should help you.

39 Responsibility for outgoings
• “(1) The landlord is responsible for all outgoings in respect of the premises that—
o “(a) are incurred whether or not the premises are occupied; and
o “(b) are incurred for common facilities.
“(2) Without limiting the generality of subsection (1), the landlord is responsible for the cost of—
o “(a) the general rate (within the meaning of section 13 of the Local Government (Rating) Act 2002) payable in respect of the premises; and
o “(b) insurance premiums payable in respect of the premises; and
o “(c) any body corporate levies payable in respect of the premises.
“(3) The tenant is responsible for all outgoings in respect of the premises that are exclusively attributable to the tenant’s occupation of the premises or to the tenant’s use of the facilities.
“(4) Without limiting the generality of subsection (3), the tenant is responsible for the following charges, incurred during the tenancy, in respect of the premises:
o “(a) electricity and gas:
o “(b) telephone and Internet:
o “(c) supply of water if the water supplier charges for water provided to the premises on the basis of consumption.
“(5) In this section, premises includes facilities that are exclusively for the use of the tenant.”

and if you want to read the act : RTA

A novel way to work from home

Wed, 02 Feb 2011 03:18:00 GMT

Another theme appeared to be the need to return to working from home instead of a leased office. Not only does it save on the extra expense of what can sometimes be an expensive office, but it also means less time on travel to and from work. However not everybody has the space to set aside a room as an office so I have asked friends Andrew and Sarah King to share their latest business and how it might help some one that you know.

These cabins could ideally suit those who work from home but have outgrown their current space or are looking to save money on their existing office arrangements.

When your home based office space gets too small or starts to interfere with family life, RoomMate Cabins can provide an option before looking at serviced or leased offices, which can be less convenient, inflexible and expensive.

Hired office space at your own property retains all the benefits of a home office with the added bonus that work doesn’t intrude on your personal space and helps provides a demarcation between home and work. You can lock your cabin up when finished for the day and are less likely to stray back into the office later. You gain a separation from work life without the nasty commute home.

RoomMate Cabins are a modern and professional design, being a generous 3.6m x 2.4m in size, sufficient for most small office requirements.

Cabins are fully insulated with Batts in the walls and ceilings plus underfloor foil insulation. They are supplied with carpet, lights and two double powerpoints.

There are no council permits required as the cabin is movable, doesn’t have water connections and is under 10 square metres.

Electricity is provided via a supplied cable which plugs into any standard three pin electric socket, incorporating an RCD electrical safety switch.

The weekly rental of just $49.50 to $55.00 per week (plus gst if applicable) is fully tax deductible if used for business purposes.

Just one phone call to 0800 111 344 or an email to roommate@andrewking.co.nz could see your problems gone and your new office delivered the following day.

Xmas Greetings and New Years resolutions.

Thu, 23 Dec 2010 20:59:00 GMT

Many of us are looking forward to the end of a hard year. Its Gorgeous summer weather and I am going to use my spare time to reflect on this past year and what changes can be made to ensure 2011 is the best year yet.

The Xmas and New Year break is always a great time to reflect plan for the future. New Year’s resolutions are made with the best intentions …and unfortunately sometimes broken.

Here are just some of the things we would love you to think about and perhaps plan in your diary’s to review over the coming months. I will be writing on them in detail as the New Year progresses, but I hope this will give you some food for thought in the meantime.

I had an early meeting with clients/friends this morning. They have just returned to NZ after spending the last 6 years in the United States. The latest buzzword around town is “staycations”. Stay at home vacations. I know so many people including myself who are looking forward to pottering around at home, spending time with the kids at the local beach , going for long walks with my dog Bella and just having good quality time with friends and family.

I am also determined to “get with it”. I have been avoiding Facebook , Twitter and Skype for years now, but realise that we must use these tools to ensure we provide you with the best possible help and service that we can, so watch this space….

What is the official cash rate.?

Great news this week was the announcement by the Reserve Bank that The Official cash would remain at 3%. A couple of questions that we are often asked are.

What is it and how does it affect me.?

We thought that the Reserve Bank explanation on their websites may be helpful to you so please just follow this link here.

Reserve bank explanation

Xmas Holidays and our opening hours.

Although our offices will be closed during the public holidays you can reach us for assistance on our mobiles.

For the 1st time in 15 years my sisters are returning home to New Zealand and we will all be descending on my mother in Christchurch for a big fat Greek Christmas. I can’t wait. It’s amazing and a little scary as we get older we pine for some of the memories of our past. My family will start Christmas celebrations with midnight mass at our Greek church. I remember as a child having the fear of god put into me not to burn the fur coat of the lady in front with our candles as we do the circle around the church at midnight.!!!!

Christmas day will no doubt be spent with Ma asking us at least 20 times if we have had enough to eat! I am sure she is determined to fatten up her daughters. There isn’t much chance of that we have our little Greek yiayia’s genes.

Stu will be at home with his family on Waiheke Island fishing as often as he can, and Bevan is planning the traditional Xmas day celebrations at his home followed by a Hangi on Boxing Day ( so if you think you will miss out on Xmas lunch have a talk with him.)

The guys have done an amazing job supporting me over the past 9 years in business and have taken on a lot of the pressure of business in the last year. They are going to have a well deserved break, so I will be on duty to help should you need assistance over the holiday period. You can call me on my mobile

Sue Tierney 021 776222

We trust you will all have a very safe, and happy Christmas and may the New Year bring you all you wish for.

Please take care.

From Stu, Bevan, Sue and of course Bella

Team Sue Tierney mortgages!

Property Trader versus Investors

Sat, 29 May 2010 10:51:00 GMT

Hi Shyam

My interpretation of a property investor is somebody who purchases a property with the intention of owning for many years to come. I consider a property trader is somebody who purchases a property with the explicit intention to resell it for a profit in the short term. That could mean redecorate/renovate and resell it one month or six months later. But specifically they settle knowing they will sell again in the short term. If you purchased with the intention of selling at a profit in the short term, lets say 6 months time, then you certainly wouldn’t expect to fix your mortgage for say a 2 yr fixed rate, because you could be faced with a penalty being charged by the bank when you sold the house in 6 mths time. That is usually one clue that separates traders and long term investors. Another differentiation would be whether you have signed up a tenant for a long term fixed tenancy such as a one year term. A trader intending to on sell a property in say 6 months is unlikely to take on a fixed term tenancy for 1 yr.

Prepare yourself for the next financial crisis

Thu, 27 May 2010 09:12:00 GMT

An article found in the NZ Herald 27/5/10 talking about financially literacy in New Zealand referred to this seminar. I am attending so please feel free to come along to this public seminar if it interests you.

Surviving the next financial crisis
Date:Tuesday, 22 June 2010
Time:6:00p.m. – 8:00p.m.
Recurring event:One time event
Category:Events
Description:

2010 Dean’s Distinguished Speaker Series

Presenter: Professor David Mayes (The University of Auckland Business School)

Venue: The University of Auckland Business School, Lecture theatre OGGB5, Level 0, Owen G Glenn Building, 12 Grafton Road, Auckland

RSVP: Please RSVP online before Friday 18 June. Seats are limited.

Abstract:
In this presentation Professor Mayes will draw on his international research over the past decade to look at how to reduce the chance of financial crises and alleviate the impact of those that cannot be avoided.

He will consider the lessons learnt from the present financial crisis and how changes in regulation and preparedness can diminish the likelihood and impact of future crises. By looking at the worst-hit countries round the world and the changes that have been implemented, Professor Mayes reaches two principal conclusions. The first is that outside Australia and New Zealand, many countries will still have major problems with international banks that are run across borders. Secondly, although the financial safety net has been substantially increased in most countries, this has not yet happened in New Zealand so people will need to prepare themselves for the consequences.

Bio:
Recently appointed as the Business School’s BNZ Chair of Finance, Professor Mayes has an international career in academia and public service. He is a former chief manager of the Reserve Bank of New Zealand and director (CEO) of the New Zealand Institute of Economic Research in Wellington. Professor Mayes has returned from more than a decade overseas, where he served most recently as advisor to the Board of the Finnish central bank, the Bank of Finland. He was also Professor of Economics at London South Bank University, where he taught international finance.

He has been advising central banks and financial regulators in 15 countries around the world, as well as the OECD, ADBI and the IMF, and is a member of the Joint Shadow Financial Regulatory Committee for Australia and New Zealand. Professor Mayes has published 36 books and more than 200 articles in international journals, chapters and reports. He is director of the Europe Institute at The University of Auckland, an editor of the Economic Journal and a fellow of the CESifo Group in Munich.

Light refreshments will be served at 6pm. Submit your business card at the door to go in the draw to win a Short Course of your choice.

For more information contact:
Beth Dowsett
Events
Phone: +64 9 923 3322
Email: b.dowsett@auckland.ac.nz

Budget 2010

Thu, 27 May 2010 02:09:00 GMT

Thank you to Withers Tsang for allowing us to share their newsletter
Tax changes….our take on our brave new world

Finally the budget delivering the biggest tax changes in 25 years has been read. Following are our comments and interpretations of the major changes.

There are both opportunities, risks, and decisions that will lie ahead for most clients, especially those with property assets in LAQC structures.

I will begin by bullet pointing the specific tax announcements and then offer our take on the issues in my commentary:

So what is our overall reaction?

A good budget for business and hard working Kiwis, especially those in the higher tax brackets. The tax cuts are monumentus and the reduction of the corporate tax rate to 28% is a clear indication of just how serious this government is to make this country competitive.

Much of the media rhetoric has focused on the elimination of structuring opportunities for the rich. The reality though is that the change is more akin to a “if we can’t beat them, let’s join them” realisation. Those already structuring incomes to avoid the 38 cent tax rate will see little change but those on PAYE salaries are better off by 5 cents in the dollar on incomes above $70,000.

Paul Reynolds, the Telecom CEO, is probably one of the country’s biggest winners with his tax saving worth in the vicinity of $3,500 per week!

Property investors can breathe a collective sigh of relief. Whilst the removal of depreciation on buildings is a blow, it could have been oh so much worse.

There will be no:
Capital gains tax
Ring fencing of tax losses
Deemed rate of return tax
Land tax
I believe property investors will now return to the market given they can now calculate their outcomes. It’s fair to say that their focus will be on the economic reality of the investment with a reduced focus on the tax savings that were previously bolstered by depreciation claims.

The specific changes are:

Tax rates

Personal tax rates will change from 1 October 2010

New Rate Old Rate
0 – $14,000 10.5 12.5
$14,000 – $48,000 17.5 21
$48,000 – $70,000 30 33
$70,000 + 33 38

Company tax rate to reduce from 30% to 28% from 1 April 2011

Trust tax rate remains unchanged at 33%

Investment tax rates including PIE tax rates to be largely aligned to the company tax rate of 28%

GST

To rise from 12.5 to 15% from 1 October 2010

Working for families eligibility

Eligibility criteria will be altered to prevent rental and investment losses being offset against taxable income when determining benefit eligibility.

Base broadening measures

Plant and machinery depreciation

The 20% loading on depreciation for new assets to be removed effective to assets acquired after 20 May 2010

Buildings

The depreciation rate for buildings with expected lives of 50 years or more to be set at zero from 1 April 2011.

Buildings with useful lives less than 50 years unaffected.

The depreciation treatment of Commercial building fit out to be reviewed and the law clarified and potentially changed from 1 April 2011.

The depreciation of residential rental property chattels is unchanged.

LAQC’s

Legislation to be introduced after a consultation process that will require LAQC’s to be taxed as if they are limited partnerships from 1 April 2011. More on this later.

Thin capitalisation rules

The “safe harbour” limit for gearing on foreign owned investments will be reduced from 75% to 60% from 1 April 2011.

WT commentary on the tax changes

The most significant win for our clients will be the reduction in the personal tax rate of 5% for those earning in excess of $70,000. Remarkably 73% of all Kiwis will now pay income tax rates of no more than 17.5% given that their incomes will not exceed $48,000.

Many clients with investment properties are currently in the top personal tax bracket. In many instances the extra tax payable as a result of the removal of depreciation allowances on buildings will be more than compensated for by the tax cut. Property investors should remember that their deprecation allowances were only ever a timing advantage, subject to recovery on disposal of the property.

The permanent savings from a tax cut are therefore far more valuable than the loss of a timing advantage from depreciation.

Interestingly, the government’s removal of depreciation has been achieved by reducing the depreciation rate to zero. This means that buildings still remain within the definition of depreciable property. It is this continued inclusion in the basic frame work of the depreciation rules that will require the existing accumulated depreciation on buildings to be carried forward as normal. There is nothing in the depreciation changes to trigger the recovery of depreciation at this point. This recovery of depreciation to date will still only be triggered by either a sale or deemed disposal of the building in the future.

A planning opportunity exists for those clients holding buildings with large accumulated depreciations. If these buildings are now restructured or sold the taxable income from the depreciation recovery will be taxed at the new low rates. If, for example, the decision to transfer a property to a trust has been put off because of the magnitude of the tax on the deprecation recovery, after 1 October 2010 may well be the time to act.

The fall in the company tax rate was probably the budget’s biggest surprise.

Many business client’s company’s will be owned by family trusts. There will now be a 5% difference between the 28% corporate tax rate and the 33% trust tax rate. This difference will encourage directors to retain and reinvest profits within company structures rather than distribute profits as dividends that will then be taxed at 33% in the shareholder’s hands. Clients should remember that if profits are drawn from their companies, dividends will ultimately need to be declared to cover these drawings.

So to take advantage of the lower company tax rate profits need to remain in companies.

For most business clients conventionally structured with their companies owned by trusts, it will be business as usual. There are many non tax reasons to structure business in this way that are unaffected by the budget. These include the fundamental limited liability protection offered by a company and the asset protection for the wealth flowing out of the company offered by a trust.

Transitional rules dealing with the attachment of 30% imputation credits to dividends are also being introduced. If the imputation credits that a company holds at 30% are to be fully utilised they will need to be attached to dividends declared before 1 April 2013.

The increase of GST to 15% makes New Zealand’s GST rate one of the highest in the world. The best thing about GST is that it drags the black economy into the tax base and is arguably more difficult to avoid.

Brace yourself, when calculating the GST component of a purchase, you will now be dividing by 7.6666666666 rather than 9!

Retailers will be grappling with the extent to which they will actually lift price points. For example, if you are a cafe that currently sells a coffee for $3.95, will you want to see this price point lift to $4.05 after the GST increase?

The government predicts that prices will only rise by 2% on average, despite the GST increase being 2.5%.

The introduction date for the GST rate change of 1 October will allow transitional rules to apply. Section 78 of the GST act contains provisions dealing with rate changes that essentially deem contracts to alter to take up the rate change. There is a raft of transitional legislation associated with this budget dealing with the practicalities of rate changes both with the GST and income tax rates. We will be able to advise clients on these specific matters on a case by case basis.

In the past, eligibility criteria for Working for Families allowed rental and investment losses. This increased the likelihood of entitlement. This has been viewed as a wrought by the government. I believe the tightening of this eligibility criteria will only have a minor impact in our client base as it has not been our experience that tax structuring has been aggressively targeted to achieve inappropriate access to these low income benefits.

With respect to depreciation, many clients may be wondering if there is “wiggle room” to depreciate buildings that may have useful lives less than 50 years. Before you get too excited, the 50 year useful life criteria is set down in the depreciation rate schedules. The typical residential dwellings and commercial buildings that our clients invest in will all be considered to have useful lives in excess of 50 years. Examples of buildings with useful lives of less than 50 years may include car parks and milking sheds, i.e. not much scope for your typical property investor.

The door is theoretically open for investors to apply to IRD for a ruling on the useful life of a particular class of building but it would seem unlikely that any great wins will be gained with this process.

For those clients with a substantial taxable income being derived from rental of commercial or residential buildings, the first impact of the changes will be felt with provisional tax planning. Because the change in rate takes effect from 1 April 2011 for the 2012 year, we will have the opportunity to estimate incomes that are materially altered by these changes through the 2011 year. Each client’s affairs will be reviewed as we complete financial statements with this in mind.

As previously mentioned, the opportunity to depreciate residential chattels remains but there is more to come following the review of depreciation entitlements on commercial building fit outs.

The significance of decisions on whether money spent on buildings is maintenance or capital improvements will become all the more important. Expenditure of a capital nature on buildings will essentially become “black hole” expenditure for tax purposes, not deductible and not depreciable. The importance of keeping evidence that expenditure is maintenance will be critical.

I have already mentioned the fact that depreciation recovery will now be dealt with under our new lower tax rate regime and clients are encouraged to consider whether sale or restructure once the tax rates have actually fallen maybe appropriate. Call us to discuss.

LAQC tax changes

The announcement that LAQC’s are to be treated as flow through entities taxed under a similar regime to limited partnerships was a wild card in the budget. No doubt many clients were left wondering just what the heck this really meant.

Treasury has already released an officials’ issues paper entitled “Qualifying companies: implementation of flow through tax treatment”. Submissions are now being called on these changes.

There is no doubt that these changes are going to have a significant impact on all LAQC’s whether they are used for property investment or not.

So, why are they being changed?

Currently losses from an LAQC flow directly back to shareholders who take advantage of these losses at their personal tax rates which will now be a maximum of 33% but when an LAQC produces profits these profits can be retained in the company and taxed at only 28%. The government is concerned that this will lead to tax avoidance.

A flow through entity like a general or limited partnership requires both profits and losses to flow out. This means that profits from LAQC’s will essentially be taxed in the shareholder’s own hands at their own personal tax rate.

On the face of it, this move to tax LAQC’s in the same way as limited partnerships doesn’t appear too problematic however it is our opinion that there is significant danger in the detail.

The limited partnership regime contains provisions that limit the ability of partners to claim losses in excess of the partners investment in the partnership. There are complex formulas in the act that must be applied to determine whether losses are in fact less than the partner’s economic exposure in the partnership. Essentially, losses are limited to the capital that a partner has at risk. The proposal will extend these same loss limitation laws to LAQC’s. This will effectively cap the amount of losses that can be flowed back to shareholders. So whilst the budget didn’t contain any specific ring fencing provisions, it could be argued that this change to the LAQC’s is limited ring fencing by stealth. Interestingly, these loss limitation rules don’t apply to normal general partnerships. This may mean a return to partnership structures as the preferred option for structuring loss making property investments.

There are further potential problems for LAQC’s triggered when shareholders dispose of their shares or cease to meet the qualifying criteria for LAQC’s. If a shareholder disposes of their interest in a qualifying company they would, under the new rules, be treated as disposing of their share of the underlying company property and would bear the tax consequences associated with this disposal. This is a direct consequence of flow through treatment applying.

Currently the sale of shares in an LAQC does not trigger the disposal of the assets within the company for tax purposes and this has given LAQC owners wonderful flexibility to alter the effective ownership of their assets by altering shareholding without triggering tax issues like depreciation recovery.

These flow through issues will significantly add to the compliance cost of LAQC’s. The new proposals do contain provisions to reduce compliance costs by exempting the flow through tax treatment being applied if the value of the proceeds from the disposal exceeds the book value of their share of company property by less than $50,000. If a company revokes its qualifying company status, flow through treatment would cease to apply and the company would be subject to normal company taxation rules.

We will be closely monitoring the impact of these proposed changes and will be able to advise clients on what options they have as details of the changes are worked through. At this stage I do not believe there is the need for clients with properties structured in LAQC’s to panic, given that there will still generally be the opportunity to flow losses out of companies and back to shareholders. The extent to which this is possible though will be on a case by case basis depending on the shareholders capital invested in the LAQC. It does seem that the complexities and added administration costs of operating an LAQC may mean that the use of LAQC’s will fall out of favour to some extent, given that ordinary partnerships will be less administrative.

It would seem unlikely though that a wholesale restructuring of properties already held in LAQC’s will be appropriate or necessary. The sheer cost of doing this and the fact that depreciation recovery would be triggered on disposal of any property assets sold out of an LAQC will make this option unappealing.

I encourage clients with LAQC’s to read the officials’ issues paper on these changes, I attach the following link:

www.taxpolicy.ird.govt.nz/sites/default/files/2010-ip-budget2010-laqcs.pdf

At this stage, this is the best information available on the proposed changes.

The government announced changes to the thin capitalisation rules. These rules only apply to foreign companies investing in New Zealand. Previously there was a limitation on deductibility where these investments were funded by more than 75% debt. This threshold is now to be reduced to 60%.

A couple of smaller points that didn’t make it into Bill English’s speech that we consider worthy of mention to you include the removal of the redundancy pay rebate from 1 October 2010.

The government have also confirmed that for now the attribution rules will remain in place despite the fact that the alignment of the top personal tax rate with the trust tax rate has removed the reason why the attribution rules were introduced in the first place. It would seem that this decision to retain the attribution rules may well be reviewed in the near future.

Ominously, the budget has also allocated a further $120 million to the Inland Revenue to undertake more tax auditing.

In the previous budget IRD was given $14 million to do more auditing of the property sector. These funds were used to resource the new property compliance division and we have seen focus on LAQC’s being used inappropriately where shareholders live in the properties and we have also seen initiatives around apartments sold off the plans for profit. Much of the compliance work by IRD has resulted from more sophisticated data matching to tax records. There has been only a minor increase in the actual amount of tax auditing. This looks set to change.

For every dollar the government spent on these tax compliance measures, they collected $5 in return.

It’s not hard to see why Bill English has been willing to increase this budget by $120 million.

That money will buy an awful lot of tax auditing and IRD have already signaled much of it will be focused on the property sector and the black economy.

So there you have it in a nutshell. We will continue to support you with sound, reasoned advice, on the change implications and look forward to discussing your personal circumstances with you. You may be interested in attending a post-budget briefing seminar featuring Olly Newland, Mark Withers and Tony Steindle which can be booked via the Empower Education website.

The WT team.

Tax changes

Fri, 21 May 2010 03:20:00 GMT

While the Budget and our decrease in personal tax rates dominated the news this week it isn’t the only change to taxes due shortly. New tax rules come into effect on July 1 which in effect means an increase to all new Life Insurance policies We are anticipating average increases will be from 15% to […]

Property Investors Budget Buster Seminar

Fri, 21 May 2010 03:16:00 GMT

I am frequently asked by people to teach them about property. While it is a passion of mine and many of my friends and colleagues it is impossible to teach you every thing there is to know in one hour. My mistakes have been made of many years!
Here is a very low cost opportunity for you to learn and ensure you are up to date with all of the 2010 budget changes which will affect property in NZ.

Auckland Property Investors Association’s
(APIA is a non profit organisation)

BUDGET BUSTER SEMINAR – STRATEGIES FOR 2010

Sat 29 May 10
8:30am start to 6pm finish (registrations from 8am)
Parnell Jubilee Hall, 545 Parnell Road, PARNELL

The 2010 Annual Budget has just been presented and it implements the largest tax reforms New Zealand has seen in 25 years. To arm you with the knowledge and tools to succeed in light of the Budget and in today’s market, the not-for-profit Auckland Property Investors’ Association (APIA) have a 1 day seminar BUDGET BUSTER 2010 – Strategies for Today’s Market with tickets at just $49.

The speakers include multiple best-selling Author and NZ Property Investors’ Federation Vice President Andrew King, who provides a State of the Property Investment Nation address, then sets the theme for both newer investors and more experienced investors with substantial portfolios.

APIA’s Treasurer & Chartered Accountant Ann Loudon has the all important topic of tax changes to go through, particularly in light of the depreciation changes and the taxation treatment of LAQCs to have to become aligned to Limited Liability Partnerships.

APIA’s Honorary Solicitor & Property Lawyer Tony Steindle then talks about structures, including the legal aspects of the Limited Liability Partnership, and APIA Vice President, Property Mentor & Trust Lawyer David Whitburn talks about what to buy in today’s market, how to buy it and how to analyse just what is a good deal or not.

APIA President & former NZ Mortgage Broker of the Year Sue Tierney then talks about finance in light of the turbulent global financial crisis we are in, particularly with the highly indebted European Union countries and the relevance of this to New Zealand.

ANZ Mobile Mortgage Manager Vanessa Murch then covers off financing in New Zealand, including why fixed interest rates are so high in comparison to floating loan rates and just how we get our loans approved.

In case this wasn’t enough content, we provide further value to you in relation to tenancy management with APIA Board Manager and Principal of leading boutique Property Management Firm Corinthian Limited Jan Galloway, presenting on how you should manage your property to get the best tenants and lowest vacancy rates.

This is combined with a presentation by Tenancy Practice Lawyer Scotney Williams, giving his expert advice on the Residential Tenancies Act including recent times and also proposals to reform parts of it.

So don’t delay, BOOK YOUR TICKET for Saturday 29th May at the Parnell Jubilee Hall for a Tax Deductible super APIA price of just $49 by emailing admin@apia.org.nz now.

Fixing your mortgage

Fri, 21 May 2010 03:12:00 GMT

If your home loan is floating or about to mature off its fixed rate in the next month or two, you may now be wondering if it is time to fix.

The Reserve Bank Governor will next review the Official cash rate on 10 June. Many bank Economists expect the Reserve Bank Governor will begin to increase the OCR on this date. The real question we don’t know the answer to is, by how much? Could he increase it by .25% or .50% or could it be even more.

Today the main trading banks are offering floating interest rates around 5.75% pa and 1 yr fixed at 6.35% pa. The lower floating rate has meant that we have gone against the tradition of fixing mortgages and remained on these lower floating rates

This .60% pa margin on the lower floating rate has been a driver for that decision. The question is of course “will the margin between the fixed and floating rates shrink as the Banks find their cost of funding rising due to a higher OCR.?

The downstream impact on NZ and other global Banks from the bailout of Greece and potentially other struggling Economies in Europe is bound to result in increasing longer term borrowing rates. There have been increases over recent weeks that have not hit the headlines.

We now think you should be considering fixing your mortgage. If having the certainty of mortgage payments is important to you; and more important than having the lowest rate, you may choose to fix your mortgage now.

We are here to help you with the refixing process. Please either call Dom on 360 7768 email support@stml.co.nz or me on 9147555 so that we can start the ball rolling for you.

To fix or not to fix

Fri, 19 Feb 2010 03:00:00 GMT

weekly overview of 11 Feb 2010

Identifier Spring/Summer 2009

Sat, 12 Dec 2009 05:12:00 GMT

With the spring thaw, and the likelihood that the economy is following suit, there’s a new sense of optimism. Perhaps you are considering buying your own home and taking advantage of the more competitive rates on offer, or are dusting off plans you’d put on hold. At any rate, it’s a good time for us to be refocusing on our goals or setting new ones. Those resolutions don’t have to wait until New Year. While you’re at it, why not review your insurance and financial needs? In this issue of Identifier, find out about which type of life cover is best for you, why honesty is the best policy when dealing with your insurer, and how you can get in shape for the summer. However you spend the season, make it a safe and happy one. Sue Tierney

Download the full newsletter

Further signs property values easing

Thu, 15 May 2008 05:10:00 GMT

National residential property values have grown 4.9% over the past year, down from the 6.5% growth reported in March, according to the latest Quotable Value statistics for April.

The average New Zealand sale price remained steady at $388,465, according to the April report.

“Although the change in property values over the past 12 months is still positive at 4.9%, it’s interesting to look deeper into the figures,” says QV spokesperson Blue Hancock. “Most of this growth occurred in autumn last year, while values remained pretty flat through the second half of 2007. Over the first three months of 2008 we are beginning to see property values easing back over most areas of New Zealand. With property listings still high, buyer demand reducing and the typical slowdown through winter, we would expect this trend to continue and our monthly statistics will likely show declining values in the coming months.”

Read the full article here…

Reserve Bank expected to hold OCR steady

Mon, 04 Dec 2006 05:01:00 GMT

Economists expect Reserve Bank governor Alan Bollard will hold rates steady this week despite evidence the economy remains surprisingly strong.

Bollard’s official cash rate (OCR), which has a direct bearing on floating mortgage rates and a lesser impact on fixed-rate home loans, currently stands at 7.25%.

Craig Ebert, an economist at Bank of New Zealand, says the central bank is under a bit of pressure. “Even though most of the data has been pressing on the strong side, it hasn’t been substantive,” he says.

While he doesn’t expect Bollard to move rates, he expects the wording of the press release accompanying the monetary policy statement will be hawkish. “There should be a clear message that the data’s going to remain very important” and that, if it continues to be strong, another rate hike is on the cards.

Cameron Bagrie, chief economist at ANZ/National Bank, says the big decline in petrol prices recently means the annual inflation rate, 3.5% at the end of September, is likely to head back below 3%. Bollard is pledged to keep inflation between zero and 3% over the medium term.

“The Reserve Bank is going to take a little bit of comfort from that but I don’t think that’s the end of the inflation story. But it’s hard to raise rates when inflation’s coming down,” Bagrie says.

Another reason for not raising rates is that the currency is currently very strong at nearly 69 US cents compared to around 60 cents back in July, although it is stable against other major currencies.

“If they hike at this point, that will push it through 70 (US cents),” he says.

Nick Tuffley, an economist at Westpac, says the Reserve Bank’s spotlight is again likely to focus on the strength of the housing market and signs it could be strengthening further.

Tuffley doesn’t think it will. “The housing market and household finances are stretched and logic dictates there is only so long that either can remain aloft.”

Reforms to Tenancies Act 1986

Wed, 29 Nov 2006 05:03:00 GMT

Better housing-related law for New Zealanders

Building Issues Minister Clayton Cosgrove today announced a package of reforms to ensure landlords and tenants are treated fairly and equally, and to revamp the outdated law concerning apartments and other multi-unit properties.

“New Zealand’s housing landscape is changing fast, and the law should keep up with the needs of New Zealanders, whether they rent or own property,” Mr Cosgrove said.

The reforms aim to ensure a fairer rental market through changes to the Residential Tenancies Act 1986, and to establish a broader and more adaptable framework for multi-unit living through a complete revamp of the Unit Titles Act 1972.

The latest proposed changes to the Residential Tenancies Act include:

‘If you are a good tenant, as the vast majority are, and someone else in your flat damages the property, you should not have to carry the full cost of their behaviour,” Mr Cosgrove said. “These reforms seek to rectify potentially unjust situations.”

Mr Cosgrove emphasised, however, that it was crucial that property owners were able to recover the costs of damage to their property.

“We have made sure that landlords won’t lose out. They will be getting more damages from the people most at fault, rather than from innocent tenants who have done no damage,” he said. “Landlords need to know their properties are protected and respected, in order to have confidence in the rental market.”

Mr Cosgrove said extending access to tenancy dispute resolution services was another step in creating a fairer rental market for tenants and landlords.

“Everyone who rents – tenants and landlords alike – should have the same support when sorting out tenancy problems. Tenancies in retirement villages, boarding houses and other tenancies with a high service component such as supported living,

have been brought into the legislation to ensure a fair go for all. The aim is to deliver fast, fair and inexpensive dispute resolution.”

Mr Cosgrove said these latest proposals are in addition to other proposed reforms of the Residential Tenancies Act that he announced in September this year.

Mr Cosgrove said today’s announcement was also good news for New Zealanders living in multi-unit dwellings.

“It is estimated that within 50 years there will be half a million people living in apartments, townhouses and high-rise buildings in Auckland alone – the traditional three-bedroom family home on a quarter acre section is increasingly becoming a thing of the past,” Mr Cosgrove said. “The new Unit Titles Act will establish a broader and more adaptable means for setting up and managing multi-unit living.”

Mr Cosgrove said the current Act is 34 years old and out of date with modern needs.

“People in multi-unit developments should be able to make joint decisions effectively and be confident and secure in their living or working arrangements. The proposals seek to create up-to-date legislation that reflects our changing urban landscape.”

Key principles of the proposed new legislation include:

“We need up-to-date laws that reflect the realities of New Zealand life and ensure a fair deal for everyone,” said Mr Cosgrove.

Mr Cosgrove said he expects to introduce two separate Bills that reform both Acts into Parliament next year.

Other reforms by the Government to improve standards and services across the building and housing sector include the review of the Building Code, the licensing of building practitioners while protecting the Do-It-Yourself (DIY) tradition, auditing and accrediting Building Consent Authorities, a major shake up of the Weathertight Homes Resolution Service, the introduction of a financial assistance pilot for the worst affected owners of leaky homes, a revamp of the Property Law Act 1952, product certification and investigating a home warranty insurance scheme.

Media contact: Robyn Cubie, Press Secretary for Hon Clayton Cosgrove, MP

Minister for Building Issues, 04 471 9136 or 021 227 9136

Background Information – The Residential Tenancies Act

What does the Residential Tenancies Act 1986 do?

The Act sets out the rights and obligations of people who rent their homes and the landlords they rent from. It covers rent, bond payments, property repairs and giving notice. The Act also sets out dispute resolution procedures.

Why has the government reviewed the Residential Tenancies Act?

The aim of the review is to improve the regulations governing the residential rental market. This is important given the changes in the nature and scale of the market since the Act was introduced in 1986. In particular:

What has already been proposed?

In September 2006 the Government proposed amendments to the Act including:

What is the tenant’s liability for damage to rental property?

A tenant’s liability for damage will be limited to four times the weekly rent if they can prove that:

Any tenant that cannot do this may have to pay more than four weeks rent.

This proposal addresses the issues raised by Labour MP Maryan Street’s recent private member’s bill Residential Tenancies (Damage Insurance) Amendment Bill. It aimed to protect tenants against personal liability for substantial damage.

Will boarding house tenants be treated the same as other tenants?

Boarding house tenants will have access to the same services as other tenants, such as tenancy advice, mediation and the Tenancy Tribunal. However, some of the rights and obligations of boarding house tenants will differ from other tenants, because of the different dynamics created by communal living. These differences include the way tenancies are terminated, the process for dealing with abandoned goods and the ability for landlords to make house rules.

Background Information – the Unit Titles Act

What is the Unit Titles Act 1972?

The Unit Titles Act covers the setting up, ownership and management of properties with unit title ownership. These are commonly apartments, flats, townhouses and office blocks with shops below. The Act covers the ownership of unit titles by unit owners; and the formation, rights and responsibilities of the body corporate.

What is a Unit Title?

A unit title is a form of joint property ownership where unit owners own a defined part of a building, such as an apartment, and have shared ownership of areas of common use such as lobbies and lifts.

What is a body corporate?

A body corporate is a collective of all the owners in a unit title development. The body corporate manages the common property and aspects of the building development as a whole.

Why was the Act reviewed?

Thirty years ago, when the Act was first introduced, unit title developments were new. Now the variety of ways in which these units are used, and their scale, has broadened considerably. The current Act does not provide well for the rapidly growing diversity of uses and complexity of unit title developments in New Zealand.

What are the key proposed changes?

The key proposed changes are to:

How will this benefit people?

The changes will:

· ensure that bodies corporate make appropriate provision over time for the maintenance and repair of buildings and other improvements within their unit title development

What happens next?

Two separate Bills to amend both the Unit Titles Act and the Residential Tenancies Act will be taken out for targeted consultation with specialist stakeholders. Both Bills will be introduced into Parliament from mid-2007, where the wider public will be able to have its say through the normal select committee process.

ENDS

Discounted Interest Rates – How much can I expect?

Tue, 08 Aug 2006 04:58:00 GMT

Discounted Interest rates ….How much can I expect?

With competition heating up this year, can we expect interest rates to be heavily negotiated in a drive by banks to get bigger market share? I’m a long term client, the bank should want to look after me, shouldn’t they? If not should I change banks?

These are all comments I hear frequently, but sadly the cheapest rate in the market is not always available to you as a clients, from your own lender. Should you change banks at this point? In my opinion lowest interest rate shouldn’t necessarily be the goal.

We each need to be careful, many billions of dollars of mortgages mature this year amongst the major lenders. In my opinion this could be the opportunity for some very good rates amongst the lenders, but should you be changing lenders for .05% variance between lenders.

For some clients this is an easy decision. The opportunity cost of their time is too high to go through with the painful exercise of refinancing, if the loan value isn’t high enough to justify the cost you just won’t move.

Frequently I am told about clients moving from one lender to another enticed by a better rate or big promises only to find their new personal banker has had a promotion and is no longer in the role.

Your existing Bank may negotiate anyway and for clients with large portfolio’s there is certainly an advantage to having a larger portfolio at one lender.

As a broker I have a range of lenders so the following outlines some offers across various banks:

A loan of $150k could expect up to .1% discount off the advertised rates at some lenders

For another lender .15% is offered for loans of $200k or more,

Again further discounts at some lenders if the loan is $250k or more and others also kick in at $500k.

A larger portfolio of near $1mill would obviously attract discounts.

This is one of the reasons behind my thoughts on packaging loans together so that you have portfolios at various lenders, but each of a decent size so that you are “valuable” to that lender.

To many clients a $50k mortgage is large, and we respect that, it is all relative to their location – town/city, and income of course, but to a large corporate bank a $50k mortgage just isn’t profitable if they start heavily discounting their rates.

Some banks will look to their treasury department and quote rates on a day by day basis. A fixed rate on offer may only be available that day, and if accepted, then it is guaranteed, other lenders are happy to quote and hold the rate up to 30 days.

This is one of the major advantages dealing with a mortgage broker. In times of increases we are aware of which lenders will offer negotiated rates, and how long they can hold those rates for you.

So should I REFINANCE to another lender for a better rate?

I have major concerns where clients think they need to “refinance” and move their mortgage to another bank every time the fixed rate matures. I would certainly recommend caution this year with loans that are maturing. It is easy for a lender to promise the earth but not deliver. Some clients tell me that they believe the only difference between one lender and another is the colour of their cheques. Interest rates can be very similar if not exactly the same, so why are you moving? Unless your portfolio commands a particular or different lender, I always make it my 1st priority to get the existing bank to meet or better the market.

Some lenders now are able to offer a quick refinance service:

Banks have the ability to refinance you without involving your own solicitor through a system they call – “Fast”. The documents are drawn up, sent to you for signing and returned to the banks appointed solicitor. This is all done and refinanced, before your own bank even realizes that you are moving.

Whilst that may be useful for some clients, getting independent legal advice is a minimum requirement for many clients.

Being pressured into moving lenders, keeping it quiet without actually having time to think it through, and before you know it you are banking with the new bank.

Is the grass really greener on the other side? Or does it go brown soon after?

Snippets

Sun, 16 Oct 2005 04:27:00 GMT

Sunday Times Article October 16 2005

3 members of the Auckland Property Investors Association ( APIA) were interviewed by the Sunday Star Times and agreed that despite the pitfalls investing in property was the best decision they ever made.

APIA has over 1000 members who own property worth more than $1.6 billion. It’s members had been investing for an average of 7.5 years and owned an average of 5 properties each with an average value of $300,000 each.

This means each has an average portfolio worth $1.5 million and carry a debt value of 50%.
Their individual net wealth has increased by $300,000 in the last year due to inflation and despite the predictions of lower inflation 88% of APIA members are planning to buy more property in the coming year. The 3 interviewed agreed that generally any market was a good market to buy in but one had to keep a real eye out for a bargain when the market was inflated.

Garth Cutfield started investing at age 25 and quit his day job at 38. Dolf de Roos’s advice was to stick with properties that only returned 10% + yield in the central CBD or locations with scarcity value. He is against negative gearing only for tax relief benefits, the use of ‘property finders’, and paying asking price on this market.

Lee Whiley has owned upwards of 30 properties over 23 years and again looks for good high yields and also in ‘scarcity value’ locations. He says that there have been better times to buy than at present but ‘buying well’ is the key. He states that generally problems with tenants pale compared to the gains on offer.

Megan McCarthy is one of the now 40% of women who are APIA members a figure up 8% from 12 months ago and a continuing trend. Currently with 15 properties Megan and her husband kevi decided in 1991 that they needed to save for retirement. Her tips are ‘start young, treat debt with respect but don’t be afraid of it and be aware of that the magic ingredient of property investment is leverage’. Also be aware of the extra costs of maintaining property as it’s not all passive income.

‘On the House’

Sun, 23 Jan 2005 04:57:00 GMT

Reverse Mortgages It’s ‘On The House’

A relatively new development in the N.Z. mortgage scene is the ‘Reverse Mortgage’. While this facility has been available for many years in the USA and UK and NZ in various forms, it is only recently that the product has been refined and actively marketed by recognized main stream lenders in N.Z.

Essentially, property owners over the age of 60 can borrow against their property for any reason whatsoever within certain stated limits, with the absolute assurance that they are not required to pay any portion of their principal or interest during their lifetime unless the property is sold. The older the borrowers, the more expensive the property concerned, the more the lenders will lend.

It is a fact that there are many retired people who are, because of their property ownership, asset rich yet, cash poor. The traditional kiwi love of real estate and the high regard home ownership has in our psyche, has meant that the main focus for a large majority of us has been to invest in our own homes, upgrade, and pay off the mortgage before retirement effectively ‘locking up’ our savings in ‘bricks and mortar’.

The obvious answer to unlock the cash value, has been to sell the home and downgrade to a cheaper property and perhaps a more compromising lifestyle away from friends and neighbours of many years standing. With the advent of, and wider acceptance of Reverse Mortgages, a retiree or retired couple have better choices which will allow them to ‘unlock’ tax free cash which can be used for any reason whatsoever. It may even be possible, after meeting certain criteria, to arrange future ‘top up’s’ if required as age and equity increases. Also part of the loan advanced may be used to refinance off an existing mortgage.

Any homeowners aged 60+ ( retired or not ) wishing to renovate their home, replace their car, get an operation, assist family members or simply to take that long promised world trip etc..etc… may now be able to do so, knowing that they only pay back the loan plus accruing interest either on the sale of their home or on their demise. If a reverse mortgage is arranged and the borrower/s decide to sell and buy another home, providing there is still adequate equity in the new home then the reverse mortgage can be transferred.

The lenders charge an arrangement fee and a valuation from a valuer of their choice is required.

A guideline to what the lending criteria and limits that are available are as follows.

From age 60, 15% of the equity in the home can be borrowed with a minimum loan of $10,000 available. The amount able to be borrowed, increases with age. The maximum amount available being 40% of the equity at age 90 with the loan value not to exceed $250,000.

The interest rate charged is obviously above the major lenders floating rate and the amount owing is compounded until the house is sold and the owners go into long term care or pass away. Solicitors must always be consulted when considering a reverse mortgage and discussions with family members as to the full implications of the loan should be held. A guarantee can be given to the borrower/s that the value of the loan will never exceed the value of the home so they can rest assured that no matter what state the housing market is in or their longevity situation, the amount that they owe will always be covered by the house sale and there will be no further claim against the estate.

When we consider that over the last 30 years the N.Z. house price index shows an increase averaging 10% p.a., and this is a tax free increase in value, unless it can be taken advantage of the owners are no better off. A reverse mortgage would enable many to increase their quality of life or achieve a particular goal during their own lifetime rather than only be passed on to their estate on their demise. In one particular case I have had to deal with, my client had lived in her home for 30 years. She was reluctant to leave, and because she had no family her estate would go to charity. Why shouldn’t she have the opportunity to live out her final years with some level of dignity.

Whilst some of us may cringe at the thought of our parents needing to borrow to make ends meet in retirement, we need to appreciate that all clients have different needs and there is a percentage of our population going into retirement with very little or no savings at all.

To date, the Reverse Mortgage lenders are exceeding their market expectations and they are confident that the market will expand as the ‘baby-boomers’ become more accepting of the concept.

Sue Tierney

Printed with the permission of Tarawera Publishing and NZ Pproperty Magazine

Passionate?

Sun, 23 Jan 2005 04:56:00 GMT

Is Now The Time To Become Passionate About Your Mortgage ?

It never ceases to amaze me that many of us would find discussion about mortgages about as exciting as watching dried paint get wet in the miserable winter rain.

In reality, next to health and relationships, money { translate that to freedom} for many people, would rate an easy third. The fact that the purchase of our home, would for the majority of us, be the most amount of money we would ever spend.

The main financial control we ever have over that asset is the mortgage. This should put our mortgage in a different light especially today as we have far more choices and therefore believe it or not……more control.

The fact that recently we have experienced the lowest interest rates in 30 years may have lulled us into a ‘ho – hum’ mortgage mentality. Recent rate rises and the uncertain rate future should be leading us to a more analytical mortgage ‘mind set’. Surely, at a point and time such as this, we should be reminding ourselves to maximize the value of our net income.

Are we getting the best overall ‘deal’ on our mortgage that suits our particular situation? The pre-warning bells asking us all to analyze, and measure the features and resulting benefits of the various options now available can be heard tinkling in the distance, and although no-one can predict with certainty future trends, it must only be prudent to take steps that are basic, obvious and sensible given all the facts.

For example, should you stay floating, fix or cap the rate, or choose a combination to suit? Should it be a table, reducing, revolving credit with a guaranteed final nil balance or are you disciplined enough to trust yourself with a pure revolving credit ? In your situation what about fortnightly repayments? Why not, no set payments? Why not speed up or slow down your payments to suit? Particularly if you are already fixed and on a relatively low interest rate now that they have begun to rise. Why not pay off a lump sum? Why not pay it off early?

What about adding the car or renovations to your mortgage instead of the higher interest rates that can be charged on consumer credit. Of course, you will ensure that the loan is over a short period of time, and not your standard 30 year mortgage. This would defeat the purpose!

Perhaps use your mortgage as your main day to day account? Bank on line by phone, using EFTPOS, ATM’ S all on your mortgage account, to minimize account fees where applicable.

Changing your interest rate, shortening your loan term, take your loan with you if you move house. So many options,………….. you choose. With property investors as many of you are, the choices widen even further………….

When you consider purchasing in the market that we are currently experiencing, which, “the experts” tell us that they expect to drop, you may be going against the trend. If all the ‘experts’ only bought when the timing was ‘perfect’ nothing would ever be purchased as it is only with hind sight that we can isolate those special time zones that we all should have leapt in and overcommitted ourselves. It is important to remember that if the property is in a good, sensible location, is in good, reasonable condition and has a comfortable yield then your timing could actually be just right.

Also, at the risk of repeating myself it is so important to buy with the long term view in mind and not with the intention of selling. Property investors will be heartened by recent figures published setting out the fact that home affordability for first home buyers has become an increasingly difficult goal and obviously this augers well for the consistently careful long term property investor.

We have had a boom in recent years, and many have seen their equity grow by simply having purchased in “the bad times”.

Don’t sit on your laurels, take action now, make some commitment to debt reduction, therefore adding to your growing equity and be in a strong position to enable you to purchase the next one, or two properties, in “the bad times”.

How can we not be passionate, about something that can lead us to financial freedom.

Printed with the permission of Tarawera Publishing and NZ Property Magazine

Compliance

Thu, 23 Dec 2004 04:54:00 GMT

To Comply or Not to Comply

Recently a client of ours was told by her solicitor, a couple days before settlement date that the developer was insisting on settlement taking place without a code of compliance certificate being issued by the local council. On close inspection of the agreement it stated that settlement could take place without the certificate being issued and while it stated that the developer would use his ‘best endeavours’ to obtain the certificate it was rather vague as to what would happen if it was not issued. It was not vague however about settlement, that would take place, end of story.

It became clear that if the purchaser did not settle then they would lose the deposit ( which was being held in the developers solicitors trust account) and the developer had all the usual legal remedies at law to either enforce settlement or to re-sell the property and recoup any shortfall from our client plus legal and other costs incurred. The reality was that our client was totally unable to settle as, a condition of obtaining finance from the lender was, that the code of compliance would be issued before settlement.

It is vital that professional advice be obtained before signing any agreement for sale or purchase of real estate especially when purchasing off plans or a developer. The developers’ solicitor will have prepared an agreement which is not the standard sale and purchase agreement but will include various extra clauses pertinent to developments generally. As it is the vendors’ solicitor who is preparing the agreement it is up to him to endeavour to get the most favourable terms on behalf of his client. Hence the not uncommon clause stating that ‘obtaining a code of compliance by the vendor / developer is not a pre-condition of settlement….’ If this clause is not altered prior to signing, then the purchaser is at real risk as our client was.

From a lenders perspective, when making the decision to lend to a client they are always looking at ‘worst case’ scenarios. Part of their decision to lend is the saleability of their security in the event of a mortgagee sale. A property without a code of compliance is deemed less saleable and therefore may not attract the best market price. Despite the unfortunate circumstances of a mortgagee sale the lenders goal is obviously to protect his position and achieve the best market price. Also, if a code of compliance has not been issued then that is a signal that building work may need to be completed and once again in a mortgagee sale situation this responsibility falls back on the lender.

A few other facts that are important to the story………

Our clients had, many months earlier, approached a lender directly and obtained a pre-approval with no specific property in mind. It is important that you have pre-approval fully explained to you because in this instance if the client had understood the conditions of the pre-approval the client would not have gone unconditional on finance in the manner that they did.

A pre-approval certificate is:

Proof that the lender is interested in you as a client but you cannot ‘pass go’ yet as I would normally expect the following conditions: An expiry date on the certificate of approval (because circumstances may change), a sale and purchase agreement satisfactory to the lender, and if it is a private sale they would also request a registered valuation. Other conditions may apply. Unfortunately on the basis of the lenders pre-approval certificate the client went unconditional on finance without paying attention to the conditions still outstanding.

Close to settlement date our client chose to approach us to become their mortgage broker, and it was only then, by providing us with all the necessary documentation that we helped them discover the predicament that they were in.

Lessons that can be learned from this situation:

Buying 20% below

Tue, 23 Nov 2004 04:51:00 GMT

“The Reality of Buying 20% Below”

Have you recently had problems with your tenants, and therefore have decided to Review your portfolio?

Perhaps the yield has dropped?

Has the suburb or area recently attracted undesirables?

So you are thinking of selling poor performing property and reducing your debt?

It sounds like a sensible strategy but will your lender agree?

I was recently called in at the 11th hour to help resolve a problem where a family had sold a property at a significantly reduced price to offload it. They had purchased a property in Auckland under one of the “buy at 20% below value” schemes.

Sometime later it was re-valued and the increased equity was used to help fund the purchase of another property. Sounds great so far, you say, however, after a string of tenants leaving the family concerned that the street was becoming a “tinny” street and was regularly frequented by police. Keeping good tenants for a long period of time would become increasingly difficult and the decision was made to put the house on the market.

Fortunately a buyer was found privately and very quickly. And after discussing it with their accountant they decided to call it quits and sell for the original purchase price, i.e. the true market value.

However the sale posed a problem, which they did not consider. Their bank had provided finance on the basis that the property was worth 20% more ie the new valuation. On settlement date, when I was called in to assist, the lender would not release the security because the net proceeds from the sale were insufficient to clear the debt. As a result the (LVR – loan to value ratio) was more than the lender had originally approved and now required lenders mtg insurance approval. A full mtg application had to be prepared in the afternoon of settlement date causing a lot of distress to the family, purchasers and both solicitors… and submitted to the lender and mtg insurers.

We were extremely fortunate to receive a quick and positive response.

Several lessons can be learned from this situation.

Because the reality can be, that once you have purchased a property for a certain price, that price becomes the market value.

We would extremely fortunate that this situation had a happy ending however it has brought to our attention, a situation that in the future could catch many clients out, if this market does drop.

Printed with the permission of Tarawera Publishing and NZ Pproperty Magazine

Are you happy?

Tue, 23 Nov 2004 04:49:00 GMT

Are You Happy With Your Mortgage?

…………..Would You Know The Alternatives?

……………… Or Is It Just Too Much Trouble To Find Out ?

In a recent survey undertaken by a major lender it was found that 39% of all mortgage holders in N.Z. believed that they could do better, but only 4% did anything about it as they thought the process would be too difficult.

Conservative figures from overseas tell us that

So it is obvious that there is plenty of room for growth despite some pundits suggesting that there may be some difficulty in achieving market share here comparable to overseas models.

To know that you have the most suitable mortgage to suit your current and future needs and goals, should be logical considering the financial benefits you could gain. If the majority of kiwi’s opt for the ‘she’ll be right’ mind-set because to sort through the options is perceived to be just ‘too hard’, then it’s obvious, we and the lenders are making it all look too complicated. The reality is, that my clients do not want to know what all the lenders products are or what they do, they only want to know what the best options are for them personally given their individual situation. A bit like the doctor not discussing the remedy for arthritis when treating an asthmatic. Can you relate to this?

In order to successfully grow their market share, mortgage brokers have the daunting task of competing with the advertising and marketing budgets of the major lenders, who are also their customers.

However a successful marketing campaign by one lender wether it be a positive or negative campaign has also helped the broker’s business. Our client’s considering all alternatives will not go directly to the lender, especially if they are not a client of that lender already (they may just be a little biased ) but will seek advice or clarification from an independent mortgage broker.

Last year I personally settled well in excess of $100,000,000 worth of loans through a wide range of lenders and was very happy with my personal increased market share. My goal on each and every loan was (and will always be) to give my clients simple, easy uncomplicated options once we have worked together to develop their goals and strategies for their future.

When we talk about the relationship between the size of any business today and its effectiveness in the marketplace there is an often assumed argument that ‘biggest is best’.

In the case of dealing with many and various lenders, as we brokers do, we are constantly seeking the best lending environment for a particular client regardless of the size of the lender.

It is more a case of some providers specializing in certain products rather than the size of their ’brand’. There are lenders with less of a market profile who will look at a particular client’s situation and apply some old fashioned common sense to approve a loan that does not meet normal criteria.

It’s not only a matter of knowing what is actually available out in the market place and how that particular product fits a particular situation but also it is knowing where to go and who to talk to should the situation need real clarification. This can only be achieved by building close relationships with the lenders to make sure that the communication lines are always open.

Today the focus and challenge for business is to deliver a better ‘experience’ to our clients in order to retain them and we are so aware of our role in that regard. We are constantly reminding ourselves that a vitally important goal for us is to reduce the stress that home buyers and sellers endure by simplifying the mortgage process. Finding and endeavoring to secure the ‘perfect’ home or investment at the right price is difficult enough on it’s own.

Lets work together as a team to make this experience an enjoyable one.

Printed with the permission of Tarawera Publishing and NZ Pproperty Magazine

It’s all so ‘logical’.

Sat, 23 Oct 2004 04:48:00 GMT

One ‘sure thing’ you can count on in this bullish real estate market is the logic of using a experienced “property focused” mortgage broker when looking at property investment.

They will highlight some very basic rules such as ‘don’t put all your property (eggs ) in one basket (lender) and although this could be said to be an obvious rule there are many investors who have not even thought about it. Simply put, all lenders have different criteria and niche markets that they themselves are focused on. If for any reason you were to get over-exposed in one area with one lender it is important that this does not effect your overall situation. An example of this may be the purchase of too many apartments for one lenders liking. Most lenders also have a limit on the number of investment properties they will lend on to any one investor, or entity, and it is good to know this information well in advance as well as any other criteria specific to that particular lender before considering who to approach . Your long term goals, not short term should dictate the final choice of lender for each property purchase.

I’m sure we would all agree that when we are buying anything we must have choices in order to assess and compare true value and performance. (When buying a car we don’t just go to one car yard !) Shopping is all about having the choice of products, coupled with the ability to objectively analyze their respective features and benefits to suit the situation before making an informed decision. Because every individual’s situation is different and all situations are subject to change anyway, it is very important from the outset that your mortgage is designed to allow for future flexibility in any property investment portfolio. A good broker will have thorough knowledge of all the major lenders products and services, criteria, and I would hope first hand experience as a property investor to help you avoid the pitfalls and mistakes that some people make.

If it is something technical we are making a decision on then we ask the opinion of the technical experts, being ever mindful of the experts who only have access to a limited range of products to advise on. The logical choice should be to shop where the widest and best range of products are available, sure makes the decision making easier.

If you are intending to grow a property investment portfolio, getting the correct mortgage advice early in the process to suit your overall goals, can prove to be very valuable in the long term.

It is a sad but true reality that the days are gone when a phone call to your long-term friendly family lender manager could be all you needed to do for that next investment property. Many lenders do not have rental properties themselves and do not understand the client’s needs as a result of this inexperience.

Any property purchase should involve your team of experts to help make informed decisions. Many of my seasoned investors discuss the purchases with their accountant, solicitor, valuer and myself prior to making their offers. The advise received from these experts and including your chattel valuer can be invaluable and save not only money but time, and worry.

On many occasions I will also make calls to your accountant and solicitor to talk through the purchase because in my opinion your team of experts must work together with you to ensure that the “package” we put together is also working as tax efficiently and structurally sound as possible.

Another and probably most important role of your broker is to present the appropriate paperwork and technical details to the lender in order to get the client the best deal possible. Often a broker, doing the homework, can isolate and identify information, and set up a structure that a client would not have considered but which could make the difference between a loan application being accepted or not, or being accepted on more favorable terms for the client. I strongly encourage my clients to bring in as much information as possible to our initial meeting. The more we can present to the lender initially and quickly the quicker and better the lenders response will be.

And the down side? Well it’s a free service, we are paid a commission from the lender, so there isn’t a down side if you choose your mortgage broker well, so, now that the Xmas rush is over, let’s go get organised and lets go shopping.

Printed with the permission of Tarawera Publishing and NZ Property Magazine

Policy Changes

Thu, 23 Sep 2004 04:43:00 GMT

Recent policy changes by some lenders are making the arranging of mortgages more complex, and we may find more difficulty in obtaining approvals for some clients in the future.

It should be taken into account that lenders policy changes can seriously affect the long term plans of any investor and although these policy changes cannot always be predicted there often are warning signs to watch for . Lenders obviously must always protect their own interests and outlawing such questionable practices as ‘ wrap mortgages ’ and ‘ two tiered marketing ‘ by most lenders recently was predictable. A less predictable policy change is demonstrated by the following case study:

Obviously a situation that was not anticipated at the time they first arranged the loan. Any subsequent property purchases have had to be financed through their own personal savings and not the “planned” revaluation of their security.

Although an investor may perceive a block of flats to be a safe bet, with all 4 flats, on one title the lenders have their own views.

Many lenders have recently tightened up their rules relating to: allowable monthly household spending budgets, car running costs & debt servicing ratios. A loan that was slightly borderline previously may now not be approved. Real obstacles to not even ‘border line’ applications are: high credit card limits ( the lenders always assess on 5% of your actual limit not your average monthly spend ) car hire purchase, regular hire purchase , student loans………….

With the recent increase in floating rates some lenders use a sensitivity analysis (sometimes known as a notional rate) which is simply a margin on top of the floating rate to determine whether the loan is affordable or not. This rate is not charged to the client it is simply used in the calculation to help the assessment. With floating rates rising the Notional rate is increasing, and borderline loans will not make the grade.

Another more recent policy change revolves around the ‘leaky building’ fiasco. Some newer properties under 5 years old may automatically need a registered valuation and along with it, builders report with specific reference to moisture test. The lender may look very closely at the results which must fit their recent policy changes.

With the increasing demand of lending under LAQC’s and trusts, some lenders are requiring accountants and lawyers to provide more detailed information as to the structure of Family Trusts, Trading Trusts and LAQC’s by lenders, and in some instances they are required to specifically confirm that the entity is for the sole purpose of residential property investment only and not another vehicle for serious commercialized operations.

The changes can make the loan application process more onerous, and time consuming. This needs to be considered when negotiating finance dates and then settlement dates. It is not uncommon for a client to wish to bring a settlement date forward but due consideration of the time both your lender and solicitor require to complete the final document simply must be considered before making changes. Failure to do so, could result in missing settlement dates and penalty interest being incurred.

The best advise I can give, is to consider entity structures and work closely with the team to have this in place prior to new purchases.

People don’t plan to fail, but simply fail to plan…….

Rental Market Correcting

Tue, 20 Jul 2004 01:59:00 GMT

By Simon Hartley, Otago Daily Times 20/07/04

Rental returns for professional property investors across the country are beginning to show a slight decline some aspects of the property market reflect an oversupply.

The New Zealand Property Investors Federation convened in Christchurch during the weekend for the bi-monthly meeting of its nine-person executive.

The Dunedin-based national president of the federation, Craig Paddon, said a downturn of up to 5% in rental income was reported from areas throughout the country, including Nelson, undefined undefined where some rentals were down 15% to 20% on some homes.

The building and supply of “executive-style” homes to rent to business people had begun to outstrip demand and some of those homes would now have to be rented more cheaply, Mr Paddon said.

Predictions the official cash rate would increase were not causing too much concern, but if interest rates hit 10% or more, there would be casualties as recent investors found themselves too heavily in debt.

“The experienced investor would sit it out. They will be positioning themselves for a downturn and be ready to pick up the pieces,” he said.

Yesterday, the Real Estate Institute of New Zealand reported Otago’s median house price in June, compared with June the previous year, had increased from $124,000 to $187,000 – a rise of more than 50%.

Mr Paddon believed Otago had reached a “false peak”, and prices would increase again during the next 12 to 18 months before beginning to plateau.

He attributed the predicted strength to strong commodity prices, a high level of investment in southern apartments and increased Government spending.

Otago’s strength could also be attributed in part to fewer homes being on the market, which was sustaining prices.

However, Mr Paddon said there had been less interest shown in southern investments by North Island people recently and, while he was still getting inquiries from Australia, the numbers were dwindling.

The federation represents more than 600 landlords in Otago and 4000 members nationally.

Tenancies Act

Mon, 10 May 2004 04:29:00 GMT

Tenancies Act review – have your say

Landlords; what is bothering you?

The government is going to undertake a large scale review of the Residential Tenancies Act. The NZ Property Investors Federation and Associations are going to have input to establish what the real issues are.

NZPIF President Craig Paddon asked us to collate as many problems that we are experiencing as landlords and if possible, potential solutions that could be made to te RTA that would remove the problem.

So far we have very little response from APIA members, which is disheartening. Perhaps the following suggestions will provide food for thought and get other members to respond. Suggestions received so far:

It has been suggested that meeting in small groups is the best way to discuss problems and potential problems you are having in managing your properties. Get together with other members of APIA or other non-member landlords to discuss things you would like to have changed.

If you do not have any landlord acquaintances but would like to meet others to discuss property management issues, then contact our office on 09 379 9692 or click this link to send an e-mail to admin@apia.org.nz and we will endeavour to put you in contact with other members in your area.

Book Review: The Automatic Millionaire

Sat, 01 Jan 2000 04:24:00 GMT

By Tina Dressel , Indiana University

How much do you know about money management? David Bach’s “ The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich ” is a book that takes you through the common-sense rules of becoming rich enough to retire early. He stresses several principles throughout the book: budgeting isn’t necessary, you don’t need determination, your salary is inconsequential, and setting up your personal finances doesn’t take much time.

Saving money with the “tortoise approach” through automatic payroll deductions is the theme of Bach’s philosophy. He suggests making a semblance of a contract with yourself to have a percentage taken out of your paycheck automatically each period. This alleviates the temptation to spend the money and takes the need for willpower out of the equation of personal finance.

I do like this approach to money management, but I think that people must have some passion for their finances for them to really become millionaires. Saying you are going to always set aside the money and actually doing so are often two different things. The hardest part is holding true to your goals when the option to spend your money on something big like a fun trip to the beach or an overpriced car comes around.

Bach suggests that budgets are not the way to eliminate bad spending habits. He believes that, no matter how large or small one’s salary, their spending will remain the same percentage of their salary.People who are in high power jobs tend to have to spend more to keep up with the status quo.

The Latte Factor

Bach explains explain his theory of wasteful spending known as the “Latte Factor.”Items such as cigarettes and expensive drinks may only cost a few dollars, but when they become a subject of daily consumption, the amount spent over the long run really adds up. My spending philosophy, similar to Bach’s, is to consider the amount of time it takes you to earn the money you spend on lunch out each day and if that is truly worth the expenditure. If it is, then there is no problem with that choice, but it is important to realize the effects of your spending and what other, bigger things you could do with the money you spend on frivolous things everyday.

Getting out of debt, which can include expensive interest payments, is one of the primary suggestions Bach dwells on throughout the book. He is a big fan of accelerated mortgage payments.

In regard to an example of a Canadian couple who seem to be his inspiration, Bach shows how the couple was able to afford two houses on a modest salary: one which they had paid off and live in, and the other that they rent out and make a nice income from. Now, not everyone is able to afford multiple homes, nor would everyone want to invest in real estate as their primary investment, but this example shows that it is possible to live comfortably on even the most modest of salaries given good money management techniques.

Safe Investing

One thing that really bothers me about this book is that it is very risk-averse. It dwells on setting up accounts that are low risk and safe. This is a fine philosophy, but for people who are young and have a lot of time to take cautious risks, this book seems very guarded. Bach also presents financial planning in a simplistic way with lots of resources and details on where to find a broker and how to set up an IRA.

If you are not an amateur investor, this quick-read, somewhat repetitive book might not be worth your while. In the same regard, if you are looking for a book to help you achieve riches early on in life, this isn’t the book for you. It does not delve into methods of achieving more money through earned or unearned income in any way. There are other books that I feel pinpoint how to become a millionaire in a more well-developed way such as “The Millionaire Next Door” or “Rich Dad, Poor Dad.”

I would recommend “The Automatic Millionaire” to young people as they are entering the workforce and trying to set up their finances. For people who already know how to manage their money effectively, this book might not be on top of your reading list. But if you have a little bit of free time, I think it is worth it to flip through and give yourself a little refresher. Who knows, it may inspire you to put aside that extra few dollars a day!

Tips for Spring

Sat, 01 Jan 2000 04:18:00 GMT

Here are some maintenance items to undertake at home during Spring to keep our homes up to scratch:
Inspect interior walls and ceilings for holes or cracks. Patch and paint as necessary. Watch out for cracking or bubbling, which could indicate water damage.

Check smoke detectors and replace batteries if needed.

Check security alarm system and battery. Call alarm supplier for advice if necessary.

Unplug the refrigerator and clean it with soap and water. Vacuum the condenser coil in the back or bottom of the refrigerator for better energy efficiency. If the drain pan is removable, clean it in soapy water.

Clean the dishwasher and empty the filter. Clean the stove exhaust fan inside the oven. Clean the microwave. Remove and replace any crumbling caulk around the bath, sink or toilet. Check for cracks or moisture penetration around the shower base and bath base. Apply recommended manufacturer sealant.

Plan any major home improvement projects, such as exterior painting, deck construction, landscaping.
Check with the local authority that your project does not require a permit.

Phenomenal Prices

Sat, 01 Jan 2000 04:17:00 GMT

Phenomenal Prices Achieved For Beachfront Real Estate

Beachfront property is the hottest sector of the real estate market at present, with properties selling for well in excess of their rating valuations.

Doug Matthews, Manager of Bayleys’ Warkworth office, says absolute beachfront properties- houses and sections right on the beach are generating huge competition at auction at present, resulting in some big premiums being achieved for property owners.

Bayleys Warkworth office has done a comparison of its recent waterfront auction sales with rating valuations (the old Government Valuation figure now referred to as Capital Valuations) and found that sale prices achieved were between 13% and 135% higher than the recently struck valuations.

Read the full story on this subject on the bayleys website.

Repairs and Maintenance

Sat, 01 Jan 2000 02:00:00 GMT

“Repairs and Maintenance” to the tax depreciation rules

Recently the Government have released an official issues paper entitled “Repairs and Maintenance” to the tax depreciation rules.”

This issues paper contains proposed changes to the depreciation rules as they relate to chattels fitout and buildings owned by residential property investors. Clarity on this issue is long overdue and the issues paper sets out the likely changes to the introduced by the Government later this year.

Many of you will be aware that Withers Tsang & Co have taken a conservative approach on the depreciation of fitout items over the last few years since the IRD signalled that the depreciation of fitout items in certain circumstances would not be acceptable at anything other than the building rate.

A summary of the proposal put forward by the Government is as follows:

The Government suggests allowing owners of residential rental property two options.

The first, which would have higher compliance costs would allow splitting out for a certain group of separately identifiable assets but would require structural components such as wiring, plumbing and internal walls to be depreciated as part of the building.

The second would be to depreciate all building assets as part of the building but allow greater scope to deduct replacements as repairs and maintenance.

Anybody wishing to read the full chapter of the issues paper is welcome to access it from our website, www.wt.co.nz were there is a link to the IRD website www.ird.govt.nz

The proposed changes effectively mean that the opportunity to separate true chattel items from a building acquisition will remain but any items that will be considered integral to or attached to the building will need to be depreciated at the building rate.

We consider that the Government could have extended its review of the depreciation rules to a far greater extent than they have indicated in this paper and as such we are supportive of the changes to the extent that they offer clarity to taxpayers with respect to the depreciation issue.

We will keep you informed of further changes that may arise from this submission process.

You can read the full report at http://www.ird.govt.nz/

Kind regards

Mark Withers

Withers Tsang & Co Limited

Chartered Accountants

T: 64-9-3768860

F: 64-9-3768861

P: P O Box 47-145 Ponsonby, Auckland, N.Z.

A: 24-26 Pollen Street, Ponsonby, Auckland, N.Z.

or visit www.wt.co.nz

Lifetime Loans

Sat, 01 Jan 2000 01:58:00 GMT

Sentinel Lifetime Loans

Opening Doors To Income Possibilities
You Probably Never Thought You Had

Given the “love affair” New Zealanders have with their home and properties, Sentinel’s Lifetime Loans is one way to turn what is still your “castle” into your very own personal bank.

As a lump-sum payment, the Lifetime Loan can be used for whatever you want or need including home improvements, buying a new car, taking a holiday, paying for a special wish like a grandchild’s university education, or even for an urgent operation in a private hospital facility.

Lifetime Loans are designed to last you the rest of your life – usually they will be repaid only when you die or move into long term care. You are provided with a lump sum using your home as security and, apart from the initial valuation fee, you will not have to make any payments for the life of the loan. Unlike traditional loans there are no monthly repayments – in fact there is nothing to pay until you decide to sell the house or upon your death.

Call us now to find out more: 0800bydesign (0800 2933 7446)

$4,500.00 Bank fees waived

Sat, 01 Jan 2000 01:57:00 GMT

As a team we work hard to ensure that our clients benefit from a close, and highly respected relationship with our lending providers.

As a result of this relationship, one client was recently granted a loan free of all fees when obtaining finance at 95% lending. This saved him $4,500.00 in bank fees.

Our skills and expertise can often result in bank approvals outside of their normal lending guidelines.

Matters of Interest

How banks calculate interest – and what it means for your loan repayments

This may affect the way you pay down your loan.

Get personalised advice.

Fear of money

Talk to your friends who feel lost or panicky about money.

You don’t have to ‘fix’ them. Just be a trusted friend.

A confession.

Financial education is empowering.

Find out your credit score – and what you can do about it.

What is a credit check?

Here's how to get your free credit report.

How do credit scores work in New Zealand?

What say you find a mistake in your credit records?

What to do if your credit report gives you a low score.

How to sell your house for more money.

G et an outside eye.

C rib from the best.

Get the benefits of home staging without the expense.

What happens next?

Will the government decide who gets your hard-earned assets?

Every homeowner should have a Will.

Protect your loved ones from unnecessary stress.

We’re trying to save you money, so don’t hide from us!

An insurance review is time well spent.

Buy first or sell first: Which is best?

When to buy a new property before you’ve sold your current one.

When to sell your current property before buying a new one.

We're always here to talk.

It’s not always easy (and we wouldn’t have it any other way)

Every deal is different.

Happy clients refer us to their friends and families.

Thank you for trusting us. It means a lot.

﻿

When buying property, our advice is to get advice

1. How many days do you have to arrange finance?

2. Are you relying on KiwiSaver to cover the deposit?

3. Should you get a builder's report?

4. What about unconsented works?

Forewarned is forearmed.

Video it. Just in case you ever need to claim it

A reminder that we don't offer fire and general insurance.

Talk to us if you need to look at your life and health cover.

Why do we ask so many questions?

When a 'cash contribution' from the bank is a bad idea.

Refinancing your loan might not be a done deal.

We're here to help you find the right loan.

Some clever things you can do to reduce your mortgage rate

Tip 1. Beware of loans that need to be refixed over December and January.

Tip 2. Be prepared - and minimise the hold-ups.

Last but not least - thank you!

Your emails and phone calls are always welcome.

How a quick call or email could save you thousands of dollars

Why? Because it's easy to miss the big picture.

Example 1: An EV Loan.

Example 2: Refixing a home loan.

Your emails and phone calls are always welcome.

Plugging the leaky money bucket.

Click. Cancel.

Here's the really clever bit.

Plus easy tracking of receipts.

Tools and training.

All of a sudden, it’s all systems go!

It’s not just about the OCR.

If your house didn't sell earlier, maybe it's time to have another crack.

If you’ve been biding your time to buy, consider whether now is the time.

4 things you need to know as interest rates (finally) start falling

1. Understand the timetable.

2. Watch out for banks that suggest you re-fix before the OCR is announced.

3. Get your ducks in a row and be ready to go.

4. Don't ignore those emails and phone messages from Tracey.

What changed on 1 July 2024? Not much.

Bank rates will probably remain high for some time.

Talk to us to get the full picture.

Why referrals are great (and it may not be the reason you think).

We can help de-risk the application for the bank.

We're always here for you - and for your friends and family members.

Three conversations, three great results.

Why do we need to talk?

The home renovation loan that comes with 0% finance.