Passionate?

Sue Tierney

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

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