A single piece of advice can change your financial world.
See our pointers that help you develop strategies to clear debt faster, build your asset base, leverage the resources you have and develop the ones you don’t.
Top 5 reasons to review your mortgage
New job or promotion
Surplus income is a great reason to revisit your mortgage structure – putting surplus income against your debt could cut years off your loan.
Addition to the family?
Often the birth of a child also means a reduction in income. Reviewing your mortgage may allow for an interest only period to reduce mortgage repayments while income is tight.
Fixed rate expiry
If you don’t re-fix your loans, they will automatically transfer to a floating rate – which is normally much higher. Requesting rates early means you can organise to transfer straight onto the new fixed term.
Thinking about buying another property
As you pay down debt, you increase the equity in your home. In some cases, you can use the equity to help with the deposit for an investment property – starting your own portfolio.
Keep shopping around
As advisers, we like to keep our eye on the wider mortgage market and let you know if moving banks might get you access to better rates, loan products and even a cash contribution towards the cost of moving.
TOP 5 HOME LOAN MISTAKES
Not reviewing your mortgage
Interest rates are changing all the time. Sometimes breaking an existing rate for a lower one can save you thousands in interest, even after you pay the break fee.
Focussing on the lowest interest rate
Even low interest rates will eventually expire. Make sure your loan structure considers what rates might do over the long term. Multiple tranches of debt means you can split the risk.
Making minimum repayments
No matter what offers you might see, the only way to pay down your debt faster is to increase your repayments. But that doesn’t mean it’s not worth doing! Even putting that extra $50 per week on your debt can make a big difference over the long term.
Using debt for spending
Just because you can, doesn’t mean you should. A revolving credit makes it easy to justify spending on cars, renovations, or family holidays. Using this facility for unplanned spending means you are paying more interest, without any structured payments to clear the debt.
Not shopping around
Just because you’ve grown up with one bank, doesn’t mean they are going to make you the most competitive offer. Ask your adviser about what interest rates, products and cash contributions that different lenders might be able to offer you.
TOP 4 LOAN TYPES
An agreed interest rate, typically between 6 months and 5 years. At the end of the term it will automatically move to a floating rate, until you choose a new fixed rate. Breaking your fixed rate early is an option, but will likely incur a fee.
Your interest rate moves up and down with the markets. As it’s not locked in you can pay off lumps sums without incurring penalties, or fix this loan at any time. Floating interest rates are typically higher than fixed rates.
A revolving credit facility allows you to pay down debt at a rate that suits you, but also lets you re-draw it should you need to. This means you can apply all your savings to the loan, reducing what you pay in interest.
Save on interest with this floating loan by offsetting the positive balances in your other bank accounts against your debt. The interest rate on an offset mortgage is higher so you still have to make sure it’s worth it.
Top 5 Home Buyer Tips
Do the numbers
Work with your Pointer adviser to look at your options and apply for a pre-approval ahead of time. That way you can shop around with a budget in mind.
Consider all the costs
Just because the bank has pre-approved you for a certain level of debt doesn’t mean you should buy at that level. Buying a home comes with additional costs – solicitors fees, moving costs, house insurance, rates and any new furniture you might need.
Use conditional offers
An offer that is conditional gives you time to check out things like builder’s reports, LIM reports and finance options. If any of those fall through, you don’t have to commit to purchasing the property.
Get rid of other debt
Most lenders prefer that you don’t have any other debt when applying for a loan (typically excluding any student loans). Even the limits on your credit card will have an impact on the amount you can borrow.
Work with professionals
Buying a home can be a stressful process and it’s impossible to know everything. Even where you’ve bought before, bank rules and procedures are constantly changing, and we can help you navigate your options.
TOP 5 FINANCIAL LIFE-MAP TIPS
New Zealanders typically shy away from conversations about money, and discussing this with friends and family is not always helpful. We have the qualifications and tools to show you what’s possible.
Leverage your assets
The equity in your home grows over time and can be used to improve your progress. Whether you use that equity to buy a better home, or get a rental property to capture long-term capital gains – it’s important to consider your options.
For most people, KiwiSaver will make up only part of what you need to retire on. Starting with a Pointer adviser now means that you will make better decisions and improve your chances for what happens later.
Protect your progress
Part of getting ahead is making sure a change in circumstances doesn’t impact on what you’ve achieved. Let us help you find the right balance between cover and cost, ensuring your insurances work the way you want.
Time is a resource
When putting a financial idea into practice, time can work in your favour. Even where debt is never paid off, it may be worthwhile if you get enough capital gain. Life-mapping can give you clarity by projecting different possibilities.
Re-fixing our mortgage was worth it
We thought we were on a good interest rate until we spoke to Pointer. They restructured everything and got us better rates. What’s great is that they’ll do it next time too.
Sarah & James
We’re clearing debt so much faster
After our strategy session we had a much better idea of what we needed to do. With Pointers help we now have our mortgage sorted and feel much confident about how we are tracking.
Katrina & Paul
We’re amazed a rental was an option
Seeing the numbers in our strategy session showed us we were better off than we thought. It felt like owning a rental was always a long way off, but now we actually own one!
Tracey & Cameron
Loan types are no longer a mystery
At first it seemed like there was too much to know. Everyone at Pointer was very patient and explained what structure was best, and why. Now I have a great system for clearing debt and the flexibility to run my finances how I want.