Make the most of your interest rate renewal by reassessing your lending structure. Here are key points to consider:
- Timing Matters
Interest rates can be locked in up to 60 days before renewal. Some lenders only allow this to be done 35 days before renewal.
- Choose Wisely
You can choose to have your loan roll onto a floating rate or fix the rate for any period between 6 months and 60 months (5 years). Generally, in New Zealand, the floating rate is more expensive than a fixed rate, so we’ll help ensure your loan is structured so the floating portion is the right size to avoid paying excess interest.
- Digital Rates
Most banks offer digital rates through online banking. Majority of the time, this is indeed the best rate available with that bank, however, it’s best to discuss this with your Mortgage Adviser for negotiation opportunities, especially if banks differ.
- First Home Buyers
We can explore whether by checking the latest e-valuation, making a lump sum payment or a re-structure could reduce the bank’s loan-to-value ratio and therefore reduce your low equity margins/fees. Sometimes if you’re close a small loan from a family member may be enough to save more on your mortgage than it would to pay back that family loan.
- Loan Priorities
Assess whether a vehicle loan or student loan should be paid off faster than needed when the low equity margin is still on the loan. Often the savings from improving the equity position can be far more than the cost of a vehicle loan. It does of course depend on the size of the mortgage and size of the vehicle loan.
Consider whether your loan structure still works for you – perhaps your financial position has changed and as a result need an adjustment? One good example, is say you have ceased employment but started working as a contract. The hourly rate may be substantially higher, but the risk if also higher too. It’s worth having a larger contingency fund and setting aside money for GST & Tax. Having an offset loan may be a great way to manage this change whereas it may not have been as suitable before.
