Auckland New Zealand mortgage

1. Pay more than the minimum payments

Do this as often as you can. The average interest rate is around 7.4% If your current rate is less than this, work out what the repayments would be at the higher rate. You’ll be amazed how much impact this will make on reducing your loan balance. This also means that when the rates do move (as they will) you will be used to the higher payments.

2. Make Lump sum payments.

Deposit these into a revolving credit facility rather than have this money sitting in a cheque account waiting for that ‘rainy’ day or unexpected expense. Or to have your savings sitting in a term deposit receiving (say) 3% but paying tax on the interest.

In either case you may want to have access to this money but in the meantime it could be helping to reduce your costs. For example. If your Revolving Credit limit is $20,000 and you put in $10,000 then the interest payable is calculated on the outstanding amount, in this case the $10,000. However, at any time you can draw back that money up to the limit.

If you also keep your payments at the higher rate you would reduce your loan even more quickly. Treat this like a reverse savings account, rather than seeing the balance increase you want the balance to decrease so that you pay less to the bank.

3. Put money into your mortgage as soon as you get paid.

If you get paid weekly, fortnightly or monthly make sure you put that portion of your mortgage into the revolving credit facility and don’t withdraw it for any reason. This way the money you receive from your income won’t ‘run out’ before the monthly mortgage payment is due.

The less stressed you are the more easily money will flow into your direction. Set automatic payments in place from the account your income gets deposited into to make all the regular payments so that you know what you have left to spend on other things.

4. Check your bank statements.

Mistakes do happen even with banks. When there is an interest rate change in the floating rate make sure the interest you are paying is corrected and you don’t still pay the old rate for a time. The same when you fix a portion of your mortgage, make sure that the new rate is correct from the time you fixed the loan.

5. Beware of finance companies offering to ‘consolidate debt’.

If you have ended up with several personal loans you will have already paid an application fee for each of these loans. By consolidating them into 1 loan you will pay another loan application fee therefore increasing the overal debt. The quickest way is to start paying off an extra $20 or so per payment to the smallest debt. Once that has been paid off then pay what you were paying additional to the next loan and so on. You’ll be surprised how quickly you will be able to get rid of these debts.

6. Keep your mortgage alive.

When the loan is fully repaid, don’t have your mortgage released. This way, if you need to borrow money in the future for a trip or a car etc, the documentation is in place to go back to the bank for another loan. The interest rate is far cheaper than going to a finance company and this way you don’t need to re-register a mortgage against your title, saving you legal fees.

7. Consult a registered Financial Advisor such as Auckland New Zealand mortgage

Banks are also a business and have varying appetites for different kinds of clients and lending. There is usually no cost for working with an advisor when applying for finance and you can save yourself lots of hassles rather than dealing direct with the bank. An advisor works in your interest, not just the banks interest only.

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