November 2014

An early Christmas present from the Council & LVR limits

Christmas is just around the corner, but the busy season has already started here as people are rushing to get into a new home before Christmas day. We’re working full steam at the office, although we’d like to take a moment out to give you some important updates:

Council valuations bring good tidings

By now most of you will have received a new council valuation for your property. If you haven’t had your valuation mailed to you yet then here’s a handy website to view your new C.V.* http://www.aucklandcouncil.govt.nz/EN/ratesbuildingproperty/ratesvaluations/ratespropertysearch/Pages/RatesSearch.aspx

Apart from those smiling about the increase in equity, there is another person smiling … Mayor Len Brown! The Auckland City Council will be able to generate more revenue as a result of these increases.

The good news is that we are able to negotiate some great fixed rates for you if you are below the 80%, lending threshold and thereby saving you some money. Get in touch if you would like us to do that for you.

*Please note this C.V. link is for Auckland properties only.

When will the Reserve Bank remove LVR limits?

Last week the Reserve Bank indicated that they’re unlikely to remove the LVR restrictions anytime soon. Reserve Bank governor Graeme Wheeler announced that “there remains a risk of a resurgence in house price inflation, particularly in light of strong immigration flows. Consequently, we do not consider it appropriate to ease the LVR speed limit at this time.”

This news will of course come as a huge disappointment for first home buyers who are struggling to save up for the required deposit. However, I do need to reiterate that every week we get mortgages approved for people who only have a 10%, deposit. If you’re unsure whether you meet these criteria then please get in touch.

Buying or renovating? Calculate your ‘usable equity’

Assuming you want to use the equity you’ve built up to either purchase another property or renovate your existing one, then you need to know how much you can use. The key here is ‘usable equity.’

The bank want you to retain a certain level of equity in your property, and the rest is usable equity. Currently, the level of equity that your bank is happy with you using is roughly 80-85%. Therefore if you have a property that’s valued at $400,000 and a $200,000 mortgage on that then your usable equity is:

$400,000 x 80%= $320,00

Then $320,000 minus the existing mortgage ($200,000) = $120,000 of usable equity.

Deal of the month

Poor economic reports from abroad (especially Europe and America) have caused a decrease in longer term interest rates. That spells good news for people with mortgages, and I’m definitely recommending that you take up some of the great offers available.

One lender is offering a 5 year fixed rate at 5.99%, which I think is excellent value. Coupled with that rate, we can structure the rest of your mortgage to allow for bulk payments without penalties. Just let me know if you need any advice around the structure of your mortgage.

If you have any questions about what I’ve discussed this month, just let me know.

Nick

0211 9444 24

nick.kotze@loanmarket.co.nz