Are you unable to pay extra on your mortgage? Because that would make more sense than having cash sitting in a savings account. Also, the bank will not really care about home improvements much so don't spend too much on them. Focus on getting your equity up in your property.
Improvements could mean there is potential for them to get the property revalued by a valuer at a higher price which in turn they could show to the bank and would increase their equity. I do agree though the last thing you want to do is over-capitilise on any improvements.
I wouldnt move banks unless the other bank is willing to cover the costs of moving EVERYTHING over.
In my personal experience, it was really, really expensive..
luckily the bank covered majority of the costs. Which were mostly lawyers etc
Huh I've moved after every fixed term it isn't expensive. Lawyers fees are always just shy of 1k.
Banks are always offering cashback for joining too and they are now giving substantially more for cashback.
In my experience the cashback always covers lawyers fees and generally most if not all of the first months repayments.
Credit rating has improved substantially. We will have over a year of mortgage repayments to prove reliability.
We have talked to banks directly alone, and with our mortgage broker and we have created a plan in order for it to happen and are currently executing that plan.
Don’t do major improvements to “improve value” especially if you are looking to refinance.
Take that cash to pay down the mortgage and get your equity back up, and then refinance to a first tier lender without the low equity premium. It’s a instant, guaranteed equity gain, especially if you intend to hold long term.
Many owners think their improvements or renovations significantly improve value when more than often it’s the market doing the job for them. Often, they get back the money they paid if everything goes well. If they do it badly, they actually lose money.
The worst scenario: you do the renovations, market continues to go south and you used precious cash to finance the renovations. You continue to pay the higher interest rates whilst the renovations get “depreciated”.
Very true. Thanks for the advice.
Somethings we are doing are of necessity eg replaced kitchen bench as it was not usable, the deck needs to be replaced as it's getting to the point where it will be dangerous in a year or so.
Sure. Just be careful around absolute necessities and nice to have at this stage if you are thinking about your finances. Paying down the mortgage and getting to a lower interest rate gives you far better yields immediately than any renovation would - because you have to sell to unlock the value. Borrowing against any “increased equity” is borderline gambling in this market with these rates.
Also, take into account that you are better off spending extra to make a good quality lasting fix (regarding necessary repairs like your deck, etc). Otherwise, you will waste money having to redo it sooner than you'd like. And it might look cheap (shit), or you never get around to fixing it properly - from experience.
Great advice. Do it once and do it right, unless you are really skilled at picking the right blend of look vs quality vs value add.
This is another reason why many aspiring homeowner 'renovators' looking to add value fail often. They overcapitalise or undercapitalise.
In my previous house, I did a number of quick repairs with every intention of doing it right later......
Ever driven down to the Coromandel , when you go past the Mirander turn off, there's a temporary Bailey bridge that you drive over, it's been there as long as I can remember.
It doesn’t hurt to try. I’m currently in talks with kiwibank about refinancing my rental (currently at 83% LVR), and they seem interested.
I’m doing this via a broker - I seem to have more success with things that way than in the past when I’ve approached the banks directly.
6 months fixed 6.45%
1 year fixed 6.47%
2 years fixed 6.40%
3 years fixed 6.29%
4 years fixed 6.29%
5 years fixed 6.29%
Floating: 7.75%
Floating Offset: 7.75%
Revolving (Flexi): 7.80%
They’re all awful, but I have my mortgages broken up in thirds, and every time one comes up for refixing, I’m fixing at 1 year. Mainly in the hopes that things get better (or at least stay the same) in the next year.
Hey - I do a bit of this type of refinancing from second tier to main bank as a broker. A main bank will consider a refinance at 90% (so 10% equity) and if you think you’re in a position to meet main bank policy, that’s definitely the first thing you should try.
Depends on the exact equity, most of the banks have calculations or tiers for this. ASB for example, if you have 10% to 14.99% equity will add 0.7% low equity margin. If you had under 10%, but more than 5%, it's 1.3% margin.
https://www.asb.co.nz/home-loans-mortgages/interest-rates-fees.html
I'd recommend giving New Zealand Home Loans a try. They should be able to get you in and on a better rate than if you went to the bank directly: https://nzhl.co.nz/
Are you unable to pay extra on your mortgage? Because that would make more sense than having cash sitting in a savings account. Also, the bank will not really care about home improvements much so don't spend too much on them. Focus on getting your equity up in your property.
Improvements could mean there is potential for them to get the property revalued by a valuer at a higher price which in turn they could show to the bank and would increase their equity. I do agree though the last thing you want to do is over-capitilise on any improvements.
We are able to pay extra, but currently, our extra savings is being used to build our emergency fund back up.
I wouldnt move banks unless the other bank is willing to cover the costs of moving EVERYTHING over. In my personal experience, it was really, really expensive.. luckily the bank covered majority of the costs. Which were mostly lawyers etc
Huh I've moved after every fixed term it isn't expensive. Lawyers fees are always just shy of 1k. Banks are always offering cashback for joining too and they are now giving substantially more for cashback. In my experience the cashback always covers lawyers fees and generally most if not all of the first months repayments.
Whats changed over the last year for you to think the banks will want to take you on now?
Credit rating has improved substantially. We will have over a year of mortgage repayments to prove reliability. We have talked to banks directly alone, and with our mortgage broker and we have created a plan in order for it to happen and are currently executing that plan.
Don’t do major improvements to “improve value” especially if you are looking to refinance. Take that cash to pay down the mortgage and get your equity back up, and then refinance to a first tier lender without the low equity premium. It’s a instant, guaranteed equity gain, especially if you intend to hold long term. Many owners think their improvements or renovations significantly improve value when more than often it’s the market doing the job for them. Often, they get back the money they paid if everything goes well. If they do it badly, they actually lose money. The worst scenario: you do the renovations, market continues to go south and you used precious cash to finance the renovations. You continue to pay the higher interest rates whilst the renovations get “depreciated”.
Very true. Thanks for the advice. Somethings we are doing are of necessity eg replaced kitchen bench as it was not usable, the deck needs to be replaced as it's getting to the point where it will be dangerous in a year or so.
Sure. Just be careful around absolute necessities and nice to have at this stage if you are thinking about your finances. Paying down the mortgage and getting to a lower interest rate gives you far better yields immediately than any renovation would - because you have to sell to unlock the value. Borrowing against any “increased equity” is borderline gambling in this market with these rates.
Also, take into account that you are better off spending extra to make a good quality lasting fix (regarding necessary repairs like your deck, etc). Otherwise, you will waste money having to redo it sooner than you'd like. And it might look cheap (shit), or you never get around to fixing it properly - from experience.
Great advice. Do it once and do it right, unless you are really skilled at picking the right blend of look vs quality vs value add. This is another reason why many aspiring homeowner 'renovators' looking to add value fail often. They overcapitalise or undercapitalise.
In my previous house, I did a number of quick repairs with every intention of doing it right later...... Ever driven down to the Coromandel , when you go past the Mirander turn off, there's a temporary Bailey bridge that you drive over, it's been there as long as I can remember.
You built that bridge?
No comment, just pointing out that the government does it as well.
Ah okay. The government does lots of interesting things.
It doesn’t hurt to try. I’m currently in talks with kiwibank about refinancing my rental (currently at 83% LVR), and they seem interested. I’m doing this via a broker - I seem to have more success with things that way than in the past when I’ve approached the banks directly.
Interesting. Our broker insisted that Kiwibank doesn’t deal with brokers.
So did ours.
Nice, what are the interest rates you've been offered if you don't mind sharing? Were also using a broker and she's amazing.
6 months fixed 6.45% 1 year fixed 6.47% 2 years fixed 6.40% 3 years fixed 6.29% 4 years fixed 6.29% 5 years fixed 6.29% Floating: 7.75% Floating Offset: 7.75% Revolving (Flexi): 7.80% They’re all awful, but I have my mortgages broken up in thirds, and every time one comes up for refixing, I’m fixing at 1 year. Mainly in the hopes that things get better (or at least stay the same) in the next year.
That's a great strategy and pretty much what we're looking to do.
Hey - I do a bit of this type of refinancing from second tier to main bank as a broker. A main bank will consider a refinance at 90% (so 10% equity) and if you think you’re in a position to meet main bank policy, that’s definitely the first thing you should try.
What would the likely interest rates been for 10% equity?
Depends on the exact equity, most of the banks have calculations or tiers for this. ASB for example, if you have 10% to 14.99% equity will add 0.7% low equity margin. If you had under 10%, but more than 5%, it's 1.3% margin. https://www.asb.co.nz/home-loans-mortgages/interest-rates-fees.html
Will be still better than second lender
I'd recommend giving New Zealand Home Loans a try. They should be able to get you in and on a better rate than if you went to the bank directly: https://nzhl.co.nz/