colinrealestate

Home ownership, once an integral part of the Kiwi dream, is one of the hottest topics right now. Limited property listings, relatively low interest rates and a burgeoning population are among the factors driving the bullish market and record high prices, particularly in Auckland.
Marry this with what’s been one of the this country’s most vigorous election campaigns with promises of home loan subsidies for first-time buyers, talk of capital gains tax and progressive home ownership programs.
One thing we’re not talking about enough is the millions spent in unnecessary home-loan interest every-day. There’s often a perception that once you get a home loan, you just let it tick over. Repayments become your biggest bill,and a call to your bank happens only if something goes wrong.
Home owners need to regularly reassess how they structure their mortgage. Does it work for their present situation? Could they increase prepayments?
Every four hours, New Zealanders pay $6M in home-loan interest. Many of us recognise the importance of long-term financial goals, but far fewer are taking critical steps to manage this.
When you look at the modeling, doing simple things like increasing your loan repayments in line with inflation every year can shred up to $156,000 of interest off a $300,000 home loan compared with a typical 30-year table loan, and it’ll be paid off 11 years quicker.
Even changing from monthly to fortnightly repayments will have a big impact on the interest you pay. One of the best pieces of advice I got early on was to pay off more than my minimum repayments when possible. This advice helped me be better with money and to curb tendencies to spend.
Home loans don’t have to be complicated. We need to be having conversations about structuring home loans so customers avoid unnecessary home-loan interest. What’s most important is that as a Nation we’re talking about it. Source: The NZ Herald – Anthony Healy, BNZ Chief Executive

Filed under: REAL ESTATE