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The secret to finding the best mortgage

The secret to finding the best mortgage 5184 3456 Float Mortgages

Get a broker – your banking BFF 

When you’re shopping around for a mortgage, do you know who wants to find you the best deal? Mortgage brokers. They want to find you the most affordable mortgage with the best terms for your lifestyle.

Your mortgage broker is your BFF

Banks are all about making money – after all, this is what their shareholders want. The bank makes money so that shareholders get dividends. But mortgage brokers are genuinely interested in finding you the very best deal. Their reputation depends on it.

If you’re hunting around for a mortgage, there are plenty of reasons why you should use a mortgage broker and avoid dealing with banks directly.

You get the benefit of insider expertise

Interest rates change, and the housing market in NZ is uncertain at the moment. Do you lock in five-year fixed term, or go for a floating rate? A mortgage broker has one job: to find you the best deal. Brokers know who offers what deals right now, and can predict interest rate changes, OCR increases and what the housing market is going to do. 

While you may simply go with the provider who offers you the lowest rate, it’s important to look further than that. Are there exorbitant fees? Are you locked into a certain length of time, and if you break that agreement, will there be cancellation or early repayment fees? While that low rate may seem like a great idea, if you sign up for a long term and then interest rates drop, you may end up paying a lot more than you would if you could change providers.

Your loan request will be presented favourably

Just like you’d get your friends to check your assignments before turning them in, your mortgage broker checks your mortgage application. Brokers understand what the bank is looking for, and can tailor your application so it’s presented in the best possible light. 

They love filling in forms. Seriously, mortgage brokers would rather fill in forms for you than relax on a beach in paradise. They’ll ensure you include everything the banks want, accentuating the positive and explaining anything that could be seen as negative.

You don’t have to do the hard work yourself

As any great boss says, if you can’t do something, delegate to someone else. If you don’t understand the ins and outs of finding an optimal mortgage, get a broker to do the work for you.

Brokers know the current market, they know the fine print to look out for, and they understand the legal jargon so you don’t get caught out. 

They can advise you on interest rates, bank fees, the current housing market, conditions of borrowing and what colour you should paint your front door (red, for Feng Shui). Why fill up your brain with this information when they already know it?

You don’t have to pay them

For standard residential mortgages, brokers are paid by the mortgage provider. This means you get all this knowledge and the benefits of the best deal for you – for free.

You get more bargaining power

A good mortgage broker is someone that banks like to keep on side. Brokers represent a lot of mortgages and a lot of income – but you on your own have just one, measly mortgage. You have very little leverage compared to a broker. On your behalf, they will ask for the lowest possible interest rates, better terms, and cushy kick-backs so you can pay off your mortgage faster. They may even be able to talk the bank into lending you more than you would get on your own.

If the banks say no, they can probably find you a yes

If you’re having problems getting the mortgage you need, a broker can help. Often, your best option may not even be a bank. When a bank says no, sometimes a reputable alternate provider will say yes. A mortgage broker will know where to turn so you get the funds you need, and at reasonable terms. 

If you have a less-than-perfect financial history or a smaller deposit, a broker can also help you hatch a plan for increasing your chances of being accepted.

You can trust your BFF broker

About 40% of all mortgages in New Zealand are arranged by a broker, and this number increases every year. Of that number, about 51% of users were very happy with the service they got – great deals on their mortgages and value from the transactions.

It’s obvious why people are so satisfied with their brokers – saving time and money makes for happy customers. So even if you think your bank will fall over itself to look after you, it’s worth approaching a broker to see if you can get an even better option.

Give Float a call. We can chat about what you’re looking for, how we can help you get what you want, and what forms we can fill out for you!

Holiday hangovers: dealing with that Christmas debt

Holiday hangovers: dealing with that Christmas debt 1920 1300 Float Mortgages

Christmas presents, holiday accommodation, travel expenses and those cheeky extra bottles of wine – ideally, these costs should have already been factored into our budgets throughout the year. The reality for many of us is that these extra expenses go straight on the credit card. Unless you pay off this debt before the bank starts charging interest, you could end up paying much, much more for your holiday break than you anticipated. 

That bargain $250 airfare? If you chucked it on your credit card and only make minimum payments, it’ll take more than three years to pay off. Adding on the interest means that $250 flight will actually cost you $351. Not so cheap.

Carrying consumer debt such as your credit card and HPs  can also affect your borrowing power. Banks will look carefully at what you already owe before letting you take out a mortgage. Sometimes, it’s less about the amount you owe, and more about how volatile you appear. To the bank, debt is risk. 

How to get out of that Christmas credit card hole

Every day that you carry a balance on your credit card, it’s costing you money in interest, fees and even insurance. Your goal is to get rid of that debt as quickly as possible. That means knuckling down, budgeting, paying more than the minimum off your credit card each month, and making sure you have the cash to cover any other debt repayments too. 

Debt consolidation can also help you reduce stress, have an easier time with budgeting and pay your loans off faster. 

Look into a debt consolidation loan

While borrowing money to pay off your debts might seem counterintuitive, debt consolidation can be a really smart move if you’re faced with a bunch of HPs, store card debt, or a maxed-out credit card. Instead of juggling many different debts, each with its own interest rate and payment schedule, you have one simple loan. And unlike credit cards, which can have up to a 30% interest rate, personal loans can have a much more manageable interest rate. You can relax knowing you aren’t racking up extra penalties for forgetting a payment, or being dragged down by your credit card’s astronomical interest rate.

Some things to consider before consolidating your debts:

Debt consolidation loans can be a good idea, but there are some things to be wary of:

  • Make sure you can meet the repayments on the new loan, or you are digging yourself a bigger hole. 
  • If you’re paying lower amounts each month, it could mean you’re paying more overall – ask for a breakdown of what your total amount, including interest will be, so you have a clear understanding. Compare this against the existing total debt amount.
  • Look out for extra fees and charges, including ones that you’ll be charged if you change anything, make late payments or default. You may even be charged extra for paying off your loan faster. 
  • Choose your lender carefully. Banks will often offer lower interest rates on their personal loans but are more careful about who they lend to. They’re always a good place to start though – non-bank lenders will almost certainly charge higher interest. Only use legitimate banks or financial institutions.
  • You’ll have already spent money on setting up your original loans. These are called establishment or documentation fees, and your consolidation loan will add another set of fees. Make sure you add these to your calculations before taking the plunge.

Look at increasing your mortgage

If you’re a homeowner, one of your options is to increase your mortgage. Other thans the holiday debts, you may also have ongoing payments on big ticket items like a car or boat. The interest rates on these types of loans will be much higher than your mortgage, and you could save a lot in the short term by bundling them all into your long-term home loan.

If you already have a revolving credit facility on your mortgage, that’s even better. You can cover your debts and save massively on fees and interest. But don’t forget that the term of the loan remains fixed, so you’ll be paying more each month to cover that extra debt. 

Crunch the numbers on your mortgage to find out what your home and all your debts are really going to cost. Take your weekly mortgage payment, multiply by 52, and again by the number of years left on your mortgage term. (For fortnightly payments, multiply by 26.) How much the bank will make from your loan over the term might shock you into saving up for next holidays! 

Have happy holidays – within your budget

If you spent a lot more than you expected to during this latest holiday period, you don’t need to suffer. A consolidation loan that will gather up all your debt might be the answer. Or you can increase your mortgage and pay off those debts at a much lower interest rate.

Whatever you do, make sure you understand the gritty details – keep an eye on fees, charges, penalties for late or missed payments, or even early repayment costs. Even more important, get a breakdown to find out the real total of your debt, including interest. 

Are you struggling with holiday debts? Talk to Float for ways to manage them effectively and save yourself some stress.