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Great income, not so great deposit

Great income, not so great deposit 4000 2670 Float Mortgages

Applying for a mortgage with less than 20% deposit

You’re in the market to purchase your first home, and with a decent income, you’re trying hard to squirrel away as much as you can. But truthfully, you’re struggling to get to that elusive 20% deposit. 

In New Zealand, it can be challenging to find a lender that will loan you more than 80% of the purchase price of a home – irrespective of how much you earn – but it’s not impossible. Referred to as a high loan-to-value (LVR) mortgage, this allows you to get a bigger loan, with less deposit, so that dream Kiwi home becomes a reality sooner rather than later. 

A word of caution: current LVR restrictions make it harder for banks to lend to buyers with low deposits. Although a high LVR mortgage might be your best – and only – option to secure a home loan, we recommend you work with a mortgage broker to ensure you meet all lending criteria and costs involved – like Lender’s Mortgage Insurance. Lenders will often apply much stricter lending criteria on those with low deposits: they’ll look at your credit rating, repayment history, property type and location, and the stability of your income.

Here are some of your options:

Get the help of a guarantor

Saving a 20% deposit in today’s market can feel like you’re paddling upstream – without the paddle. In Auckland, the median house price reached a whooping $870,000 in December 2017 according to REINZ. 

These days, it’s cheaper to go on a round-the-world trip than it is for first-home buyers to get a foot on the property ladder. With many (particularly young adults) struggling to save the necessary 20% deposit – even with good incomes – this has seen an increase in the number of parents, and grandparents, being called upon as guarantors. 

The role of guarantors is pretty simple – they’re the ones who are legally required to cover mortgage repayments if for any reason you’re unable to. Although simple in definition, becoming a guarantor doesn’t come without risks. Most guarantor home-loan arrangements require collateral – often in the form of property. If things go topsy-turvy for you, lenders are well within their rights to ask your guarantor to repay what they’re owed – and in some instances, this might mean your parents or grandparents could lose their own home.

Getting help from family and friends is a viable option for those who have a low deposit – and with careful consideration, can work out well for both parties. The best thing to do is to get advice from a good mortgage broker.

Apply for a Welcome Home Loan

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. 

This option is specifically for first-home buyers. A Welcome Home Loan is a special home-loan option which requires a 10% deposit – making getting your first home a whole lot easier.

While only needing a 10% deposit takes financial weight off, you’ll need to meet all other Welcome Home Loan lending criteria. That includes a maximum income cap for solo and joint borrowers, the chosen house must cost less than the regional house-price cap, and only first-home buyers are eligible (Welcome Home Loans can’t be used to purchase investment properties). On top of this, you’ll also need to meet the lender’s usual lending criteria.

Welcome Home Loans are issued by Housing New Zealand and are only available through selected lenders. You’re best to get the help of a good mortgage broker who is familiar with the Welcome Home Loan process – and which lenders to approach.  

KiwiSaver HomeStart grant

Been contributing to KiwiSaver for more than three years? You might be eligible for a KiwiSaver HomeStart grant. Another Housing New Zealand initiative, if you have at least 10% saved (which can include the grant), you might be eligible for up to $10,000 towards an existing home, or up to $20,000 for a new home. 

Like the Welcome Home Loan, the KiwiSaver HomeStart grant comes with additional conditions, including maximum income caps, regional house price caps, and it’s only for first-time home buyers who are planning to live in the house for at least 6 months.

Use a personal loan

If you have a high enough income, you could consider getting a personal loan to use in lieu of a deposit. If you can prove you can afford to repay both a loan and a mortgage, and you tick all the other boxes for lending criteria, like good credit and responsible repayment history, you could approach certain lenders with the help of a mortgage broker. Be aware you might end up paying more in interest if you go down this path.

It’s almost always best to use genuine savings for a deposit – because it shows you can meet your repayment obligations – but there are some lenders who will allow you to use a personal loan to fund your deposit.

Turnkey house and land packages

Maybe you want to build your own home – consider a turnkey home and land package. These packages are designed to take the stress out of having to find land and contract builders – by handing over the process to property developers and builders, who work together to source land and build your home.

Usually only a small deposit is needed to start the build, and no mortgage repayments are required until after Code of Compliance is received and you’ve moved in – great if you’re still paying rent.

If your heart isn’t set on a specific piece of land, this might be a great option. There are lots of packages available, so be sure to do your research to find the one that suits you best.

Turnkey house and land packages

For first-home buyers, high LVR mortgages offer an alternative way to buy property in an unaffordable market. Unlike their traditional counterparts, high LVR home loan options often require much smaller deposits. 

If you’re willing to wade through the waters of the approval process, or you have the income to pay a mortgage with a slightly higher interest rate, things like co-signing with a guarantor, applying for a grant, or using other non-bank lending to fund your deposit might just be the right home loan option for you.

If you can prove you have a good income, but you’re struggling to save enough for a 20% deposit, get in touch with Float Mortgages to see what home loan options you might be eligible for.

Why your bank said ‘no’ to your mortgage

Why your bank said ‘no’ to your mortgage 7000 4667 Float Mortgages

And what to do about it

You’ve spent all this time applying for a mortgage only to have your application denied. There are several reasons why things may not have worked in your favour, and the good news is, there are things you can do to fix it.

While it’s better not to have your application denied at all, it’s not the end of the road. We’ve pulled together the four most common reasons why banks and lenders turn down applications, and what to do about them. 

Finding and speaking to a mortgage broker you trust can help you better understand how to go about applying for – and securing – a mortgage.

You don’t have a big enough deposit

Saving a 20% deposit in today’s market can feel like you’re paddling upstream – without the paddle. In Auckland, the median house price reached a whooping $870,000 in December 2017 according to REINZ. 

Having a deposit of 20% or more of the purchase price does make it easier to get a mortgage, and it helps you avoid paying the cost of Lender’s Mortgage Insurance (LMI), which all things being equal, means a cheaper mortgage.

You’re best to continue saving and/or looking for a cheaper property (so you need a lower deposit), but even if that’s possible, you still have options.

Recently the Reserve Bank announced changes to lending restrictions on banks: they can now lend more money to first-home buyers with lower deposits. To be exact, 15% of a bank’s total loans is now reserved for low deposit lending (keeping in mind each bank has their own lending policy). 

This is where having a Float mortgage broker is super useful. We can steer you in the right direction of which lenders to approach and help you present your case in the best light.

You don’t earn enough income

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. 

When applying for a mortgage, you need to have a good income to debt ratio i.e. how much you earn compared to how much you pay in expenses each month.

Under the Responsible Lending Code lenders also have to make sure home buyers have enough income to meet their everyday living expenses as well as mortgage repayments. Typically, if your expenses are over 40% of your income, your application will be denied because it’s likely you won’t be able to meet your mortgage repayments if interest rates rise.

You’ve got three options:

  1. Look for a more affordable property so your mortgage repayments are lower
  2. Get rid of all short-term debt (RIP credit cards) before applying for a mortgage
  3. Find ways to increase your income

Our mortgage brokers will be able to tell you which lenders are more likely to loan to you and can also review your application to make sure you’ve covered everything in the right way, particularly when it comes to presenting your income information.

You’ve got a not-so-good credit history

If a broker suggests moving banks, double check how much money they’re due to make from the shift – usually it’s between $4-$5,000 – because it’s a pretty good sign they’re chasing commission rather than the right deal for you. Whereas to re-fix your mortgage with your current bank, the commission for a broker is $150. 

Not all hope is lost if you have a bad credit history. A credit history or credit rating is a complete record of your financial history, including things like hire purchases, credit cards and personal loan applications – approved or declined. It also includes late or missed payments, and money still owing.

The thing to know about banks is they change their lending policies often. So, while your bank may have turned you down, others might not. 

A good mortgage broker should have a relationship with all major banks in New Zealand so they’ll know who is best to approach. They can also support you through the application process by explaining any black marks on your record. If your credit history is bad… really bad, there are other options like non-bank lenders who might loan you at a slightly higher interest rate. 

If you don’t know what your credit history is, it’s worth doing an online check.

You lack proof of income

Another good sign a mortgage broker is advising you based on what’s right for you is how transparent they are with how much commission they’re entitled too from each lender.

This usually applies to those who are self-employed, work as contractors or work part-time. 

Banks want to lend to you, but they do need to know their money is in safe hands. Proof of income is required to calculate your income to debt ratio, and that can be tricky if you have irregular income, or if you haven’t been in business for long. 

If providing proof of your income is a challenge, a mortgage broker will be your best friend. They understand what banks are looking for and can help tailor your application, accentuating the positive and explaining anything that could be seen as negative. 

Again, a non-bank lender may be an option as well and can be surprisingly affordable. 

Let’s get you home

At Float, we have a great team of mortgage brokers and advisers who will work with you to find the best lending option. We understand everyone has a different financial situation, and that’s ok – no judgement!

Give us a call today to chat about where you’re at on your home loan journey and how we can help you get the stamp of approval. 

How to spot a dodgy mortgage broker

How to spot a dodgy mortgage broker 5184 3456 Float Mortgages

And find your fairy godbroker. 

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.

Whether it’s your first or third, buying a new home is a massive financial commitment, one that comes with a lot of banking jargon and paperwork. 

Working with a mortgage broker can help make all that easy, but how do you know you’ve chosen the right one to partner with? A great mortgage broker will be like your fairy godmother. A not-so-good one, more like an evil stepsister. 

A broker is there to hunt the mortgage market for the best deals, while saving time on forms. They advise on everything there is to know about taking out a mortgage and the house-buying process, as well as KiwiSaver withdrawals and grants. They should also be knowledgeable about each lender, their criteria, and give great advice on which one will suit different financial situations. So that’s what they should be doing.

We’ve put together a list of the top five things mortgage brokers shouldn’t be doing if they know their stuff. This means you can make an informed decision about which broker is right for you.

They give commission back to the bank

To get a deal across the line, some mortgage brokers will hand some of their hard-earned commission back to the bank. While this may seem awesome in the short-term, it’s a sign your mortgage broker isn’t offering sound advice and is potentially compromising your long-term position. A great mortgage broker shouldn’t need to do it – their skill in brokering deals should be enough.

They pay for referrals 

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. 

This one’s really a no-brainer. Good relationships are built on trust and rapport from hard work and great communication skills. 

Great mortgage brokers shouldn’t have to pay for referrals. If they’re good at what they do, there should never be any need for money to exchange hands.  

They always want you to move banks

If you’ve recently made the shift to self-employment – less than 12 months – consider approaching a non-bank lender. Several non-bank lenders offer more flexibility in the way they assess income. A low-doc (low-documentation) home loan might only need six months’ worth of bank statements rather than a bank’s two-year policy. These lenders may require less documentation, but the trade-off is that you’ll pay slightly higher interest rates and fees. They’re a good way to get into a home, until you have enough financial history to approach the banks. A mortgage broker will be able to advise you on which non-lenders will suit you best.

Great mortgage brokers think and play the long-term game. When it comes to re-fixing a mortgage, one big red flag is a broker who always wants to move banks.

If a broker suggests moving banks, double check how much money they’re due to make from the shift – usually it’s between $4-$5,000 – because it’s a pretty good sign they’re chasing commission rather than the right deal for you. Whereas to re-fix your mortgage with your current bank, the commission for a broker is $150. 

That’s not to say shifting banks might not be a smart move. But any move should benefit you and your financial situation in the long run, not your broker.

They’re cagey about commission 

Another good sign a mortgage broker is advising you based on what’s right for you is how transparent they are with how much commission they’re entitled too from each lender.

Different lenders have different commission rates. When a broker advises you on your home loan options, they should also tell you how much commission they are expecting to get with each deal. This helps you judge whether your broker is steering you towards one bank over another because it’ll win them more money.  

Our advisors and brokers don’t earn commission. They get paid a salary, which is an unusual way of working. It means our brokers are never chasing commissions – instead their priority is always finding you the best deal.

They hand you over to team members with no financial experience

With experience comes connections, expertise and information, so it’s important that everyone involved in your deal has experience in the banking and financial industry. After all, their job is to help you with one of the biggest financial decisions you’ll ever make. Many brokers will hand you over to support staff to process paperwork – while that may seem efficient, it can lead to things being missed. They simply won’t have the experience to spot opportunities or issues on your behalf. 

Your wish, granted

Whether you’re self-employed or not, having a decent deposit will always make applying for a mortgage less challenging. The more deposit you can save, the less risky the banks will consider you, and the less weight they’ll put on your income. A deposit of at least 20% is good, but having more is ideal.

Our focus is and will always be on finding you the best home loan deal. 

Alongside our extensive financial experience, we’re transparent about how our team is paid, we work hard for our referrals and we take no shortcuts.

If you’re considering working with a mortgage broker, give us a call today. We’re happy to answer any questions and help you navigate the sometimes (ok, most of the time) confusing world of property.

Float Mortgages

Business owner to home owner

Business owner to home owner 5408 3605 Float Mortgages

How best to apply for a mortgage when you’re self-employed

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.

To future home buyers who are self-employed– this one’s for you. When you’re self-employed – maybe running your own business, contracting or doing seasonal work – your income fluctuates, and applying for a home loan can seem damn near impossible. We’re here to tell you: it’s not. 

The challenge usually starts when self-employed borrowers need to provide proof of income to support their loan application. You don’t have the luxury of just printing out your payslips, but with a good broker, you can still get the job done. A good broker won’t just know which lenders to approach, they’ll approach the right lenders based on your needs as a self-employed borrower, and they’ll know how best to prepare your application. 

There are several ways you can improve your chances of securing a home loan with a bank or non-bank lender. 

Gather proof of your financial history

Lenders generally decide on how much you can borrow based on what you earn. For those who work for themselves, that usually looks like an average of the past two years’ income. Most banks want to see financial history from at least two years in your current business or freelancing venture – but not all. Some, like Westpac, only require 12 months, and some banks may take into consideration evidence that you have future work lined up, or a track record of regular work. But all of this, of course, needs proof. Your mortgage broker will work with you to understand what info you’ll need to gather up, and how best to present it.

Get your books in order

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. 

It’s crucial you get your books in order. When you’re self-employed, lenders not only look at your personal financial history but your business’s financial history as well. Banks want to lend you money – but they also want to make sure you’ll be able to manage the loan. A mortgage broker can help you gather and prepare the business information you need to show the lenders you’re a safe bet. Include things like getting a cashflow forecast prepared to show where your business is headed, outlining your home office expenses separately so the bank doesn’t double-up on those, and putting together background information on your experience in your industry. Proving you are experienced and have established a successful career for yourself will give you a great advantage.

Hot tip: things can move quickly when applying for a home loan, so giving your broker direct access to your accountant will be the ultimate time-saver.

Consider a non-bank lender 

If you’ve recently made the shift to self-employment – less than 12 months – consider approaching a non-bank lender. Several non-bank lenders offer more flexibility in the way they assess income. A low-doc (low-documentation) home loan might only need six months’ worth of bank statements rather than a bank’s two-year policy. These lenders may require less documentation, but the trade-off is that you’ll pay slightly higher interest rates and fees. They’re a good way to get into a home, until you have enough financial history to approach the banks. A mortgage broker will be able to advise you on which non-lenders will suit you best.

Apply with a guarantor

Over the past couple of years, it’s become way more difficult for first home-buyers to get a home loan. Applying with a guarantor – who offers up their own assets as collateral for the loan – has become a popular way for first home-buyers to get themselves on the property ladder (thanks, Mum and Dad!). A word of caution here – acting as a guarantor is a big commitment, especially if you, as the primary lender, are unable to meet your loan repayments. Talk this option through with your mortgage broker – there are things you can do to safeguard you and your guarantor.

Consider a joint application 

Traditionally, you’d buy your first home with your significant other, but since we’re in the 21st century and all, you can look at other home-buying partnerships too – your sibling, another family member or a friend, for example. If you’re looking to buy a home on your own, it can often feel like the odds are stacked against you, so applying for a joint home loan means you share the responsibility equally with someone else. It’s a great way of helping each other onto the property ladder, but it’s also important you both understand what your expectations are for the future of the property, and what your responsibilities are, particularly if something goes wrong. 

Make sure you have a decent deposit

Whether you’re self-employed or not, having a decent deposit will always make applying for a mortgage less challenging. The more deposit you can save, the less risky the banks will consider you, and the less weight they’ll put on your income. A deposit of at least 20% is good, but having more is ideal.

How best to apply for a mortgage when you’re self-employed

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. 

Just because you’re self-employed, doesn’t mean your dream home can’t be a reality. Make sure the mortgage broker you work with understands your needs and what you can manage comfortably. They should also understand the finer details of each lender’s policy, so you know you’re getting the best advice possible.  

Are you self-employed and looking to purchase your dream home? Call the team at Float Mortgages today and we can talk you through your options.

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!

Mortgages Advice Auckland

The secret to finding the best mortgage

The secret to finding the best mortgage 7360 4912 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!

Consolidate Debt - Mortgage Broker

Holiday hangovers: dealing with that Christmas debt

Holiday hangovers: dealing with that Christmas debt 1549 1052 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.