Top mortgage tips for Kiwis after rate increase

Source: 1News

A financial advisor is urging Kiwis interested in or currently holding a mortgage to get professional advice and consider spreading the risk by not putting all their eggs in one basket.

Anthony Sage has been speaking to Breakfast in response to the recent rise of mortgage rates by several banks.

That’s as the Official Cash Rate was lifted to help curb inflation, meaning mortgage payments are now higher.

And they are expected to rise even higher in line with an anticipated further rise in the Official Cash Rate.

Sage says this shouldn’t necessarily deter people but advises them to review a few options with different advisors.

“It’s more valuable than ever to get the right financial advice,” Sage told Breakfast.

That includes for someone who is considering refinancing their mortgage, although he advises people in that situation to speak to their existing bank first.

“The banks are quite keen to retain their existing business and you can actually restructure your lending without refinancing it," says Sage.

He adds it’s probably wise at the moment for Kiwis to look into putting their money into a variety of different loans, rather than a single one.

“You definitely don’t need to go and put your eggs all in one basket. That would probably not be prudent at this time.

“But it definitely would make sense to split it up and spread the risk.”

And for those who are wondering about whether to break out of their existing mortgage agreement, Sage had this to say.

“It really depends if there’s a break fee or what your long-term goals are.

“But yes, that could be an option for clients if you’re looking for a bit more long-term certainty.”

Sage says Kiwis are starting to see a few really good deals in the housing market, which has cooled off in recent months, so it could be a good time to buy a property despite the higher mortgage rates.

“Rather than going to an auction and competing with 100 different investors or 100 different buyers, you’re actually able to take a step back, find the right property at the right price and not be emotionally charged into making a transaction just because it’s the first home you can get your hands on.”

Sage says he doesn’t expect to see a rise in the number of Kiwis defaulting on their loans because New Zealand has relatively low default rates on home mortgages.

“The banks don’t particularly like mortgagee sales for obvious reasons – it’s bad publicity.

“They don’t really want to force their customer to do something they’re unhappy with, especially if it’s a family home.”

He urges people who feel like they may be in this situation to “pre-empt” it and get professional advice on the range of options open to them.