Smart Brokers -

How to kill your credit rating — in six simple steps

February 9, 2012

Having a squeaky clean credit rating is very useful in life. It'll help you next time you really need to borrow some money. Every time you want...

Top five home buyer’s tips

December 9, 2011

Buying a home is an exciting experience...

Housing affordability down despite falling mortgage rates

November 30, 2011

Housing affordability declined over past two years. Housing affordability has declined over the past two years despite mortgage rates falling to their lowest levels since the 1960s. Statistics New Zealand's household economic survey found that total housing costs as a proportion of...

Competition hot in first-home property market

November 30, 2011

A shortage of houses in the first-home buyers' market over winter has caused a rise in multi-offer agreements, confusing those new to the real estate game. Multi-offer agreements are when more than one written offer is received for a property at one time, turning a sale by negotiation into a...

First-timers drive housing market

November 16, 2011

Young professionals who stayed at home with their parents during the recession were now driving competition in the market for first homes. Chief economist Tony Alexander said the need to spread wings, low interest rates, talk of housing shortages, rising rents and an improving labour market...

How to kill your credit rating — in six simple steps
Top five home buyer’s tips
Housing affordability down despite falling mortgage rates
Competition hot in first-home property market
First-timers drive housing market

How to kill your credit rating — in six simple steps

February 9, 2012 – 10:12 am

Having a squeaky clean credit rating is very useful in life. It’ll help you next time you really need to borrow some money.

Every time you want credit, your “record”, which is held by private company, Veda Advantage, is checked and if you look like a bad risk, you could have trouble getting anyone to lend money to you or take you on as a customer.

If you want to buy something on hire purchase, get a credit card, or even open a utilities account you’ll have a much easier time if your credit record is “clean”. That means that you have no defaults on your credit record.

Believe it or not, employers and potential landlords can and do check people’s credit ratings. If, for example, you’ll need to handle cash or even a company credit card in for new job, a black mark on your credit record could be death for your job chances.

Here are six ways to kill your credit rating:

1. Applying for credit too often. Every time you apply for credit, a footprint is left on your credit rating. You might not even realise you’re applying for credit. For example, every time you open a new utilities account with a power or phone company, your credit record is searched.

2. Failing to pay. If you fail to pay everything from a hire-purchase to your water bill, you could have the default recorded on your credit record for all to see. Needless to say, defaults don’t look good when you next need money.

3. Being a bad tenant. Landlords check prospective tenants’ credit records — or at least the good ones do. So if you’re moving from flat to flat, it will soon become mighty obvious on your credit record. If you’re a bad tenant and are turned down over and over again, then that will show too. You’d be surprised what landlords read into credit records.

4. No asset procedure (NAP). NAP is a type of bankruptcy for people who owe less than $40,000, but can’t repay their debts. It’s a good alternative because it is discharged after one year, meaning you can apply for credit again, and is wiped off after four years. Even so, it’s going to make it darned difficult to do everything from opening a bank account to getting a mobile phone.

5. Going guarantor is a great way to ruin your credit record. Your brother, sister, flatmate, or member of the whanau, wants to buy anything on credit they may be asked for a guarantor. Being that guarantor may seem simple. All you need to do is sign a piece of paper. The trouble is that if aunty or anyone falls behind with payments, you’re then responsible for them. This is a hugely difficult problem in New Zealand where cultural responsibilities mean that many people are expected to back up their family in this way.

6. Don’t pay your taxes. Currently taxpayers have confidentiality. But under new proposals the Inland Revenue Department may start reporting non-payments to Veda Advantage from next year.

Finally, debt figures in New Zealand make grim reading. Debt collection agency Baycorp has seen an increase in unpaid debt ranging from mortgages through to library fines in the past couple of years.

The dollar value of debts being recovered by Baycorp (which has nearly half of the debt collection business in New Zealand), has also steadily risen since the recession hit. If you’re at risk of blighting your credit record, or defaulting, click on some of the links below for some tips on how to keep control of your finances.

Top five home buyer’s tips

December 9, 2011 – 8:50 am

Buying a home is an exciting experience but also requires buyers to make important decisions. Here are our top five buyer’s tips to set you on the right road.

1. Obtain pre-approval

As a home buyer you should always get pre-approved for a loan. This way you will know in advance how much you can afford and what the lender will loan to you. Ask for the pre-approval in writing so you will be ready to act once you spot your dream home.

2. Consult the experts

Leave things such as building inspections and contract advice to the experts. Always obtain a land information memorandum (LIM) as well as building and pest reports, speak to the local council regarding any properties you are interested in and obtain necessary legal and expert advice from your solicitor.

3. Choose the right location for you

The area you move into will become a big part of your life so it’s important you make the right decision. Remember you can make changes to a house but you can’t change its location. Always do your research and buy into the right area for you and your family.

4. Don’t buy over your limit

Banks will often lend over the limit you can comfortably afford so it’s wise you always stick to your original budget. Consider your current lifestyle and areas where you can and can’t cut back. Factor in future rate rises and circumstances that may affect your ability to make repayments.

5. Go with your gut

When it comes to home buying, trust your instincts. If a home seems right for you it’s probably the one (as long as it’s within your budget) but on the other hand if a property seems to be too good to be true (ie, a great home, in a great location at a great price), it probably is. Always go with your gut instincts and look into things when alarm bells ring.

By Hannah Nicholas,

MSN NZ Money writer

By Rohit Ranchhod | Posted in First Home Buyers, Real Estate | Tagged First Home Buyers, home loans, Property, Real Estate | Comments (0)

Housing affordability down despite falling mortgage rates

November 30, 2011 – 8:58 am

Housing affordability declined over past two years.

Housing affordability has declined over the past two years despite mortgage rates falling to their lowest levels since the 1960s.

Statistics New Zealand’s household economic survey found that total housing costs as a proportion of household income increased from 15.1 to 16 per cent over the two years since June 2009.

Housing costs include rents and mortgage payments, rates and building-related insurance. They absorb a higher proportion of incomes in Auckland than in other regions – 18.8 per cent in the latest year, up from 16.1 per cent two years earlier.

The proportion of households nationwide who spend 30 per cent or more of their income on housing rose from 19.5 per cent to 21.8 per cent over the past two years.

Average spending on housing rose 6.8 per cent to $248.20 a week over that period, while average household incomes rose just 1.5 per cent. Average rents, for the 35 per cent of households that pay rent, rose 6.6 per cent over the two years.

Local body rates outstripped income growth even more, rising 9.3 per cent.

But mortgage payments, for the 31 per cent of households which have mortgages, fell slightly (1.8 per cent) from $376 a week to $369.

This reflects a decline in mortgage interest rates. The current weighted average mortgage rate is 6.17 per cent, compared with 7.05 per cent two years ago.

Among rental households just over half spend 25 per cent or more of their income on housing costs, while 39 per cent spend more than 30 per cent and 23 per cent spend more than 40 per cent.

For owner occupiers the proportions are lower – 18 per cent spend over 25 per cent of income, 13 per cent over 30 per cent and 7 per cent over 40 per cent. In part that reflects the fact that about half of owner-occupiers have paid off the mortgage.

But the Reserve Bank in its Financial Stability Report this month warned that a sharp fall in house prices, combined with a fall in incomes or a rise in interest rates remained a key risk to household balance sheets, which had not truly been tested over the past three years.

House prices fell 10 per cent, peak to trough, from their 2007 high but most of that decline had since been recovered.

Meanwhile, the ability of indebted households to service debt had been improved by a rise in disposable incomes, slower growth in debt levels and lower mortgage interest rates.

Nevertheless, the median loan-to-value ratio (LVR) had increased from 38 per cent in 2007 to 42 per cent, though the bank noted that that was still below the 54 per cent median LVR 10 years ago.

Households with high LVRs tended also to have relatively high incomes and strong cash flows, it said.

The second highest income quintile, with household incomes ranging from $63,000 to $88,000, had the highest median LVR at 47 per cent, but spent 22 per cent of disposable income servicing the loan, the lowest proportion for any quintile except the highest.

Only 1 per cent of households had an LVR above 80 per cent and a debt-serving ratio over 50 per cent, the bank said.

The 4700 households Statistics NZ surveyed were also asked about the adequacy of their incomes relative to what was required to meet everyday needs, for things such as accommodation, food and clothing.

More than half – 53 per cent – said their income was just enough or not enough to meet to their everyday needs.

Among the lowest income quintile the proportion was 70 per cent, while among the highest quintile it was 28 per cent.

Big cut

16 per cent

housing costs as a proportion of household income

18.8 per cent

housing costs as a proportion of household income in Auckland

21.8 per cent

of NZ households spend 30 per cent or more of their income on housing

Source: Statistics New Zealand

By Brian Fallow

via Housing affordability down despite falling mortgage rates – Property – NZ Herald News.

By Rohit Ranchhod | Posted in First Home Buyers, Investment Property, Mortgages, Property, Real Estate | Tagged home loans, Interest Rates, mortgage, mortgage interest rates, Property, Real Estate, Rental Property | Comments (0)

Competition hot in first-home property market

November 30, 2011 – 8:56 am

A shortage of houses in the first-home buyers’ market over winter has caused a rise in multi-offer agreements, confusing those new to the real estate game.

Multi-offer agreements are when more than one written offer is received for a property at one time, turning a sale by negotiation into a sale by tender.

Real estate agents are warning first-home buyers to be aware of the rules of multi-offer agreements so they don’t miss out when making an offer.

“Multiple offers occur on a regular basis and were particularly prevalent over the winter and spring months when there were very low levels of stock on the market, but there was also high buyer demand,” said Rachel Dovey of Bayleys Real Estate.

As soon as two or more purchasers were willing to put an offer on paper, negotiations halted and all parties were invited to present their best offer. The offers, in sealed envelopes, were then presented to the vendor.

A seller then chose their preferred offer, whether it be the highest price, least conditions or family over developer.

Kiri Barfoot, of Barfoot and Thompson, said prospective buyers needed to realise there was no room for negotiation after envelopes were sealed and buyers had to put their best offer forward.

“In this situation, people need to get good advice from their lawyer and real estate agent. There are no second chances” she said.

Barfoot said multi-offer agreements had been around for years but first-home buyers may not have heard of them.

Barfoot advised buyers to do their homework and make informed offers.

“Often first-home buyers like to get advice from everyone and, by that stage, someone else has fallen in love with the property as well and are ready to make an offer.”

By Kirsty Wynn

via Competition hot in first-home property market – Property – NZ Herald News.

First-timers drive housing market

November 16, 2011 – 5:11 pm

Young professionals who stayed at home with their parents during the recession were now driving competition in the market for first homes.

Chief economist Tony Alexander said the need to spread wings, low interest rates, talk of housing shortages, rising rents and an improving labour market had first-home buyers out in force.

A Bank of New Zealand and Real Estate Institute of New Zealand REINZ survey found investor buying had dropped while first-home buyers had dominated sales.

“In contrast to investor activity, first-home buyer activity continues to rise very strongly and is perhaps the most notable feature of our survey in recent months,” Alexander said.

He also noted people selling and buying again were much more likely to be downsizing rather than trading up.

The survey – of 10,000 licensed real estate agents – also found that the third-biggest motivation for selling, behind “needing the money” and “leaving town”, was the break-down of a relationship.

Latest figures from REINZ showed 58.6 per cent of properties sold in October were in the under-$400,000 price bracket.

Peter Thompson of Barfoot & Thompson agreed the first- home market was busy but said the $1m to $2 million market also showed great growth. The first-home buyers bracket was competitive but he warned buyers not to over-extend as interest rates would only rise.

Savings with second hand

First home owner Greg Skinner researched for five years before choosing to relocate rather than build on his familys dream site.

The Muriwai man found he could get more for his dollar with a second-hand home than a new build.”

Our house is nearly 200sqm and for the same money we would have only got a 100sqm of new house,” Skinner said.”

With this option we got a big place with character and we think it is going to be worth more in a few years than a smaller modern house.”

The four bedroom bungalow has plenty of space for his partner and two daughters.

The couple had to have it delivered, re-wired, re-plumbed, insulated, plastered and the interior painted – paying half of what a new build would have cost.

A new home based on between $1500 and $2000 a square metre would cost up to $400,000.By Kirsty Wynn | Email Kirsty

via First-timers drive housing market – Property – NZ Herald News.

By Rohit Ranchhod | Posted in First Home Buyers, Mortgages, Property, Real Estate | Tagged home loans, mortgage, Property, Rental Property | Comments (0)