Central Unlocked | December 2022

A NOTE FROM THE DIRECTOR

Richard Humphreys

November! Alway busy and the mantra of can I get this done before Christmas is heard across all industries and it has been no different for the team here at Twentythree. The team have been out in the community with Rocky Nooks twilight bowls and as the series draws to a close our teams are unfortunately not in the running for the finals. We also held a Gumboot Friday auction (on Thursday) to get in behind a truly fantastic cause Auctioning away our time as an office. Glen Foster had a fantastic call getting additional bids out of the community so thank you to those that joined in. As we move into Christmas we often think about those who need help through Christmas and this year the team has decided to help Womens Refuge with donations of useful things. If you want to make a donation of canned goods our tree will be up next week at our office.

Interest rates in New Zealand will continue to be volatile partly due to our small and fickle economy. Even professional economists are unable to predict events that can significantly influence interest rates. So how do we ensure we continually get the lowest possible interest rate on our mortgage? The short answer is “we cannot”.

There is an alternative to the stressful task of constantly assessing whether we are “winning” or “losing” based on a decision we previously made in respect of our mortgage interest rate.

Interest Rate Averaging is a unique strategy that offers a way to reduce the impact of big upward swings in mortgage interest rates as well as gaining some benefit if interest rates decrease.

Interest Rate Averaging is achieved by splitting a mortgage into several smaller loans and then taking different interest rate terms on each loan. For example, if you have a $600,000 mortgage you could split this amount into six separate $100,000 loans taking differing interest rate terms. i.e. $100,000 Floating, $100,000 fixed 1 year, $100,000 2 years, $100,000 3 years $100,000 4 years, $100,000 5 years.

Each year we then only need to make a judgement call on whether to float or refix that $100,000. This is a much more manageable decision to make rather than deciding whether to fix or float the total loan amount.

Many people opt for a floating rate when floating rates are low and other times will incur large early repayment penalties to break higher fixed rates to enjoy a lower floating rate. The intention is usually to watch interest rate levels and take a fixed rate if rates start to increase too high. This appears to reflect a somewhat short-term solution to a longterm (mortgage) commitment.

For example, if the floating rate starts to increase and we take a fixed rate we may find a few months later that the floating rate is back down or worse still, considerably lower than when we (wisely) decided to fix.

Interest Rate Averaging offers many advantages including:

• Less interest rate risk

• Less stress when making a decision on whether to fix or float

• Opportunity to gain some of the benefit of reducing rates.

The downside of Interest Rate Average is that each time we take a fixed rate a bank re- documentation fee may apply due to re-disclosure requirements. This fee obviously impacts on our costs (and effectively increases our true interest rate), however the benefits of Interest Rate Averaging should outweigh this cost. Interest Rate Averaging is not a perfect science, but it goes a long way to relieving the difficult decision of whether to fix or float our mortgages.

- KIERAN TRASS

PROPERTY FOCUS Management

INSIDE THEMarket

Bringing you news from the world of New Zealand property management.

Tips for Dealing with Rising Mortgage Rates

OCTOBER 2022 | AUCKLAND CENTRAL MARKET INSIGHTS

Rising interest rates are bad news for first home buyers and borrowers alike, with new homeowners and investors (those who bought homes in the last 18 months) facing much higher mortgage repayments for the first time. With the Reserve Bank of New Zealand signalling further interest rate hikes are on the horizon, how can we avoid placing strain on already tight budgets and stay on top of bigger mortgage repayments?

Here are some options:

1. Check what mortgage you are currently on

While October sees an increase in enquiry and open home attendance in some regions, rising interest rates have caused hesitancy amongst buyers across New Zealand. The national median price showed improvement on September. Still, prices continue to ease, sales activity remains down and properties are taking longer to sell than in October 2021, according to the latest data and insights from the Real Estate Institute of New Zealand (REINZ).

The first step is to determine how your current mortgage is structured, as interest rate increases will affect the floating portion of your home loan, as well as any fixed interest rate terms that are ending that are going to be refixed.

The REINZ House Price Index indicates that the housing market value in Auckland has decreased by 14.3% and decreased by 8.4% outside of Auckland.

Richard Humphreys Business Owner | Harcourts Twentythree

If you’re not sure how your home loan is structured, contact your lender or mortgage adviser to help you work through the details. It’s worth booking in a home loan restructure checkin with a Mortgage Express branded adviser, to ensure you’re getting the best deal available to you, and that your home loan is structured to fit your requirements.

2. Determine how interest rate increases impact you

Now that you know how your home loan is structured, your mortgage adviser can help you determine the impact any interest rate rises will have on your home loan repayments. You can also use a home loan repayment calculator – like this one – to work out what your repayments are going to look like.

If your fixed rate term is nearing the end, now is a good time to discuss with your mortgage adviser locking in an interest rate. It’s also worthwhile comparing how your interest rates stack up against any other deals in the market, and this is something else your mortgage adviser can help you with.

3. Devise a plan to help you manage higher repayments

The Reserve Bank (RBNZ) has warned that a noticeable number of households that borrowed for the first time in 2021 will find it difficult to pay their mortgages and cover all their other usual expenses. If you’re in this situation, start building up a savings buffer now to help you manage the higher repayments you are going to face in the year ahead.

Take a close look at your budget to identify the expenses you can cut out or ways in which you can boost your income. Check that you’re getting the best deal for utilities – power, internet and phone – and pay down any high interest debt as soon as you can to help free up extra cash to divert into your home loan.

Get expert advice about your financial situation

With more interest rate hikes predicted, it’s important to have a financial plan in place to help you cope with higher mortgage repayments. As well finding ways to cut back on unnecessary spending, building up a savings buffer could help you prepare for higher costs ahead.

If you’re concerned about the impact higher mortgage repayments could have on your financial situation, it’s best to seek help immediately. Contact your mortgage adviser or lender to discuss your situation before you miss any repayments.

Contact a Mortgage Express branded adviser if you have questions about your existing home loan and the impact higher interest rates could have on your financial situation.

Source: https://www.mortgage-express. co.nz/blog/rising-mortgage-rates

197 offices and a growing property management team. For more information visit www.harcourts.co.nz. While every

Harcourts is New Zealand’s largest and most trusted real estate group*, with over 2600 sales consultants

ensure that the information of the publication is accurate, we recommend that before relying on this information you seek

has been

specialist advice. *Readers

Most Trusted Brand Survey 2013-2022.

across

effort

made to

independent

Ho Ho Ho, Merry Christmas everyone!

But wait a snowy second... Santa and his reindeer want your help! The sleigh and all the presents need some Christmas colour! Get creative & use your favourite colours to make the sleigh bright & beautiful.

PROPERTY FOCUS Management

Bringing you news from the world of Zealand property management.

Tips for Dealing with Rising Mortgage Rates

interest rates are bad news for first home buyers and borrowers alike, with new homeowners and investors (those who bought homes in the last 18 months) facing much higher mortgage repayments for the time. With the Reserve Bank of New Zealand signalling further interest rate hikes are on the horizon, can we avoid placing strain on already tight budgets and stay on top of bigger mortgage repayments?

are some options:

Check what mortgage you are currently on step is to determine how your mortgage is structured, as rate increases will affect the portion of your home loan, as any fixed interest rate terms ending that are going to be not sure how your home loan structured, contact your lender or mortgage adviser to help you work the details. It’s worth booking home loan restructure checka Mortgage Express branded to ensure you’re getting the deal available to you, and that home loan is structured to fit your requirements.

Determine how interest rate increases impact you

that you know how your home structured, your mortgage can help you determine the any interest rate rises will have home loan repayments. You also use a home loan repayment calculator – like this one – to work out your repayments are going to like.

fixed rate term is nearing the now is a good time to discuss your mortgage adviser locking in interest rate. It’s also worthwhile comparing how your interest rates up against any other deals in the and this is something else your mortgage adviser can help you with.

is New Zealand’s largest and most trusted real estate group*, with over 2600 sales consultants across 197 offices and a growing management team. For more information visit www.harcourts.co.nz. While every effort has been made to ensure that the information of the publication is accurate, we recommend that before relying on this information you seek independent specialist advice.

2013-2022.

CASE STUDY STUNNING REMUERA RENOVATION ADDS MASSIVE VALUE

A tired family home in Remuera has been given a complete overhaul thanks to the hard working crew at The Renovation Team. They descended on this dated property and transformed it into a modern and spacious home – perfect for the young family who live there. In just seven-and-a-half weeks, we completed a power of work, including:

1. A total exterior repaint Bungalow which freshened up the look of the house. We also removed the bushy foliage to the right of the entrance that was obscuring the scale of the house, replacing it with clean, sculptural native planting.

2. New flooring and paint throughout

The grey carpet and wood-look flooring complement the neutral walls, making all the rooms look larger and showcasing the new barn-style doors and the fantastic wardrobe fitout in the master bedroom.

3. A new fully tiled bathroom was a huge upgrade on the previous fit-out, taking the bathroom from early 2000s and bringing it 20 years forward in just a few short weeks.

4. The kitchen renovation

The biggest eye-opener in this house. From a poky, cluttered kitchen to a gorgeous open-plan dining and entertaining space – this was a dramatic result and it will be a major selling point for this house in future.

5. A new lighting scheme inside and out plus a new front door

This really finished off the look of this home. Pendant lights in the full-height stairwell, visible from the front, elevate the street appeal and add significantly to the home’s value.

“The Renovation Team finished the job in just over seven weeks. It was at the time when material and labour shortages were being widely reported, and a lot of other renovations were delayed. But James has his own team, so we weren’t waiting on any tradies.”

BUDGETING FOR A FIRST HOME

Buying a first home

investment,

first home buyers underestimate

Meeting with a mortgage adviser

planning

home ownership,

budget for the extra costs they’ll incur when buying a first home. Setting a realistic budget is one way to get around this. To help you plan a budget for a first home, here are 3 important costs to keep in mind.

The Cost of

Buying a Home

The first meeting is a bit like a “meet and greet” chance for to get to know each other We’ll go o your goals, talk about the type of property you w to buy, and assess how much you have to spend We’ll also give you an indication of which lende think would be right for you, and let you know if you ’ re ready to buy now or if you need to boost deposit, pay down some debt, or bump up your savings ahead of your application We can answ any questions, help you prepare a solid home lo application, and present it to the right lender.

These costs include the team of professionals who will help you navigate the finer details of buying a first home and some of the reports you’ll need to pay for. (Please note all costs quoted below are indicative only and will vary depending on a range of factors. We recommend you confirm all costs with the service provider.) These include:

Getting a pre-approval

Before you start house hunting, it’s a good idea get mortgage pre approval With a mortgage pr approval, you’ll know how much a lender is prepared to lend to you provided certain condit are met So you won’t waste time looking at properties you can’t afford to buy!

• Your lawyer or conveyancer: Because buying a home is a legal transaction, there’s a fair amount of paperwork that needs to be completed. Your lawyer or conveyancer will look over the contracts, explain your financial commitment, help you understand the loan documentation, and generally ensure that whatever you sign is right for you before you sign it. Expect to pay in the region of $1,500 - $3,000 for this service.

Crunching your numbers

We can use our easy loan tools to make understanding your finances easier

• A building inspector: Having a professional builder go over the property before you commit to buying it is a good idea, as it could prevent costly surprises later on. Most professional building inspectors provide a written report of any issues or concerns about the property, so you’ll be able to estimate how much the repairs or maintenance will cost you. Budget for between $500 and $1,000 for a building inspection report.

Home Loan Repayment Calculator

To find out how much you could borrow and wh your repayments could look like using different interest rates, loan terms, and repayment frequencies

Extra Repayment Calculator

Find out how much you could save on interest w an extra repayment to your home loan Test var amounts to see how you could shorten your loa term and reduce your interest charges

• A registered valuation: A registered property valuation is an independent assessment of a property’s market worth conducted by a registered valuer. A valuation will generally be required by your lender if you are borrowing more than 80% of the purchase price of a property. The registered valuation is based upon a full inspection of the property as well as the comparable sales data in the surrounding area. Expect to pay around $900 to $1,000 for a registered valuation.

Split Loan Calculator

Work out your repayments when splitting part o your mortgage. You can also adjust the fixed rat portion to calculate various levels of savings

• Land Information Memorandum (LIM Report): The report includes a summary of current property information held by the council, as well as rates, consent for work done, and any known land issues such flooding or subsidence. Depending on where you’re buying a home, expect to pay around $300 - $400 for a LIM report.

is a huge

so it’s important to get the

right. Many

the true cost of

and fail to

The Cost of Paying for a Home

This one is an obvious one: your mortgage repayment is the regular payment you’ll make to your lender to repay your home loan. By working with a mortgage adviser who can help with applying for finance and structure your home loan, you’ll have a clear idea of how much you can expect to pay for your mortgage each month or fortnight.

Your mortgage adviser can also guide you and help you decide how much of your loan could be on a fixed interest rate and how much could be on a floating interest rate. What’s more, every year you may like to book in an annual review of your mortgage to ensure it’s still fit for purpose and that you’re getting the most suitable deal appropriate for you.

The Cost of Maintaining a Home

Owning your own home means you’re responsible for ongoing bills and the general upkeep of your property. Some of the bills you can expect to pay when owning a home include:

• Council rates: These fees go towards maintaining public infrastructure, services and facilities in your area, and will vary depending on where you live.

• Body corporate fees: If you buy an apartment or unit, you’ll need to pay body corporate fees to help cover things like the upkeep of the building and its facilities, insurance and the cost of power in common areas.

• Insurance: It’s important you protect your biggest asset from situations outside of your control and most lenders will require insurance cover to protect their investment.

• Maintenance: Homes require upkeep and there are a number of things that can go wrong over time – from small things like leaking pipes, to larger issues like replacing a roof. Plan ahead and set up an emergency fund to cover these unexpected costs.

For more financial advice tailored to your unique situation, get in touch with Nikki Kapadia, our Mortgage Adviser, who can help you find the right mortgage to fit your lifestyle and budget, and help structure your home loan in a way that works for you.

#PROPERTY SPOTLIGHT

ESTATE SALE AUCTION 30 NOVEMBER

The phrase ”highly sought, seldom found” has never been more suitable than here and now with this estate sale, established in one of Epsom’s most tightly held avenues. Giving little away from the quiet street front, and for a family who seeks sanctuary with that familiar home feel, this heart-warming Californian bungalow encapsulates the quintessential Kiwi dream.

The character-filled interiors welcome with a bright sense of natural light, engaging living spaces and four roomy bedrooms alongside two bathrooms. The originality of its era has been perfectly married to a modern look and layout; glossy timber floors and inspiring high ceilings remain highlights.

The open living and master suite step outdoors; virtually a private oasis, the alfresco zones hit a high note with allseasonal poolside entertaining under louvres, immaculate gardens, and sunshine on tap. With garaging and ample off-street parking, this full site is the complete picture.

Top education at Epsom Girls Grammar, Auckland Grammar, Auckland Normal Intermediate, and Epsom Normal School will give kids their best foot forward. Also discoverable on foot are Cornwall Park, Greenwoods Corner stores, and artisan cafes like Little Jimmy and Wild Wheat Bakery. Being a city-fringe destination close to motorways, it’s truly the dream.

PROPERTY FOCUS Management

Bringing you news from the world of New Zealand property management.

Tips for Dealing with Rising Mortgage Rates

INVESTORS INSIGHTS

After the latest Investor Insight survey

Rising interest rates are bad news for first home buyers and borrowers alike, with new homeowners and investors (those who bought homes in the last 18 months) facing much higher mortgage repayments for the first time. With the Reserve Bank of New Zealand signalling further interest rate hikes are on the horizon, how can we avoid placing strain on already tight budgets and stay on top of bigger mortgage repayments?

he gauges how things are changing.

Here are some options:

This month the results show the following main things:

1. Check what mortgage you are currently on

• High volatility and uncertainty regarding interest rates and the economy have had little impact on investor plans for their properties.

• Interest in purchasing a new townhouse is waning marginally.

• Desires to increase rents have risen over the past two months.

The first step is to determine how your current mortgage is structured, as interest rate increases will affect the floating portion of your home loan, as well as any fixed interest rate terms that are ending that are going to be refixed.

• There has been a slight shift in mortgage interest rate fixed term preference away from one year towards two years.

• Concerns about rising interest rates have increased slightly.

• It has become less difficult this month to find good tenants.

If you’re not sure how your home loan is structured, contact your lender or mortgage adviser to help you work through the details. It’s worth booking in a home loan restructure checkin with a Mortgage Express branded adviser, to ensure you’re getting the best deal available to you, and that your home loan is structured to fit your requirements.

2. Determine how interest rate

3. Devise a plan to help you manage higher repayments

The Reserve Bank (RBNZ) has warned that a noticeable number of households that borrowed for the

Get expert advice about your financial situation

With more interest rate hikes predicted, it’s important to have a financial plan in place to help you cope with higher

information of the publication is accurate, we recommend that before relying on this information you seek independent specialist advice. *Readers

2013-2022.

compiled by Tony Alexander,