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-   -   Fix or float .... mortgage (https://britishexpats.com/forum/new-zealand-83/fix-float-mortgage-827240/)

Bo-Jangles Mar 2nd 2014 5:47 am

Fix or float .... mortgage
 
Here's a really good article on the merits of fixing or floating mortgages with imminent increase(s) to interest rates over the coming months.

http://www.nzherald.co.nz/business/n...ectid=11212246

Charismatic Mar 2nd 2014 9:11 am

Re: Fix or float .... mortgage
 
Even when the real economy coughs, the housing bubble collapses forcing RBNZ to apply a ZIRP policy and depositors pull their funds from the big four banks who have ever increasing exposure to housing debt causing a bank run because there is no depositors guarantee scheme in New Zealand and due to the collapsing NZD value money pours back abroad? ;)

Still a broken clock is only right twice a day, right?

TommyLuck Mar 2nd 2014 7:26 pm

Re: Fix or float .... mortgage
 

Originally Posted by Charismatic (Post 11154516)
Still a broken clock is only right twice a day, right?

This is an excellent quote.


When we took out our mortgage in August just gone we wanted to see how thing were going to go and wanted a keep a bit of stability in our outgoing and so fixed it at 5.4% with ASB for 24 months.

A fixed 24 month mortgage with ASB is (as of Friday) 6.29%, so it's climbed quite a bit in just over 6 months.

Just a bit of info for you really. I'm not trying to suggest anything either way.

bearskin Mar 12th 2014 8:32 pm

Re: Fix or float .... mortgage
 
I see the base rate has risen as expected. At a very basic explanation level, you could say it adds about $20 a week to every $100K you borrow? That soon adds up.

Also, did anyone see the recent quotes from the UK Bank of England that they are probably not going to unwind QE? What do we think of that?

Pom_Chch Mar 12th 2014 8:58 pm

Re: Fix or float .... mortgage
 
We have just bought a house (yay!) Still conditional at the moment though. If it all goes through we will be fixing $320k of the mortgage for three years and having the remaining $40k as floating. And then chuck as much money at it as we can manage (whilst still having a life of course :D )

A Rush And A Push Mar 13th 2014 12:25 am

Re: Fix or float .... mortgage
 

Originally Posted by bearskin (Post 11170105)
I see the base rate has risen as expected. At a very basic explanation level, you could say it adds about $20 a week to every $100K you borrow? That soon adds up.

From what I've heard/read this morning, it adds that $20 a week per $100K of mortgage for every 1% rise in the interest rate - so far it has only risen 0.25%. It is predicted to rise by another 1% by the end of this year though.

madao Mar 13th 2014 5:31 am

Re: Fix or float .... mortgage
 
We are only two weeks away from completion on a low equity mortgage with ANZ. We are only putting down a 10% deposit which means a different (read higher) set of rates for us.

They offered us a deal with a 0.25% discount on their low equity rates though.

I'm thinking fixing for 3 years which would be at a rate of 6.9%.

2 years would be at 6.54 but im not sure that would be enough time for the market to do its thing.

I like the idea of leaving some on floating though, we hadn't considered that. A topic for discussion tonight as we are looking to get some paperwork signed tomorrow to lock something in before ANZ raise their rates following today's announcement.

Pom_Chch Mar 13th 2014 8:37 pm

Re: Fix or float .... mortgage
 

Originally Posted by madao (Post 11170734)
A topic for discussion tonight as we are looking to get some paperwork signed tomorrow to lock something in before ANZ raise their rates following today's announcement.

Yes, definitely rate lock. We looked into it but it's too risky for us as our property is not unconditional yet. BNZ charge a $500 bond for rate locking that is returned only if the sale goes through. We probably wont be unconditional for another week.

The mixture of fixed and floating is a good idea. I don't like the thought of not being able to pay off bigger chunks of money of our mortgage if we are doing well for money on a particular month. We talked to the bank about it and they were pretty good at explaining it all thoroughly (which is good for me seeing as my brain goes to sleep when numbers are involved!!)

Good luck with it all Madao. It's easy to get caught up in interest rates, building reports, types of mortgages etc and forget that you've actually BOUGHT A HOUSE! Exciting times :D

pricklykina Mar 14th 2014 3:26 am

Re: Fix or float .... mortgage
 
We just refixed with westpac at 6% for three years.
That was on Wednesday.
We also have a small portion floating

A Rush And A Push Mar 14th 2014 3:37 am

Re: Fix or float .... mortgage
 

Originally Posted by Pom_Chch (Post 11171843)
The mixture of fixed and floating is a good idea. I don't like the thought of not being able to pay off bigger chunks of money of our mortgage if we are doing well for money on a particular month.

Always a good idea to check with the bank to see if you can overpay even if on fixed. We are on 100% fixed rate with Westpac but they allow us to increase our payments by up to 20% without charging us for doing so - so we can overpay without having anything on floating.

We are fixed on a lowish rate till October so hoping the rates don't jump too much before August/September when we will be able to refix.

Charismatic Mar 14th 2014 4:53 am

Re: Fix or float .... mortgage
 

Originally Posted by A Rush And A Push (Post 11172279)
Always a good idea to check with the bank to see if you can overpay even if on fixed. We are on 100% fixed rate with Westpac but they allow us to increase our payments by up to 20% without charging us for doing so - so we can overpay without having anything on floating.

We are fixed on a lowish rate till October so hoping the rates don't jump too much before August/September when we will be able to refix.

Some will allow one off payments without penalty as well but it depends on the back room stuff (so check next time you fix).

With some banks the increased repayment amount is nominal on a per loan basis so if you can get a free fix (which, unless you are getting more than about 0.5% discount on the carded rate, it should be free to fix) it's often worth splitting the mortgage down into smaller blocks to give yourself better future repayment flexibility.

BEVS Mar 14th 2014 5:15 am

Re: Fix or float .... mortgage
 

Originally Posted by Charismatic (Post 11172311)
Some will allow one off payments without penalty as well but it depends on the back room stuff (so check next time you fix).

With some banks the increased repayment amount is nominal on a per loan basis so if you can get a free fix (which, unless you are getting more than about 0.5% discount on the carded rate, it should be free to fix) it's often worth splitting the mortgage down into smaller blocks to give yourself better future repayment flexibility.

Yes.

gazmac Mar 25th 2014 6:44 am

Re: Fix or float .... mortgage
 
Weve decided to fix for 3 years with BNZ, pays to haggle.

TommyLuck Mar 27th 2014 1:09 am

Re: Fix or float .... mortgage
 

Originally Posted by gazmac (Post 11189425)
Weve decided to fix for 3 years with BNZ, pays to haggle.

Always.

A mortgage is the biggest ticket item most of us will ever spend our hard earned on.

You save yourself literally $1,000's through a life time of repayments if you haggle each and every time you go through the mortgage rigmarole.

Negotiating a decimal percentage less than the advertised rates saves heaps over time.

I know the comparing and playing one off on another is time consuming but it's worth doing the maths to make that time tangible.

By doing this, I know I saved $2,500 over the 2 years of my fixed rate, extrapolate this over the 30 year term and you're looking at $37,500 - not an insignificant amount of money.

You can do further analysis, if you're so inclined. I did some workings to estimate that I spent roughly 30-35 hours making calls, attending meetings with mortgage advisers, etc (getting close to a work week!!) so, in a roundabout way, I earned $70 an hour by doing this [$2,500 / 35 hours = $71.40 (Swedish rounding)].

If I got offered a full time job paying $70 an hour, I'd more than likely take it. I presume most people here would at least strongly consider it ...

madao Mar 28th 2014 12:38 am

Re: Fix or float .... mortgage
 

Originally Posted by madao (Post 11170734)
We are only two weeks away from completion on a low equity mortgage with ANZ. We are only putting down a 10% deposit which means a different (read higher) set of rates for us.

They offered us a deal with a 0.25% discount on their low equity rates though.

I'm thinking fixing for 3 years which would be at a rate of 6.9%.

2 years would be at 6.54 but im not sure that would be enough time for the market to do its thing.

I like the idea of leaving some on floating though, we hadn't considered that. A topic for discussion tonight as we are looking to get some paperwork signed tomorrow to lock something in before ANZ raise their rates following today's announcement.

So, we did manage to lock in a rate and we did complete on the house today.

We also seem to have ended up on a 3 year fixed rate of 6.4% instead of the 6.9% we were expecting. :sneaky::thumbsup:

Looks like rather than charge us the low equity rates we have been given their standard rate and still received the further 0.25% discount they offered us on top too.


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