bourbon-biscuit

We've been building all last year and thanks to the escalating interest rates are now looking at a mortgage that could make life quite uncomfortable here. We looked into interest-only but it seems that banks here will only do interest-only mortgages for 5 years, which makes the repayments only fractionally less.

Have I missed something?

Thanks in advance

Avid

Don't think so. Before you take out a Kiwi mortgage you might want to put your [I'll delete this bit] in a door-frame and slam the door repeatedly until you pass out with the pain.

That's a Kiwi mortgage, that is.

bourbon-biscuit

Oh dear, that's not very encouraging to hear, but thanks for taking the time to reply

Nerine

Have you thought about taking in a 'paying guest' or maybe a homestay student or two to make ends meet?

bourbon-biscuit

Our house is a little too modest for the paying guest and a little too remote for the homestay student, but thanks for the thought

dlmckay

Have you thought of contacting a mortgage broker? They are free to you as they get a commission from the banks. They approach all the banks with your situation and find you a mortgage that fits.

Try http://www.mortgagepeople.co.nz/home/default.asp (these were the people that helped us move from the National Bank to bankdirect) or http://www.roost.co.nz/

bourbon-biscuit

Thanks dlmckay- I've contacted the former and will contact the latter on Monday.

Someone mentioned to me that you can use a 'flexible home loan' like an interest only mortgage- does anyone understand this idea?

Really, we're still awfully young and can afford to withhold paying any of the principle of the loan for a few years (I'm studying at home because our kids are still young) but need to get the fortnightly payments as low as possible as we're currently looking at over $1000, which is far too much as it sails over 50% of our income. We don't want to lose our dream

uk+kiwi

I don't think you've missed anything.

Interest only should be quite a bit cheaper than a repayment though, regardless of the fact that it will only be for 5 years (that doesn't affect the monthly amount.)

We have an interest only mortgage. Albeit in the UK. I would suggest trying to find the lowest fixed rate mortgage and going interest free. It makes about 20% difference to us I think. Maybe more. We took it when in a similar situation to yourselves (one income, toddler, baby) and then thought 'since we move house every few years so have no intention of staying in it long term and will downsize in retirement as everyone does, why on Earth pay more each month?' The saving then enabled us to go to the hairdressers and other extravagant things!!

Now, we pay reasonable chunks off the capital when we can. We've done really well with it so far. We have an offset mortgage too (not sure if they do them in NZ) and the incentive to repay the principal just wouldn't have been there if we had gone back to our original repayment mortgage. It has been the best mortgage we ever took. For reasons similar to yours and now it is much lower than it would have been otherwise.

I would also ask a broker about longer term interest only mortgages. You are responsible for repaying the capital, but as long as you do this before retirement age in the the UK, this is okay. Does no lender allow this in NZ?

I know you are probably worried right now. My experience is you will look back in 3-4 years and feel much more comfortable financially. This has happened to us every time we've moved house and over-stretched ourselves ....... and then we move again!

bourbon-biscuit

Thankyou so much for your lovely reply- karma given