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259 posts

Ultimate Geek
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Topic # 191593 9-Feb-2016 20:55
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Hi,

 

I'd like to hear some opinions about NZ Home Loans and how they are different to other mortgage brokers. Its website has some bold claims like "our clients are currently saving $35,668,170 in interest costs and taken years off their mortgage term", so wonder it they are solid.


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243 posts

Master Geek
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  Reply # 1488394 9-Feb-2016 21:40
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Owned by kiwibank. Their work with revolving mortgages

685 posts

Ultimate Geek
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  Reply # 1490309 11-Feb-2016 12:46
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For it to work, you have to be disciplined -

 

 

 

Your pay goes into your home loan account. You spend all your money on a credit card and then pay the balance in full each month on the due date. The interest savings claimed equate to the use of the free credit on the credit card whilst your money is reducing the amount you borrow and thereb reducing how much interest you pay on the mortgage.

 

Very easy to get caught in the trap of redrawing up to your credit limit on the home loan, thereby not paying it off at all, simply paying interest only, especially for one off things like holidays, new assets (TVs, computers, new cars etc).

 

There was an article in the NZ Herald a month or so ago about how small changes can make big long term benefits on a mortgage. They used the example of a coffee (or maybe it was 2) a day, if you put the $5 per day you would spend on a coffee into your mortgage (so $100/month), it wiped years off the mortgage and thousands off your interest costs - small sacrifice, big reward.

 

It is very unlikely that the average person will beat the banks economic forecasters when it comes to how to structure your mortgage as a way of reducing interest costs (fixed, floating, when to fix, when to break etc), they don't pay them a small fortune for nothing, only higher repayments / shorter term will do that.

 

Things to get mortgage free quicker -

 

* Pay rise - put some of your new found income into the mortgage payment.

 

* Paid off an "interest free HP" - put some (or all) of the amount you were paying into the mortgage payment.

 

* As above, a small "lifestyle sacrifice" can have huge impacts on the term of a loan

 

* Don't tip the debt payment / lifestyle balance too much in favour of one over the other, too much lifestyle and you will pay back a fortune in interest, too much in debt repayment and you won't enjoy a lifestyle

 

* If you do get an interest rate reduction, keep the payments the same (if as above, your lifestyle / debt payment balance is ok), if you afforded the payments at x% interest rate, why change them now interest is at y%?


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Uber Geek
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  Reply # 1490344 11-Feb-2016 13:24
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Just revolving credit.  As @sen8or said, it works if you are disciplined with your money.  

 

Just about everywhere offers revolving credit options including the main banks.  It's nothing special.  

 

 

 

 





Always be yourself, unless you can be Batman, then always be the Batman



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Uber Geek
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  Reply # 1490594 11-Feb-2016 16:14
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Once nice thing about NZ Home Loans is they don't try to rip you off with fees the way the banks do.

 

You can get your account set up with a reducing limit, just like a "normal" bank loan.  Any money you pay ahead of the required payment schedule can be withdrawn at no cost.  I believe all of the banks have this feature these days but watch out for the fees.


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Uber Geek
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  Reply # 1490663 11-Feb-2016 17:40
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graemeh:

 

Once nice thing about NZ Home Loans is they don't try to rip you off with fees the way the banks do.

 

You can get your account set up with a reducing limit, just like a "normal" bank loan.  Any money you pay ahead of the required payment schedule can be withdrawn at no cost.  I believe all of the banks have this feature these days but watch out for the fees.

 

 

 

 

Sometimes lower rates make up for higher fees. So some providers may have zero fees, but higher rates or other terms. 


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