On the up: What will higher interest rates mean for real estate investors in New Zealand and further afield?
The Land of the Long White Cloud is shaping up to raise rates and the country may well be a bellwether for the Australia...
It can be easy to become accustomed to your property debt, but too many investors become complacent and aren’t making the most of their money.
Blogger: Warren Dworcan, managing director, Rate Detective Finance
Investing in property can put you on the right path to financial independence but done wrong and it can set you back significantly. I have put together a list of mortgage mistakes we see on a regular basis which can be easily avoided:
1.Taking advice from unqualified people
Would you trust the advice of someone who watches medical drama about your health? Most likely the answer is no, you would see an expert. The same applies to your home loan. You should seek the knowledge of a broker. They have an in-depth understanding of the market and can find the mortgage that is not only right for you now but also in the future.
2. Too many loan enquiries
Shopping around should be part of the finance process but what you may not know is that every time you do so a note is made in your credit file. Too many and banks may think you are desperate and therefore a risk.
3. Staying with the one lender
The old adage of not putting all your eggs in one basket also rings true for property finance. While it may appear to make sense to keep all your loans with one lender, cross-collateralisation can have severe consequences for your strategy. You are essentially giving the lender control over your portfolio and restricting future purchases by not being able to access equity from your individual properties.
4. Focusing only on interest rate
Many investors search for finance purely by rate and not what is most suitable. A low rate may look more affordable but if you include the fees and ongoing costs it may well end up more expensive in the long run. Different products have a range of features, some of which may be advantageous and result in savings.
5. Not reviewing regularly
Once you have finance it shouldn’t be one of those things you set and forget about. A mortgage is a long-term commitment and not only are new products constantly being entered into the market but your circumstances may change. If you want to save or make your repayments more flexible it is suggested you speak to a mortgage broker every couple of years to discuss refinancing.