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KIWIS CHECK YOUR MORTGAGE

RATES ON HOW MUCH YOU WILL PAY PER MONTH

USING OUR EASY MORTGAGE CALCULATOR

Free Mortgage Calculator

Sale Price of Home:

(In Dollars)

Percentage Down:

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Length of Mortgage:

years

Annual Interest Rate:

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MORTGAGEE rates ready to rise 2015

US Federal Reserve ChairmanYellen wants to slowly wean the economy off the cheap money that has intoxicated investors for years. Will interest rates start to rise as in NZ borrowers have capitalized on cheap short term
loans to buy into expensive properties that soon they might not be able to service.Central banks have inflated their balance sheets to $10 trillion (€7.5 trillion). Cheap money inflates asset prices as in NZ with property prices
reaches dizzy heights,

Bank of Japan continues to flood the markets with money. The central bank's new governor, Kuroda, is buying up more than 7 trillion yen (€54.5 billion) in government bonds each month. That's 70 percent of all new bonds but is this good and what about South Korea--will they follow if Japan can export cars cheaper than their neighbours?

People buying real estate, rising interest rates will pose a problem, because the low rates at which they have borrowed money in recent years are usually locked in for only five or 10 years. Many people don't realize how expensive this can get, Too many loans are calculated on very narrow margins.Even for life insurance customers, an interest increase, can be more of a curse. Insurance companies have been complaining about low interest rates for years, because it forces them to invest most of their customers' premiums in relatively safe bonds, which are hardly profitable at the moment. On the other hand, these funds are also locked in at low bond yields for years. If interest rates go up within a few months,their customers also have little to gain from a boom in interest rates, at least in the short term.

 

   

 

 

BUYING A MORTGAGEE SALE PROPERTY IN NZ HAS ITS DOWNSIDE

 

Buying a property under a mortgagee sale you may think its easy and you can get a bargain but their are hidden items that you will need to know as it could turn out to be a nightmare. Mortgagee owner being the (bank) does not have to give vacant possession so its up to you to remove the tenants/mortgagor who may not leave quietly. If the householder owner being the mortgagor or a tenant is in the property on settlement date and refuse to shift then it is your problem. You then have to file to evict the tenants and be aware as this is when the trashing will start and the mortgagor will do all sorts to make the transfer a pain for you. Theres also no set rules or warranties in standard Agreements for Sale and Purchase do not apply in mortgagee sales.  That means that if additions have been completed on the property without a building consent or the issue of a Code Compliance Certificate then its on you. You cannot enforce this in the sale. The bargain you thought may not be the bargain after all as the Insurance company may also change its mind which will affect your Bank loan payments if youre not a cash buyer. Don't ask the Bank for help as its all your problem and you can't add clauses that you would like this or that when you buy. You may wish to get their ( the mortgagor owner whose living in the property) their feeling on the sale before you go ahead perhaps or offer some incentive to leave the place in one piece. eg. help in removing to another property perhapsor extra time to vacate. Theres no recompense as you still have to settle in full and now its up to you to negotiate with the occupants or go or ride down the path of trespass. You could offer them $$ to move to another property perhaps or you can use the Court but then they could still trash the property in the meantime. There is no obligation for keys to be provided to you on settlement so best change the locks anycase in case of future incursions by an irate evicted mortgagor owner. Keep away from short term as you will get caught.

BANK OBLIGATIONS:


There is no obligation on the bank to ensure that the chattels will be there on settlement date so the tenant can take the sink and wall fittings if they want or if known then a creditor (e.g. hire purchase company) can re-possess chattels etc as well. If you default on settlement the bank can charge you interest for late settlement. If the bank is unable to complete settlement on due date then you just have to hang on in there until settlement - you are not entitled to charge the bank interest for late settlement. If the bank is unable to give. The contract is very important and the vendors name must be exact. You will normally have to pay 10% deposit so have all this done by your lawyer. The mortgagor can still stop the sale if it comes to the party with the Bank it owes at any time before sale. If buying Unit Titled properties & apartments, you are normally entitled to certain information about the property including Body Corporate rules, accounts, payments, sinking funds, fees & Management bodies etc

INSURANCE RISK:


Insurance risk will pass to you on signing of the Agreement. You need to make sure before the auction that your insurance company will provide you with insurance cover even though you are not yet the legal owner. Also make sure that your bank knows it is a mortgagee sale - as they may change the total amount the bank will agree to lend. Make sure you can get insurance as they may say NO as no LIM report befpre buying.

BUYING TO RENT:

Check out if you have a Trust account for your rental will you pay 33% on the income. Add up the rates, insurance, mortgage reayments above what you are paying to cover you in inflation & interest rate rises. Check the town as see if there are good rental ops or is it a welfare town where its hard to keep tenants. You may think buying a secod home is good but then you need to weigh up the pros and cons as well as your equity in the property.

LAWYER FOR CONVEYANCY:

I know you hate them but sometimes better to be safe. Never listen to a realtor as some proeprties even in Levin are on a swamp and in high rainfall times the sewerage rises??? The best idea before buying is to use a lawyer and check also that theres no clear guidelines and you could find a trashed property that you did not budget for. You can also use the services of a real estate agent if going thru a Realty firm. However its entirely up to you as theres no clear cut rules.
Source Reuters.

HERES THE DANGER WITH THE BANKS WITH YOUR MORTGAGE:

  • What if your funds are being used by Banks to Rehypothecation as has happened to MF Global & Hedge funds where your funds are now susceptible to being reinvested?? Do you know what this is will if not read this [ Check this out ]
  • Houses in main centres like Wellington are being priced off the market. They are not dropping in price but the shortgage means increased premiums. But whats worse is insurance hikes and earthquake damage costs plus the inevitable maintenance costs for those with rentals. But on the rent side houses are gaining with 3 bedroom homes min $400 per week. Is this sustainable---of course not but we are pricing ourselves off the real market due to greed & our perception that our houses are worth loads more.
  • Banks are allowing interest only loans with no principal paid for the next year. Not good it means the owner is now 2 years behind??? 1 year to catch up and one year to pay the increasing costs.
  • Interest rates have dropped to lower than normal rates. But will this be sustained as the ERU crisis & the NZ Giovt borrowing gets worse.

[ Money Managers 2015 ]

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