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Smart tips for smart homeowners

From tips on making the most of your home, to ways of paying off your home loan faster – BNZ GoodHome is a collection of inspiration and expert advice, all designed to help you be good with your home.

Having a mortgage is one of those grown-up things most of us do at some point in our lives to help us have the home of our dreams. Once you’re living in your dream home, the next dream is being mortgage-free.

At BNZ, we want to help you get there, faster. So here are a few tips on how to get there sooner, rather than later.

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Look into offsetting

Reduce the interest you pay by offsetting with a TotalMoney home loan. It combines the balances of your everyday accounts and subtracts them from the total owing on your mortgage, and you only pay interest on the difference. This means you could get mortgage free faster, while saving thousands of dollars in interest.

Calculate how much you could save with TotalMoney

Have you thought about tailoring your repayments?

Your financial situation changes over the years with different factors coming into consideration. Pay rises happen, kids leave home and you find yourself with a little bit of extra cash. Instead of putting those extra pennies towards something else, why not look at increasing your repayments to suit your new financial situation and help pay off your home loan faster? With BNZ’s Tailored Repayments*, you’ll get a little reminder every year, giving you the option of a small automatic increase to your loan repayments. You can choose to say yay or nay, so you’re in control.

See how Tailored Repayments can work for home loans.


On that topic of extra pennies… pay extra when you can.

Anything you pay above the minimum amount will come straight off the principal of your home loan, which means you will end up paying less interest over the life of the loan*.

  • Pay an extra $20 a week. On a 25-year, $250,000 home loan at 6.5% this could save you nearly $33,000 in interest and knock two years off your mortgage.
  • Round your repayments up (for example, instead of $634, pay $650).

Low interest rates? Don’t be tempted

When the interest rate drops, it can be very tempting to lower your repayments if you have a variable home loan. But, if you continue to pay the same amount, more of each payment will go towards repaying your principal – you know what that means. You’ll be reducing your outstanding balance faster and lowering your overall interest costs.

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Switch it up to fortnightly repayments

If you’re currently paying off your mortgage monthly, you can jump ahead a little bit by changing to make your repayments every two weeks*. With 26 fortnights in a year, you’ll end up making two extra repayments every year without even noticing.

To find out more about paying off your home loan faster, pop in to your local BNZ, give us a call on 0800 275 269 or click here to find out some more information. You never know, you could be mortgage-free faster than you thought.

BNZ Lending criteria, terms and fees may apply. *Early repayment charges may apply. Tailored repayment are not available on interest-only or progressive draw-down loans.

This information is for general information purposes only. To the extent that it contains financial advice, it does not take into account your particular financial situation or goals. BNZ recommends that you seek advice specific to your circumstances from your financial adviser.

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5 ways to be mortgage free faster

Investing in property could be a great way to take control of your financial future. So whether you’re new to property investment, or you’re building on your portfolio, here are some key things to consider if you’re in the market to invest.

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What are the benefits?

Most people buy property as a long-term investment. But there are many other benefits, like equity inflation, capital appreciation gain, and more stability when compared to other types of investments like the stock market.

And as you build up equity in your investment property, this opens up the possibility of buying more properties or making other investments.

The big question: can you afford to invest?

One of the first things you need to figure out is whether you can actually afford an investment property. Calculating your budget is an important part of the process. So get started by crunching the following numbers:

You might just discover that you’re closer to achieving your goals than you think.

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Making a plan

Everybody has different reasons or motivations for investing in property. Do you want to set yourself up for retirement? Or do you want a property that you can pass down to your kids? Whatever your reason, you need to ask yourself these questions and make a plan for the future.

Finance options

Did you know that any equity stored up in your current home can go towards purchasing another property? There are many ways you could fund your investment property, which one you choose depends on you and your circumstances.

You’ll also need to decide what kind of loan to get. Interest only loans are a smart option for investors who want to achieve capital growth on their property over a shorter term.

Click here to find out more about your home loan options.

Property selection

One of the biggest worries many investors have is that their property might sit vacant on the rental market, so choose a home in an area with a high population rate and a high sign of rental demand. Also, look at areas that have a steady growth in value.

And if you’re worried about on-going maintenance and repair costs, then find a property that’s in good condition, as this will limit the costs.

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10 common mistakes to avoid

Many New Zealanders make a number of mistakes when it comes to managing an investment property. So to reach your goals more quickly, be prepared and avoid these common pitfalls:

1. Property investment won’t solve your financial problems

Just because you own an investment property, doesn’t mean you’ll automatically be wealthy. To make money, you need to put in the work and this takes time.

2. Do the numbers

Before you spend hundreds of thousands of dollars, you need to understand the costs involved. This could make the difference between a purchase being a good investment or a long-term drain on finances.

3. Understand the risks

Many people get caught out by believing that property prices only ever go up. Most risks can be minimised, but you’ve got to know where they are.

4. Get advice

Avoid mistakes by getting advice from those who have already seen others make them. There are plenty of stories out there, so make sure you talk to the right people.

5. Finance isn’t just about getting a loan

Getting money in the bank is the “easy” bit, but many people don’t think about how they structure their mortgages. Talk to our Property Investment team.

6. Manage your property well

Many investors don’t review rents as often as they should or they don’t know how to deal with a tenancy problem. Always have additional money set aside to cover repairs and maintenance, to avoid being caught out in the future.

7.  Doing due diligence

Many people let their emotions get in the way when buying an investment property and sometimes end up paying too much, or end up with a leaky building. Take time to do enough research pre-purchase.

8. Don’t just be interested when the market is hot

A lot of people become property investors when house prices are rising. In reality, you should be buying when the market is low.

9. Understand the difference between a home and an investment property

Your purchase should be driven by things like numbers, on-going maintenance and the local rental market – not how attractive or homely it is.

10. Buy in the right location

Look for property in places where there is population growth, infrastructure and employment.

Ready to invest?

Our dedicated residential property investment team are here to help you. So once you’ve done your initial research and believe you are prepared to take the next steps, get in touch with us today.

This information is for general information purposes only. To the extent that it contains financial advice, it does not take into account your particular financial situation or goals. BNZ recommends that you seek advice specific to your circumstances from your financial adviser.

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Property Investment | Things to consider

We all like to think retirement is something that’s a little way off for most of us. We love living in the moment and enjoying our family, friends and all the milestones in between. At BNZ, we know that we’re not all ready to move into retirement, but there’s no better time than now to start planning and saving for it, so we’re here to help with a few tips.

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A little now, means a lot more later

Where do you begin when it comes to planning? When you want to retire, your main sources of income come in mainly three forms: your own savings, income from any investments you have made and the NZ Super.

The NZ Super is unlikely to be enough for your personal needs and the government only pay out when you reach 65, so looking into developing your own saving scheme and retirement plan is necessary.

Start with a budget and think about the life you would like once you retire. Thinking about the basics, such as insurance, maintenance on your home and car, plus a few extra pennies for some unexpected purchases, is a starting point. Also consider what age you’d like to retire, what kind of lifestyle you’d like and where you’ll be living.

When you keep these things in mind, you can make sure you’ve got a good basis to start your budgeting and begin putting away a little bit now to make sure you’ve got enough for yourself later on for whatever plan you’d like to have.
The answer to “how much you should be saving?” is different for everyone, according to their individual circumstances. For you it will depend on your:

  • current age
  • current income and lifestyle
  • intended retirement age
  • target retirement income (i.e. preferred retirement expenditure levels)
  • current retirement savings and assets
  • likely inheritances and other sources of assets

To work out your position, check out the retirement planner at sorted.org.nz

Own home or renting?

One of the big things to think about is whether you’ll be living in your own home or renting during your retirement. If you find yourself renting, you won’t have any money tied up in a home and no responsibility for home maintenance. At the other end of the spectrum, owning your own home means you’ll have more control over your finances. Plus, there’s no threat of being asked to move out or having your rent increased.

It’s a personal consideration as to what best suits you and it’s great to keep your options in mind as you continue to move towards a saving scheme.

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Speaking of mortgages… how to avoid the mortgage trap

Paying off your mortgage prior to retirement is important but shouldn’t be the sole thing you take into account when planning your savings.

There are risks in leaving serious retirement saving until after you’ve paid your mortgage off. There is the chance you could end up having a mortgage for longer than expected due to changes in circumstances such as illness or loss of work. These factors need to be considered as they can affect your ability to make repayments. Click here for 5 ways to become mortgage free faster.

When KiwiSaver is on your side

KiwiSaver offers extra benefits, making it a great option for retirement saving – even if you have a mortgage.

As well as the money you put in and any growth in your savings over time, your employer and the Government may help boost your KiwiSaver account. If you’re working and are contributing through your pay, your employer must generally also contribute 3% of your before-tax pay to your KiwiSaver account. And if you’re eligible, for every $1 you put into your KiwiSaver, the Government may add an extra 50 cents, up to $521 per year.

A little bit of thinking about the future, and the type of retirement you’d like to have, the easier it’ll be for you to begin planning and budgeting a long-term savings plan – your future self will thank you for it. If you have any questions, we’re happy to help. Drop into your local BNZ store or call us on 0800 275 269 to find out more. We also have Authorised Financial Advisors ready to help you with any money advice you may need.

Article adapted from the original article at https://www.sorted.org.nz/guides/planning-for-retirement

This information is for general information purposes only. To the extent that it contains financial advice, it does not take into account your particular financial situation or goals. BNZ recommends that you seek advice specific to your circumstances from your financial adviser.

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Planning for your retirement

Aside from actually buying a house, renovating it is one of the more stressful housing-related activities you can undertake. Thankfully, if it’s done right it’ll also add value and provide your home with a new lease of life. But where exactly do you start?

It doesn’t matter how large or small your planned renovation job is, you’re going to need a solid plan. The first thing to do is figure out if you can afford your grand design — and that means budgeting.

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Get budgeting

A great resource for budgeting is sorted.org.nz — an independent financial guide containing all sorts of great financial advice. In this case, we want to use their budgeting tools to make sure your renovations don’t blow the budget.

Use the Money Planner to plug in all your financial details (income, debt, savings, regular expenses and so on), this’ll make it much easier to see where you stand. From here, determine how long it’ll take to save up the money, or how much to borrow.

If borrowing is how you plan to fund your renovation there are plenty of options available, including topping up your home loan. We have more information on these on our website and we have experts available to talk you through it and how it applies to your individual situation.

The most important thing when creating a budget for your renovations is that you’re realistic about what you can afford. Don’t underestimate your regular expenses and, if you can, include a buffer of ‘just in case’ money for unforeseen costs.

Avoid over-capitalising

At this point, it’s important to weigh up whether you’re over-capitalising. Unless you plan on living in the house forever, there comes a point when it doesn’t make financial sense to pump too much money into the renovations if it’s money you likely won’t get back when the time comes to sell.

A professional valuation of your home will give you an idea of how much it is worth. If you think you might need to borrow money for your renovations, check with your bank first about their valuation requirements. This will give you a good starting point when it comes to deciding how much you want to spend. Ultimately renovations should increase the value of the home by more than you spend.

Upgrading bathrooms and kitchens are popular places to start, and renovations that increase the efficiency of the home (like decreasing energy or water bills) will be attractive points for a future buyer. Anything that could limit what a future buyer might want to do with the property should be weighed up carefully before you proceed.

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Have a plan

Your plan needs to take into account many things, including costs, the length of time your home is going to be a construction site, if you think you’ll need to hire a designer, an architect, an engineer or all of the above.

When it comes to hiring, don’t just go by price. Consider a range of factors including experience working on similar jobs and the reputation of the company.

The Consumer Build website has a section dedicated to renovations, which is a gold mine of information including some sound advice on finding such professionals.

Rules and regulations

Whether it’s a pro job or DIY, you’ll need to ensure anything you do is compliant, and this means talking to the local council to find out what, if any, consents are required to ensure the work is legal and safe. Again, the Consumer Build website has a great list of considerations that anyone undertaking a renovation should  check out. You should also visit the website of your local council.

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Come and see us

When it comes to renovating your home, you can’t be too prepared. The more surprises you eliminate in advance, the smoother things will be during construction and the less likely you are to suffer a budget blow out. And don’t forget to come in and see us if you’re in need of some advice re options to fund the renovations you are planning.

We want to hear from you

GoodHome should be an enjoyable and worthwhile place to visit filled with information that helps you to be the smartest homeowner you can be. We want to hear about anything you found useful or anything you didn’t, and anything you want to see more of that would help make this the perfect site for you - email us at goodhome@bnz.co.nz

This information is for general information purposes only. To the extent that it contains financial advice, it does not take into account your particular financial situation or goals. BNZ recommends that you seek advice specific to your circumstances from your financial adviser.

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Getting ready to renovate

Table loans

Most people choose this type of mortgage. Your regular repayments are the same each week, fortnight or month, unless your interest rate changes.

Here’s how it works

Every repayment includes a combination of interest and principal. At first, your repayments comprise mostly of interest but as the amount you still owe begins to decrease, your regular repayment will include less interest and repay more of the principal (the amount you borrowed). Most of your later mortgage repayments go towards paying back the principal.

With a table loan you can choose a fixed or a floating interest rate. And with most lenders you can select a term (how long you’ll take to repay the loan) of up to 30 years.

Note: Based on an average fixed term of around 2.5 years, borrowers will likely refix 12 times over a 30 year mortgage.

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Revolving credit

Where table loans are great for regular incomes, revolving credit loans are more flexible and can work better for people whose income tends to be more sporadic.

They operate like a large overdraft where all your pay goes into the account, and all your bills and such come out of it up to a predetermined limit. Revolving credit loans require discipline to make them work to your advantage since there are no set repayments. For this reason, some people prefer to set a credit limit that gradually reduces over time.

In addition to offering great flexibility, because all your money goes into your loan account each payday, it’s acting as one big home loan repayment and as such can result in you paying less interest over time.

Offsetting

An offset loan works in much the same way as a table loan in that you have set repayments to make weekly, fortnightly or monthly. The cool part is in the way an offset loan also lets you save in interest costs by subtracting any money you have sitting in your accounts from the total amount owing on your loan when calculating interest. Because banks calculate interest daily, this means you’re paying interest on a smaller amount — even if the money is only in there for a day or two, it all counts. Each bank will operate an offset loan with slight differences, however, some, like BNZ, will even let you group the accounts of your family to help offset an even larger amount.

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Interest only

An interest only loan isn’t a long term option— you’d never pay the home loan off. However, they can be a good short term choice if you need extra money in the hand right now.

You’d pay just the interest portion of your loan for a period of time and none of the principal. You’ll end up paying more interest in the long run, but free up cash when you need it most. People typically switch back to principal and interest payments once they’ve done what they need to with the interest only loan.

Non-table

A less common type of loan is a non-table or ‘straight line’ loan. With these you’ll repay a constant amount of your principal each week/month/fortnight for the life of the loan.This is different from a table loan where the amount of principal paid starts off small and gets larger. While the interest portion of your non-table loan payment starts off large, over time it decreases in a ‘straight line’ (hence the name). Sounds great, right? Well, yes, however, the downside is that because the repayment starts off much higher, and decreases, you don’t make regular payments each week, fortnight or month.

Talk to the experts

Picking the right loan type can be tricky for old hands let alone first home buyers, so make the most of the expertise at BNZ and contact us here or  talk to us in store to find out which loan type — or mix of different loan types — is best suited to how you like to structure your money.

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We want to hear from you

GoodHome should be an enjoyable and worthwhile place to visit filled with information that helps you to be the smartest homeowner you can be. We want to hear about anything you found useful or anything you didn’t, and anything you want to see more of that would help make this the perfect site for you - email us at goodhome@bnz.co.nz

This information is for general information purposes only. To the extent that it contains financial advice, it does not take into account your particular financial situation or goals. BNZ recommends that you seek advice specific to your circumstances from your financial adviser.

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Which home loan is best for you?

The following tips will help you get a good indication of how much or how little you’ll need to spend on your new property should you sign on the dotted line.

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The roof over your head needs to be a good one

  • It can be costly to replace or even patch a roof, so be sure to check its condition. Look for signs of leaks in the attic/roof space and ask when the roof was last replaced.
  • Keep an eye out for rotten wood as this may be an indication that renovations will be required and these costs will need to be built into your budget.
  • If you can spot any cracks in the guttering the property may not have good drainage. If you can, pop back on a rainy day so you can see how the guttering and roof perform, and that the property drains quickly.
  • During the 1990s, a number of homes were built that could not withstand New Zealand weather conditions, so check that the property you are viewing is not one of them. There are a range of claddings associated with leaky homes so visit www.consumerbuild.org.nz for all the information.
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Room by room

  • In each room there will be specific things to check and some rooms will score higher than others. The kitchen might be celebrity chef worthy, while the bathroom is bordering on a health hazard. There will always be the need to compromise, but make sure you’re not compromising on key features that could end up costing you in the long term. Have a clear idea of what upgrades are urgent and necessary versus nice-to-have.
  • Check the wiring and ask how recently it’s been replaced. Look out for tell tale signs of mold. Kitchens can be particularly expensive to renovate so keep an eye out for anything that might be faulty. Check whether your own appliances will fit if you’re bringing them with you.
  • In bathrooms, turn on the taps, turn on the shower, and flush the toilet. Lack of water pressure can indicate an issue with the property’s water heater. If you notice odd noises or strange smells, they could be a sign of plumbing problems. Check for bubbling paint or cracks which could mean water damage or dampness.

A warm home is a healthy home

A warm dry home is not just a nice-to-have, it’s essential for good health. Look at the insulation and note what kind of heating the house has. Is it positioned well in relation to the sun?  Are windows double glazed? EECA have a good checklist of things to keep to an eye out for.

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Your checklist is your friend

It’s hard to keep track of all the things you need to check, especially when you’re seeing one property after another, so keep a list. This handy checklist is useful to take with you on the open home trail so you can rate the rooms and make notes.

An inquisitive mind will pay dividends

Ask questions: This is a good place to get ideas of questions to ask, as well as other checks to carry out when you’re at open homes. It’s also a good idea to have houses checked over by a professional builder - there is a small cost involved, but it could end up saving you more down the track.

Happy house hunting!

We want to hear from you

GoodHome should be an enjoyable and worthwhile place to visit filled with information that helps you to be the smartest homeowner you can be. We want to hear about anything you found useful or anything you didn’t, and anything you want to see more of that would help make this the perfect site for you - email us at goodhome@bnz.co.nz

This information is for general information purposes only. To the extent that it contains financial advice, it does not take into account your particular financial situation or goals. BNZ recommends that you seek advice specific to your circumstances from your financial adviser.

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The open home trail: How not to make a decision that costs you.

The term ‘home equity’ has become a bit of a buzz phrase.

Property values have increased around the country, and many New Zealand homeowners will be wondering what this all means for them. Let’s break it down simply.

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What is home equity?

Home equity is essentially the total value of your home, minus what is owed to a lender. Most people purchase property by saving up a deposit (a share of the total cost of the property) and borrowing money (a home loan) from a bank or other lender to cover the rest, which is then paid off over an agreed period of time. Equity is what you’d walk away with if you sold up and paid off the lender.

The equity you have in your property could increase over time as you pay back what you’ve borrowed, or as the value of your property increases. Equity is an asset – think of it as the share of your property that you truly own.

It’s worth noting that the council capital value and the market value of a property are often different – the council valuation will remain the same for the duration of the 3-yearly revaluation cycle but the property market fluctuates regularly, and ultimately it’s the market that determines the true value of your home.

What is a CV and how does it affect my mortgage?

Capital value (CV) is the value assigned to a property by the council to calculate what share of the region’s rates the property owner must pay. CVs are based on the value of the land the property sits on, plus any ‘improvements’ made to that land – for example, a house. Usually, the higher the CV, the higher the rates.

CVs are typically ‘desktop reviews’ (not involving a valuer actually visiting your property), and look at surrounding properties and recent sales data to inform a change in value.

The council valuation of your home is important because it’s one of the factors a lender could take into account when determining the value they will lend against and ultimately how much you can borrow.

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Why does equity matter?

In a nutshell, the more equity you hold, the better your position when it comes to negotiating with lenders, at the time of new borrowing

In October 2013, the Reserve Bank of New Zealand (RBNZ) put restrictions (LVR restrictions) on lending to potential homeowners who have a deposit of less than 20% of the value of the home they wanted to buy. For banks, these restrictions mean that only 10% of the bank’s lending for new home loans can be given to customers with a 20% deposit or less.

It’s a measure designed to support the stability of the financial system, but it can make it more difficult for borrowers to get a loan. Find out more here.

Could you get a better deal?

This is where it gets interesting. If the recent revaluations suggest you have a stronger equity position, you could renegotiate with your lender for a better rate at the time you apply for new or additional home lending.

The main thing to keep in mind is that banks are required to record the value of the property at the time the loan was originally taken out to work out how much capital they need to hold for the loan. Capital is money banks (and other businesses) set aside to ensure they can continue to function – in this case, it’s money that’s set aside in case a borrower cannot repay a loan. For every dollar the bank lends out, a certain amount of money needs to be set aside because there is a risk that the loan may not be repaid. The higher the risk, the more capital has to be set aside.

This affects the cost of lending (how much resource needs to go in to a loan) for banks and so they may be reluctant to alter the interest rate unless there has been some new lending or refinancing that allows them to use the “new” valuation.

If you’re thinking about taking advantage of your increased equity, it’s important to make sure that you have the ability to service (pay back) any extended or new lending you agree to. In this same vein, using your equity to reinvest in your asset (e.g. improving the value of your property via renovations) may be better than using It to making discretionary purchases like that flashy new car or boat that you’ve always wanted.

If you are interested to know more, get in touch with us. It doesn’t hurt to look into what your options are.

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We want to hear from you

GoodHome should be an enjoyable and worthwhile place to visit filled with information that helps you to be the smartest homeowner you can be. We want to hear about anything you found useful or anything you didn’t, and anything you want to see more of that would help make this the perfect site for you - email us at goodhome@bnz.co.nz

This information is for general information purposes only. To the extent that it contains financial advice, it does not take into account your particular financial situation or goals. BNZ recommends that you seek advice specific to your circumstances from your financial adviser.

Read more

Home equity: What is it? And why should you care?