RBNZ: Investors will require 40% deposit from September

[Wayne]

Your dad could easily sell his place for the $1.5 million you mention and immediately have $1.5 million cash (which is higher than 1st division lotto prize). With that money he could rent comfortably or he could downsize to a $750k house and still have $750k cash in the bank to supplement whatever income he currently has.

Is your dad rich? Damn straight he is.

So he sells the house for $1.5m
Puts the money in the bank at 3% - gets $45k/year.
Pays tax on that at say 17% leaving him with $37350 or $718/week.
Of course he does need to allow for rent cost inflation on that money he has in the bank.
People keep saying they'll put their rents up and it seems to be running at 5% or so.
So with the money in the bank he needs it to grow at the same rate after tax and before he spends any so the 3% interest won't cover it.

Each year it will get more difficult to pay his rent.

He could downsize - or even move towns which is probably more viable.

[PTILoveYou]

Puts the money in the bank at 3% - gets $45k/year.

At next recession, he will get 1-1.5% in the bank....

He's not rich at all.

[lissie]

I know this is a property forum - but it's just stupid to compare property investment to money in the bank. If you invest 1.5million in a portfolio - yes I would be expecting say 5% after fees and taxes inflation proofed for 20+ years.

Assuming the person involved is maybe already retired - with the $750k left over from downsizing he'd be left with an income of some $1300/week assuming he's happy to use the capital and wants the income to last for 20 years. That's including Super after fees and taxes, with the money invested in a balanced portfolio - paying professional management fees. In fact the income and/or time period is probably conservative - these are real figures because we are currently doing this exercise.

I dunno what planet people live on but where I live a home and $1300/week for a single or couple is a pretty good lifestyle.

The living to be 100 is a red herring. Most people slow down after their first 20 years of retirement - say mid-80s - and so long as they have a rent-free home - they can probably live on super or close to. Again there is research to support this view. And remember at that stage the person still has a freehold property they can borrow against for say medical costs

[brokerman]

Sovereign just confirmed no new applications for over 60% LVR being accepted although some exceptions for combining owner occupied may be considered. All existing pre-approvals will be honoured.

[Wayne]

I do not know about others parents, but one flaw of my own is that they have not contributed a single cent to my wellbeing since the age of 18. I paid for my own education and my own properties, despite asking for assistance with both.

I also paid for my education (free Uni went out a long time ago and when it was there it was rationed).
I paid for my own properties (built a lot of them with my own hands also).
My parents haven't given me a bean since I was 17 - well the board was pretty fair but I paid board from the time I started work and everything from the time I left home (20).

And I'm a baby boomer!
Now I'm greedy and supposed to give it to the current generations for some reason.

My children may get some help but totally proportionate to their own effort - something for free has no value, easy come easy go.

[Wayne]

and so long as they have a rent-free home - they can probably live on super or close to. Again there is research to support this view. And remember at that stage the person still has a freehold property they can borrow against for say medical costs

That is the key it seems - a mortgage free home!
Equity release loans for oldies is an interesting and new (to us) area and I'm not comfortable with what is on offer.

40% rent and it will be harder for them in their old age.

[brokerman]

Equity release loans for oldies is an interesting and new (to us) area and I'm not comfortable with what is on offer.

Interesting take, can I ask what you feel the issues are around these? They are certainly not for everyone and most objections come from rellies who seem to think they are losing their inheritance!

[lissie]

That is the key it seems - a mortgage free home!
Equity release loans for oldies is an interesting and new (to us) area and I'm not comfortable with what is on offer.

I don't see any requirement for an equity release loan as anything special Just keep a flexiloan with a zero balance and don't discharge that mortgage. There is no requirement for any minimum repayments on flexiloans as far as I've experienced. Bank is happy to keep on deducting their monthly fee. We recently refinanced and the bank didn't even blink at the main income earner being in his 60s - gave us 30 year mortgag no problem.

When you die - the house sells - the loan is repaid.

[Wayne]

I don't see any requirement for an equity release loan as anything special Just keep a flexiloan with a zero balance and don't discharge that mortgage. There is no requirement for any minimum repayments on flexiloans as far as I've experienced. Bank is happy to keep on deducting their monthly fee. We recently refinanced and the bank didn't even blink at the main income earner being in his 60s - gave us 30 year mortgag no problem.

When you die - the house sells - the loan is repaid.

Equity release loans are special.
Taking a normal mortgage generally means you pay them monthly.
Equity release the payments are added to the loan.
Also, normal mortgage you get a lump (though revolving credit is a possibility) whereas equity release they give you money monthly.

[Beginner1]

Was at Lodge auction rooms in Hamilton today.. Auction clearance was 40% comparing 80-100% for last couple of months..

[propertybuyingNZ]

my broker just told me ANZ does not accept over 60% LVR applications any longer, can anyone confirm pls?
Thanks

[brokerman]

my broker just told me ANZ does not accept over 60% LVR applications any longer, can anyone confirm pls?
Thanks

Not according to the BDM this morning, they still accepting until early August is what I was told, all other Banks shut up shop, non Banks doing very well!

[donna]

This is a topic in it's own right - my 2 cents worth...I think generosity doesn't come naturally to most people and it's evident in the older generations splashing the cash on a yet another holiday without a seconds thought as it how it would help their offspring to get a foot onto the property ladder or pay off the student loan. There are exceptions to the rule but they are exceptions.

cheers,

Donna

[propertybuyingNZ]

total off topic:
I am buying my son 1 oz gold and 1 bitcoin (just in case) for each of his birthdays, when he gets older to own a property, I will buy one a year (the plan) and when he is 21y old, he can have it all.

so, hopefully he will let us alone and we can enjoy our quiet retirement, haha

[Courham]

total off topic:
I am buying my son 1 oz gold and 1 bitcoin (just in case) for each of his birthdays, when he gets older to own a property, I will buy one a year (the plan) and when he is 21y old, he can have it all.

so, hopefully he will let us alone and we can enjoy our quiet retirement, haha

The world is full of rich little brats with no concept of the worth of anything thanks to being given everything and not working for it and so squandering all their parents have given them. I've already told my son (14)- we've been discussing it a lot of late- that there are no free rides and that he'll be making his way in the world as I'm leaving all my properties to the Cat Protection League (and I hate cats!)

I will be more than happy to provide some financial support (eg releasing equity to help him with a deposit)-but if he chooses to get a house he'll be working for it and paying it off himself.

Craig