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  • Beano
    replied
    You have three accounts
    1: A fixed period loan which is generally the lowest interest rate
    2: Have a floating commercial loan which is generally the lowest interest rate as an account to clear surpluses or shortfalls to
    3: A credit card which has no fees and earns benefits

    Use the credit card to buy things pay the credit card on the day the rents come in
    Match the bank mortgages to the day the rents come in

    Leave a comment:


  • samlarson
    replied
    how do they structure the loan. They say revolving but how it is set up to clear mortgage faster. I know there is two accounts - one for fixed and one for revolving . all money received and spend goes thru revolving account.
    I'm also interested in this moment because its all sounds way too good

    Leave a comment:


  • primal
    replied
    how do they structure the loan. They say revolving but how it is set up to clear mortgage faster. I know there is two accounts - one for fixed and one for revolving . all money received and spend goes thru revolving account.

    Leave a comment:


  • kazzp
    replied
    Originally posted by BradFromNZ View Post
    I dont follow what you mean sorry?



    Yea I like the thought of having something like this with Westpac, ideally something with a decreasing limit and having it with an actual bank makes me feel more secure

    There is nothing unusual or risky I can see about NZ Home Loans - they borrow from Kiwibank and are owned by Kiwi Group Holdings Ltd who own Kiwibank and NZ Post. They just structure your mortgage to help you pay it off faster - something most banks have no incentive to do.

    Leave a comment:


  • BradFromNZ
    replied
    Originally posted by eri View Post
    over investment property
    I dont follow what you mean sorry?

    Originally posted by hawkeye View Post
    We had loans with them years ago and at the time the offset mortgage was innovative. We have the same with Westpac now. It is like having a low interest rate credit card but the maximum limit decreases like a table mortgage so at eg age 65 there is no more credit. You might be able to get one from them where the limit stays the same. If you tend to spend it isn’t a great idea. But if you have good self control it is very useful.
    Yea I like the thought of having something like this with Westpac, ideally something with a decreasing limit and having it with an actual bank makes me feel more secure

    Leave a comment:


  • Chris W
    replied
    Originally posted by eri View Post
    am not warning about regular bank lending terms+conditions

    but the highly likely extra hooks in non-bank lending

    hopefully anyone interested in one of those loans will make extra efforts to fully understand the differences and extra risks

    am thinking of the case a few years ago where the big banks sold taranaki farmers interest rate swaps as if they were fixed rate loans

    they weren't and after the financial crisis the banks started demanding huge amounts from the farmers

    as a group, the farmers challenged the complexity of the derivatives in court and won

    afaik their case was strengthened by 3 things

    1. it was the countries biggest banks

    2. there were many farmers caught

    3. due to the bad publicity the banks didn't appeal the decision

    https://www.stuff.co.nz/business/far...-bank--and-won

    imho if it had been just a couple of farmers with a non-bank lender they would have lost their farms
    In an environment of increasing interest rates, it looks like the farmers entered into fixed for floating interest rate swaps to fix their interest rate.

    They wanted to fix their interest rate so that it did not increase. It was an explicit bet on interest rates by the farmers.

    If interest rates had remained above the level which the farmers had fixed their interest rate, then the farmers would have benefited.

    Imagine agreeing to fixing your interest rate for the next 20 years in 2007 at say 9%. If interest rates stayed above 9% over that 20 year time period, the farmer would have benefited.

    Instead the interest rates fell below the rate that they fixed at - so the farmers were caught paying a higher interest rate than the market interest rate.

    Now that agreement to pay 9% for the next 20 years doesn't look so good when interest rates have fallen to say 5%.

    Leave a comment:


  • donna
    replied
    Originally posted by eri View Post
    what is REALLY important in non-traditional? financial products

    is the fine print

    we can't go into fine print in any depth here because there is so much of it

    and it's all different!

    but here's a story from overseas

    my sister in law was wanting to rent an apartment + needed a guarantor to get the lease

    my wife had previously been her guarantor but when the real estate company noticed my wife had a new surname

    meaning she was married

    they wanted
    me as the guarantor

    i asked what my "liability" was

    they seemed puzzled by the term, so i gave an example

    "my sister-in-law smokes, if she were to fall asleep and drop a cigarette into some highly flammable synthetic bedding

    resulting in her death, the death of many others, and the gutting of a multi-story apartment building in a very expensive city

    what would be the maximum it could cost me?"

    ......


    there was a pause and then they said, "that very rarely happens..."

    and i said

    "wrong answer!"

    so when looking at new + uncommon financially-engineered products

    i recommend your questions always be along the lines of...

    "how much am i exposed?

    what is the worst that could go wrong?

    could this in any way, shape or form

    lead to me or my loved ones being evicted onto the streets?"

    and record the questions and answers

    if they won't put them on paper

    ....

    remember

    if you have a term deposit in 1 of the big 4 banks, and they fold

    the gov. is likely to bail you out

    but if you've gone "off-grid"

    you'll probably

    end up in

    a cold, dark hole in the ground

    burning bark to cook your children's dinner


    Love it Eri - as you say if you're thinking "it's too good to be true" - that's because it is.

    There's a catch in there somewhere - find it and then decide if it's the deal of the century.

    cheers,

    Donna

    Leave a comment:


  • hawkeye
    replied
    We had loans with them years ago and at the time the offset mortgage was innovative. We have the same with Westpac now. It is like having a low interest rate credit card but the maximum limit decreases like a table mortgage so at eg age 65 there is no more credit. You might be able to get one from them where the limit stays the same. If you tend to spend it isn’t a great idea. But if you have good self control it is very useful.

    Leave a comment:


  • eri
    replied
    Originally posted by BradFromNZ View Post
    (excuse the ignorance here but...) how do you get a mortgage that doesn't include the home you live in?
    over investment property
    Last edited by eri; 06-11-2019, 08:13 AM.

    Leave a comment:


  • eri
    replied
    am not warning about regular bank lending terms+conditions

    but the highly likely extra hooks in non-bank lending

    hopefully anyone interested in one of those loans will make extra efforts to fully understand the differences and extra risks

    am thinking of the case a few years ago where the big banks sold taranaki farmers interest rate swaps as if they were fixed rate loans

    they weren't and after the financial crisis the banks started demanding huge amounts from the farmers

    as a group, the farmers challenged the complexity of the derivatives in court and won

    afaik their case was strengthened by 3 things

    1. it was the countries biggest banks

    2. there were many farmers caught

    3. due to the bad publicity the banks didn't appeal the decision

    https://www.stuff.co.nz/business/far...-bank--and-won

    imho if it had been just a couple of farmers with a non-bank lender they would have lost their farms
    Last edited by eri; 06-11-2019, 08:18 AM.

    Leave a comment:


  • BradFromNZ
    replied
    Originally posted by eri View Post
    no

    none of my mortgages

    have ever included the home we live in
    (excuse the ignorance here but...) how do you get a mortgage that doesn't include the home you live in?

    Leave a comment:


  • Learning
    replied
    Fair enough. Though, most people do get mortgages on property they (or a loved one) will be living in. Not always the most astute financial decision. As when done so your "worst case" risk is applicable. I would hope most people would be aware of this.

    Leave a comment:


  • eri
    replied
    no

    none of my mortgages

    have ever included the home we live in

    even though

    the banks have always been willing

    to include it

    Leave a comment:


  • Learning
    replied
    Originally posted by eri View Post
    what is the worst that could go wrong? could this in any way, shape or form lead to me or my loved ones being evicted onto the streets?
    Isn't that the case of every mortgage, ever?

    Leave a comment:


  • eri
    replied
    what is REALLY important in non-traditional? financial products

    is the fine print

    we can't go into fine print in any depth here because there is so much of it

    and it's all different!

    but here's a story from overseas

    my sister in law was wanting to rent an apartment + needed a guarantor to get the lease

    my wife had previously been her guarantor but when the real estate company noticed my wife had a new surname

    meaning she was married

    they wanted
    me as the guarantor

    i asked what my "liability" was

    they seemed puzzled by the term, so i gave an example

    "my sister-in-law smokes, if she were to fall asleep and drop a cigarette into some highly flammable synthetic bedding

    resulting in her death, the death of many others, and the gutting of a multi-story apartment building in a very expensive city

    what would be the maximum it could cost me?"

    ......


    there was a pause and then they said, "that very rarely happens..."

    and i said

    "wrong answer!"

    so when looking at new + uncommon financially-engineered products

    i recommend your questions always be along the lines of...

    "how much am i exposed?

    what is the worst that could go wrong?

    could this in any way, shape or form

    lead to me or my loved ones being evicted onto the streets?"

    and record the questions and answers

    if they won't put them on paper

    ....

    remember

    if you have a term deposit in 1 of the big 4 banks, and they fold

    the gov. is likely to bail you out

    but if you've gone "off-grid"

    you'll probably

    end up in

    a cold, dark hole in the ground

    burning bark to cook your children's dinner


    Last edited by eri; 05-11-2019, 09:37 PM.

    Leave a comment:

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