Beginner wanting advice on first home, Hamilton mortgage broker & revolving credit

[yungin]

Hi all,

Newbie here, looking for any advice on a mortgage broker in Hamilton suitable for an absolute beginner buying their first home. I've seen a couple I like that were recommended on Sorted.org but thought it'd be worth asking here.

I am a little skeptical of using a broker due to a lack of transparency in commissions but being such a beginner I think using one will still be a good move.

I'm buying on my own and I'm quite fond of the idea of a revolving credit facility. Ideally I would like approval for up to 500k (I can afford 20% deposit of this). My employment situation might be holding me back (I'm confident I can service a loan but I'm currently in a seasonal job).

I want to be able to put whatever money I can spare toward the debt and pay it off as fast as possible which is why revolving credit is appealing. I haven't wrapped my head totally around how it works but have a fair idea.

I'm aware I may not be able to get the whole loan on revolving, in which case I'm unclear whether I could have a fixed portion of the loan charged to a credit card account which is paid off every cycle from the revolving account? I don't know if that's possible to do, I've never used credit. I've read about a recommended setup with revolving credit where you have a credit card and use it for every day costs and pay it off from the RC account before it starts charging interest. I know there is a lot of self control needed to make use of a revolving credit account and I feel that I could manage one.

Any feedback/advice welcome, thanks!

[Anthonyacat]

I do recommend using a broker. It's much easier than approaching several banks separately. Don't be too concerned about lack of commission transparency, but if it really does both you just ask the broker. One I've found is always incredibly upfront about this sort of thing is Ruan ([email protected]z) who has just helped me with a refinance - if you use him, let him know I sent you! But for your first property just about any broker will be able to help you adequately. They absolutely don't need to be in Hamilton. I have used brokers in Wellington, Auckland, and Tauranga.

You do NOT want the whole loan on revolving credit. RC interest is much higher than fixed interest (something like 5%, vs current fixed rates 3.4%). You want to structure this with your mortgage broker so you only have on RC what you think you can pay down in the next X months. For example:
$50k RC
$50k Fixed 1 Year
$400k Fixed 2 Year
Over the course of the first year you pay down the RC, then when the first $50k Fixed Term expires at the end of the first year you use the RC to pay it down, maxing it back out to $50k - which you then pay off over the following year. When the $400k expires at the end of year 2, you max out the RC again to pay off $50k of it, leaving $350k left to fix - fix $50k of it for 1 year, and the other $300k for 2... and so on. Just an example, but you get the drift.

You are NOT able to put fixed mortgage payments on a credit card. This is not an option. The setup of using a credit card for every day costs then paying it off with your RC is an excellent idea, if you have the self control to manage it.

[yungin]

Thanks for the info Anthonyacat,

I think I understand the RC better now, so it's just for the surplus cash I can spare. If I've followed correctly, I'll have ordinary, regular fixed payments that are paid out of my RC account, and any money left over that I don't spend accumulates in the RC and saves me interest. I'm at least more clear on that now, but still can't quite understand what happens when you say "when the first $50k Fixed Term expires at the end of the first year you use the RC to pay it down, maxing it back out to $50k - which you then pay off over the following year".
Won't I have already, in theory, paid the 1 year fixed term off by the end of it's term? And are the interest savings from the surplus cash in the RC account reflected in the interest paid on the fixed term portion? I'm just struggling to see where/how I will sort of see the savings from the money in the RC account. I think I'm a bit in over my head -_-

[brokerman]

Hiya, don't worry about commissions as all banks pretty much pay the same! Structure is really important and a good broker can guide you based on your situation and goals. No one size fits all. A broker can assess an application and look at all banks bar HSBC and non banks too, at 90% for example a non bank is cheaper than many banks! Good luck and happy to assist if you wish.

[yungin]

Thanks brokerman,

That's good to hear about the commissions. I will try and explain as clearly and in as much detail as I can my goals for the mortgage and let the broker do their thing I'm doing a rough-ish budget (estimating rates/insurance/new costs) at the moment and will be in contact with them soon!