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  • Homelinks latest newsletter:

    Hi Guys

    Homelinks latest newsletter:

    "Homelink" Newsletter
    Providing finance for National & International clients purchasing New Zealand property
    This newsletter was specially prepared for Bob

    NEWS
    Taxation Update
    Real Estate Deposits
    Interest Rate hikes to hit hard in a year’s time
    MORTGAGE RATES
    Interest rate update

    MORE ADVICE
    Visit 'Our Newsletter Archives' and useful links for up-to-date information
    Finance/Property Questions, free website/newsletter content, feedback
    Properties for sale

    "If you realized how powerful your thoughts are, you would never think a negative thought." *Peace Pilgrim {1908-1981 American Peace Activist}

    “If a man empties his purse into his head, no man can take it away from him. An investment in knowledge always pays the best interest.” – Ben Franklin

    Life is not a journey to the grave with the intention of arriving safely in a pretty and well-preserved body, but rather to skid-in, broadside, thoroughly used up, totally worn out, and loudly proclaiming - "WOW!! What a Ride!"

    Taxation Update
    Labour's residential property tax grab
    In the last year, the government has made a surplus of $7.4billion. Each and every New Zealander has paid over $1500 in tax that even Dr Cullen hasn’t been able to spend. The IRD now proposes taking around $22million of extra tax from residential property investors, through adjusting property depreciation rates. There are 164,000 private landlords with at least one rental property.

    Changes could be in place as early as April next year. I don’t believe the changes are fair, and want to send the government a message that penalising property investment - when for so many it's a means of saving for their retirement - is unacceptable.

    I have set up an online petition against the proposed changes at www.depreciation.co.nz. The site also has more information about the IRD's discussion paper.

    I urge you to visit the site and sign the petition. If you like, you can also make an online submission to the Select Committee considering the proposal. Time is of the essence though – the deadline for submissions (and the petition) is September 30.

    Costing a tax cut - no slashes to social spending

    In another taxation development, ACT has agreed to let Treasury cost our policy of decreasing and flattening income tax rates. ACT believes that tax cuts would be good for workers and their families, and could be afforded without cutting a single dollar from social spending.

    Dr Muriel Newman
    ACT Deputy Leader

    Real Estate Deposits
    I often get asked how clients can come up with the requested deposit when purchasing a property. Often they don’t have the cash in hand, especially when the deposit money is coming from topping up another property mortgage. Real Estate Agents typically like to ask for 10% and often tell the purchaser that this will mean that they can negotiate a better deal for the purchaser. DON’T DO IT!

    Legally there needs to be a deposit to confirm the contract but even $1 is a deposit. I am not suggesting going quite that low but instead to calculate 5% of the purchase price. This amount will cover the commission payable by the vendor on unconditional date.

    On the S&P agreement it is possible to split the deposit, for example $1000 on signing by both parties (vendor and purchaser) with the balance of the 5% (in dollar value) to be paid on unconditional date. If the deposit is paid prior to unconditional date the money will sit in the Real Estate Trust account instead of earning you interest (or saving interest if it’s in your revolving credit account).

    Deposit Bonds can be offered to the purchaser but this money needs to be repaid on settlement. As an investor why would you agree to pay interest on money that really does not need to be borrowed except perhaps if you purchase at an auction. However, even then the broker can usually arrange with the bank to have an advance given for the deposit once the loan has been approved unconditionally. This applies to any purchase not just via an auction.

    Once a sale goes unconditional then the vendor is legally liable to pay the Real Estate commission, even if the purchaser walks away from the deal. This does happen occasionally. The Real Estate Sales person acts on behalf of the vendor and needs to protect the vendor against this occurrence, as such they do their best to obtain as much deposit as possible. At least if the commission is covered then the vendor is safeguarded against having to pay that cost from their own pocket, should the purchaser not settle the purchase. The vendor in that case has the right to sue the purchaser for non-completion of the purchase. The Real Estate Agent can sue the Vendor for the commission. The whole situation can get quite messy so it is much better to have the commission covered.

    Interest Rate hikes to hit hard in a year’s time

    The real bite into homeowners’ pockets as a result of the Reserve Bank raising interest rates won’t hit until up to about 18 months, says ANZ Bank economist Cameron Bagrie. Article by Jenny Ruth

    The reason for that is that about 70% of home lending is now done at fixed rates and that 80% of fixed-rate lending is for terms less than two years. Bagrie says current Reserve Bank data suggests the average interest rate on existing one to two-year fixed rate loans is only 6.9%. That compares with the 8.5% to 8.6% floating rates currently charged by the five major home lending banks.

    That means most borrowers haven’t experienced any increase in rates yet. The Reserve Bank has raised its official cash rate (OCR) five times this year from 5% to 6.25% and economists are expecting a further increase at the next review in late October. Bagrie says most borrowers rolling over a fixed-rate loan now will be paying up to about 75 basis points more in interest but that by next year they will be faced with 100 point or more increases.

    "If the Reserve Bank keeps on tightening and we see a sell-off in global rates, those (one-year) rates are going to be up around 8%," he says. If the Reserve Bank raises the OCR to as much as 6.75% and there’s an aggressive sell-off in global rates, that could mean somebody with a $100,000 mortgage will end up having to pay $1,000 more a year in mortgage interest.

    While the Reserve Bank will be aware of this situation, it seems to be more concerned about existing capacity constraints and inflation pressures rather than what will happen in the medium term, he says.

    Best rates available this month
    Current rates available are:

    6 mths 7.65%
    1 year fixed 7.49% up from 7.10%
    2 year fixed 7.30% same
    3 year fixed 7.55% up from 7.45%
    4 year fixed 7.55% down from 7.60 %
    5 year fixed 7.75% up from 7.65%
    Floating 8.00% up from 7.75 %


    Homelink can often negotiate
    a) even better rates than those above, depending on the application
    b) contribution toward legal fees and a waiving of the application fee
    c) 100% finance for first home owners (some lending criteria applies)
    d) special rates available for public servants with some lenders

    Properties for sale

    If you would like to be on the data base to receive information regarding properties then please email [email protected] We receive information from several real estate agents in NZ and are happy to pass on the details to anyone requesting this information. You can deal with the real estate direct with Homelink providing you with finance if required.

    Property available in Papakura
    Beach Rd ROW, 5 brm plus carport, fenced rear yard. Tenanted at $320 pw Asking price $235,000. Private Sale. For more information either email [email protected] or call owner on 025 676 3397

    Visit 'Our Newsletter Archives' and useful links for up-to-date information
    Our newsletter archives contain every article. This wealth of knowledge and expertise is still highly recommend reading!
    All the concepts, "big picture" techniques and step-by-step instructions, make reading these back issues a simple but extremely powerful way to give yourself an education in starting, growing and exploding!

    Check out all our back issues at http://www.ehomelink.co.nz/flash/newsletter.htm


    Finance/Property Questions, free website/newsletter content, feedback

    Finance / Property questions? Please email us at [email protected] and we will do our best to source the answers from our professional network.
    Need some fresh, free content for your web site or newsletter? You now have permission to reprint these articles on your web site or in your newsletter.

    To request permission to reprint any of our articles, simply email: [email protected]

    Feedback. We would love to hear what you think our newsletter. If you have any suggestions
    for upcoming issues that you'd like to share with us, please send those too !

    Just e-mail the editor at: [email protected]


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    Important Disclaimer: The views expressed herein are those of the author and are based on information believed but not warranted to be correct. Any views or information, whilst given in good faith, are not necessarily the views of Homelink Enterprises (NZ) Ltd and are given with an express disclaimer of responsibility and no right of action shall arise against the author, the Company or its brokers and employees either directly or indirectly out of any views, advice or information.


    Tina Webb The financial Alchemist -
    Homelink Enterprises (NZ) Ltd
    Ph (09) 236 3398
    Fx (09)2363218 / (09)236 3981
    Mob. 021 520 617
    P.A. Lorna (09) 2363981
    E-mail: [email protected]
    Web: http://www.ehomelink.co.nz
    Regards
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx
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