NZ Home Loans (NZHL)

[BradFromNZ]

Has anyone ever used NZ Home Loans (NZHL)?

I have had a meeting with them and they believe they can slash our mortgage by 11 years and $154K whilst maintaining our current repayment rates.

I am obviously interested, yet suspicious. I cant see any 'catches' which makes me think there is a hidden catch somewhere.

What are your experiences using NZHL and what should I be wary of?

Also, if I do go to them, will this impact me being able to use equity in my property to purchase a investment property?

Cheers!

[Keys]

Do you pay your credit card off every month? If not, do not go with one of these loans.

[Learning]

Offset mortgages are not new and often come with a higher interest rate.

I've split my mortgage a small loan through BNZ's Total money and a bigger standard mortgage. The Total money one is higher interest but most months I manage around 95-100% offset so pay just a few cents. The bigger loan is fixed for two years at a discounted rate.

Every two years when it's time to renew, I shuffle the amounts around paying a chunk off the bigger loan and setting myself a new offset target with the Total money account.

[BradFromNZ]

Do you pay your credit card off every month? If not, do not go with one of these loans.

Yea we do, I'm really intrigued, however, if I can set something up like this with my bank I am tempted to stay with the bank

[BradFromNZ]

Offset mortgages are not new and often come with a higher interest rate.

I've split my mortgage a small loan through BNZ's Total money and a bigger standard mortgage. The Total money one is higher interest but most months I manage around 95-100% offset so pay just a few cents. The bigger loan is fixed for two years at a discounted rate.

Every two years when it's time to renew, I shuffle the amounts around paying a chunk off the bigger loan and setting myself a new offset target with the Total money account.

And that is effectively what NZHL is? A big offset mortgage?

[Learning]

And that is effectively what NZHL is? A big offset mortgage?

That's what I gather from their intro video but I haven't actually spoken to them.

[eri]

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

[Learning]

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?

[eri]

no

none of my mortgages

have ever included the home we live in

even though

the banks have always been willing

to include it

[Learning]

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.

[BradFromNZ]

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?

[eri]

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/farming/dairy/114240977/the-taranaki-farmers-who-took-on-anz-bank--and-won

imho if it had been just a couple of farmers with a non-bank lender they would have lost their farms

[eri]

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

over investment property

[hawkeye]

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.

[donna]

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