One of the key pieces of information to get your head around is how much your mortgage is going to impact on your finances and budget. For first home buyers, this can be a daunting experience as it is the first time that they are likely to have been looking at these sorts of numbers. Do not be discouraged, remember that the mortgage pathway to home ownership is a well-trodden one and both your mortgage adviser at Trish Greenwood Mortgage Adviser and the lender you end up going with are committed to ensuring that the package is manageable within the financial envelope that you have. Indeed, there is a margin of safety built into the process by banking regulations and practice in the New Zealand market.
The advantages of owning your own home are enormous in terms of security and long-term financial independence but like most things in life that are worth working for there is a cost side to the equation. The personal freedoms that come from owning your own home cannot be overstated.
To get a picture of what the regular payments are likely to be you need a mortgage calculator, there are lots of calculators available online. At Trish Greenwood – Mortgage Adviser we have a simple and easy to use example on our website which may help you Mortgage Calculator. From there it is easy to fill in the amount you wish to borrow, current interest rate and term of the loan. The monthly payment figure will be calculated for you. If you want to know the weekly payment, multiply the monthly payment by 12 and divide by 52. If you want to know the fortnightly payments, multiply the monthly payment by 12 and divide by 26.
There is an option to have a pdf report emailed to you also.
So, let’s have a look at an example – say you are looking at properties with a target price of $600,000 and you are able to offer a deposit of $120,000. This means you need to borrow $480,000 to make this deal work. Enter $480,000 into the ‘mortgage amount’, select an interest rate (likely to be around 2.29% in the current market), and the term (time duration) of the loan. 30 years is a common term at present and a good option to select for many people. If your circumstances change then the term can be revisited as you go along. Go ‘calculate’ and bingo, you have your monthly payments. In this scenario, we are looking at a monthly payment of $1844.59.
Depending on your circumstances it may well be advantageous for you to choose another payment frequency, but this can easily be arranged when setting up your mortgage. This is something that Trish will discuss with you, so you end up with a package that works for you, not the bank.
Another good mortgage calculator option is Sorted.Org. This is a government supported website that has a range of impartial information relating to personal finances and budgeting. Well, worth having a look around and their mortgage calculator is very user friendly. Plus, there is a range of other informative and credible information on personal finances, both how to manage debt and investment for your benefit and long-term advantage. Sorted also has a great money personality quiz which you can take to help you understand your financial strengths and possible blind spots. It’s meant to be light hearted and a big of fun but for many, it has proved to be quite accurate. See how you go!
Another good Sorted tool is their budget planner. Many of my clients have found it really helpful to use this to keep track of their budget and help them with their savings plan. Because it’s online, it easy to log in and share the information with a partner or other family members.
Sorted is a free service powered by the CFFC (Commission for Financial Capability), the government funded, independent agency dedicated to helping New Zealanders get ahead financially.
Obviously, there are many scenarios available in regards to the term of the loan and repayment frequency. In simple terms the more often you make payments the quicker your loan reduces and the interest payments over the term of the loan can be significantly less. Paying less interest is always an attractive option!
To work out what may work best for you it is always good to get some expert input. Trish can look at your situation in terms of income, family, matching income to expenditure, factoring in other outgoings and budgeting so that you can maximise your repayment situation. This is one of the advantages of using an experienced mortgage adviser who can take a holistic view of your individual circumstances and give real advice for real life of what can work for you. A mortgage is a long-term commitment and requires planning to make it work well for you.
Remember that any mortgage calculator will only give you a snapshot view “on the day”, but it’s and ideal place to start when you are looking at big picture affordability and to gauge realistically the viability of your proposal. But as always, the devil is in the detail and that is where Trish Greenwood Mortgage Adviser can add real value and give you peace of mind at no cost to you!
Remember that in life there is no such thing as a ‘free lunch’. Mortgage advisers are remunerated by a commission payment from the loan provider, and this is standard across the industry. The value that you get out of the transaction is up to you and your choice – you don’t pay a fee but the level of service you experience can vary. Choose a mortgage adviser that will go into bat for you, assess your situation accurately and tell you straight up what the deal is. The property market has a range of professional providers that all have responsibilities to their clients. Your Mortgage adviser is someone who is on your side, not the vendors. At Trish Greenwood Mortgages, we represent your best interests as our client and help you navigate the complex world of the property market so that you can feel confident in making your decisions.