Don't just let your loan rollover

Loan renewal - what should I do?

5 big reasons why you need to stop, think and talk to your adviser.

New Zealanders and our cousins in Australia are unique. We absolutely love property! We dream big! Upsizing the family home, buying the perfect beach cottage or starting the property investment portfolio is always close to our hearts.

The other thing that’s unique to Kiwis is that we see the family home as an investment. So much so that we have a habit of using our retirement savings from the first years of our KiwiSaver contributions as our go-to for our first home deposit! We throw it all in for property!

With all this in mind and given our passion for property, the question is “Are we good at seeking financial advice on our home loans?”.

There are times in the economic cycle when this becomes essential. We’ve reached one today and I want you all to be aware of this and to consider why it’s more important than ever to use a home loan adviser.

Here are 5 reasons why you need to book an appointment with your financial adviser:

1. Interest rate cycle – With the low-interest environment pre-Covid we all got relaxed about debt and thought we had unlimited borrowing power. The last two years have woken us up to the risk of interest rate movements and the importance of having an interest rate strategy. But now rates have plateaued and are falling albeit at a glacial pace, you should be thinking about the best way to take advantage of any small reductions in the months ahead. Give your adviser an update on your personal household situation and have them take a look at the best strategy to suit your circumstances. Remember you’ll need to talk to a registered financial adviser to have this conversation as banks today offer limited advice.

2. Property cycle – We’ve seen a level of market shock not seen in a while, so you need to be aware of what impact that has had on your property value and what position you’re in with regard to your loan to property value ratio. A good adviser will have this valuation information at their fingertips and will give you some understanding as to if this change is material to your position with your lender.

3. Competitive banking market – Did you know that in New Zealand the banks have seen a major change in the home loan market? The recession we have been through has seen a significant change in the volume and value of home loans written. In 2021 banks wrote close to $90b of new home loans, currently down to around $60b. That $30b hole means the welcome mat is firmly rolled out across the banks making it a great time to reassess your home loan needs.

4. Loan terms – With the roll-back of overassessment related to discretionary expenses and recent changes to roll-back restrictions on investors, lenders are in a better position to provide attractive loan terms.

5. Cash – As they say, “Cash talks” and the banks know this! Cash incentives both to move banks and to hold good home loan clients have never looked better. Home loan advisers have a balcony view of the whole of the market and will know what’s being offered in terms of rates and cash across all banks.

A good adviser will offer you peace of mind as to what the right home loan structure is for you and your circumstances, who the right lender is in terms of achieving your desired outcome, and will give you their time at no cost. Yes, specialist advice at no cost!

If your rate is expiring soon or you just want to be prepared for when it does, book a check-in with your adviser and make sure you get advice. Now’s not the time to think “I don’t need advice”. Now’s the time to stop, think and talk to your adviser.