Are You Paying Too Much For Your Mortgage?

Many home owners may now be paying a higher interest rate on their mortgages than they need to be and don’t realise they may now be eligible for a cheaper rate. This is because they took out their mortgage with less than 20% equity, but recent property valuations (particularly in Auckland) have sent property values higher.

Aucklandís recent CV updates have given a 29% increase in property prices on average across the city and its suburbs. Many low equity borrowers are now unaware that as they now own more than 20% of their property that the bank may still be charging them a higher interest than they need to be paying.

How to Find Out if You’re Paying Too Much Interest
Banks are very competitive in recruiting and holding onto borrowers who have a deposit of more than 20% of their purchase price or current CV. Because of this they offer lower fixed rates and offer cash as incentives to borrow the money from them.

So making an appointment to meet with your lender after receiving the new CV for your property is a great plan. But the best plan would be to chat with your local mortgage broker who will be able to discuss with a variety of lenders to get the best interest rate deal for you.

Government Under Pressure to Reduce Rising House Prices
Prime Minister John Key is being pressured to make it easier for first home buyers to purchase a home, especially in Auckland and Christchurch. Because of the current popular activity of speculating on property, prices have been rising too quickly for first home buyers to get a foot hold.

Although Mr Key has said, slowly rising house prices in Auckland are good, galloping Auckland house prices are not good, he is currently reluctant to put any measures in place to slow the rate of rises.

Property investors are not keen on having any further restrictions placed upon buyers and feel that the Reserve Bankís LTV ratio is enough at the moment. Property investor Ollie Newland agrees and told TVNZ’s Q & A program that, if you restrict property investors buying properties you’re going to affect the rental market and rents will go up.

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