Financing renovations by topping up on your home loan can be the easiest and cheapest way to get the job done if you don’t have access to the cash. ‘Topping up’ means increasing your existing lending with your existing bank. In some cases, if it makes more sense economically speaking, it could even be worthwhile refinancing (moving to another bank) for a better deal on your existing mortgage AND the new funds being requested......
But first, in case you missed my last blog, the main points from the draft ring-fencing of losses bill are.....
On 5 December 2018, the Government released the first draft of legislation dealing with the proposed ring-fencing of tax losses from rental properties. First impression on reading the Bill is that it is extraordinarily complicated and leaves questions unanswered. Here is a quick summary of the key points........
There is a reasonable chance you have already heard about the phenomenal rates being offered almost across the board now with most banks having rate specials down into the 3%'s.
What you may not be aware of is that you don’t necessarily need to wait until your current fixed rates expire in order to take advantage of these very low rates.
As a personal example yesterday I broke out of a 5-year rate that I had locked down circa 2 years ago for 4.65%. I incurred no break fee in doing so. I then re-fixed at a interest rate of......
- The Tax Working Group (TWG) has ruled out a land tax or an inheritance tax, but appears to me to clearly be pushing towards implementation of CGT. They have noted that it is premature to form a view without firstly determining exactly how the tax may apply, but I would be highly surprised if their final report did not support implementation of CGT.
- The TWG is of the view that CGT should apply across assets broadly, so not restricted solely to real estate. It would also apply to shares, intellectual property, goodwill, business assets etc. The one exception to this will be the family home.
Can you borrow money to renovate?
The short answer – is yes. There are two key ways of borrowing for renovations (large, or small).
A bridging loan is a loan to assist you in purchasing a new property before you’ve unconditionally sold your existing property. This loan remains in place until the existing/old home is sold, and then you are left with the difference as your new mortgage. This can be either when upsizing, or downsizing.
We cover it all in this co-hosted webinar with industry experts Kris Pedersen of Kris Pedersen Mortgages and David Faulkner of RealiQ.
Kris and David will discuss a range of updates in the market, including:
I was always taught in relation to saving and investing that it is not the amount that counts, it’s where you put it – it’s allocation. Time is an investor’s best friend, and understanding the power of compounding interest, and other minor tricks can be the difference in turning a little into a lot. The median wage in NZ when annualized ends up being about $49,900, take away student loan payments and Kiwisaver, add rising rents, potential other debt (credit cards, HP’s, etc.), and this can be a heavy load to carry for an individual already, let alone trying to spare cash for savings and investments – which in many cases, the low risk ones such as bank savings rates aren’t even keeping up with inflation! What do you do?
Why use a broker over your bank?
This is a question that is often asked, so it seems worth covering a few points from different perspectives which may help shine some light on the differences (or opportunities) presented by working with one or the other.
From a banking perspective:
When you’re considering applying for a loan, it makes more sense to approach a broker than it is to approach a bank because of the sheer range of options that are available to you, due to their independence. This is only one of many benefits.
When applying for a loan...
You are probably already familiar with the two-year bright-line test that was introduced in October 2015. Under this test, investment property that is sold within two years of settlement is subject to tax on any increase in value.
The Labour Government has always said they will extend this test to five years. On 15 February it was announced that the new.....