A thread for KK and Mortgage holders

[ManDownUnder]

I can spot you $20.

Interest Rate?
Term of Loan?
Payment Frequency?

Loyalty Program?
MDU

[Flyingpony]

MDU.
I would like you to clarify the above point you make though.
My understanding is that it is seldom a good idea to amalgamate personal loans HP's etc into your mortgage. It is a false economy to just think.. hey lower interest rate it must be better... It is not. You forgot to mention the term over which the loan is carried.
Below is a simple calculation to show my point.

Ex 1:You have a personal loan for a motorcycle which is $10,000.
The interest rate is 13%.
The period of the loan is 4 yrs.

You will actually end up paying $12,876.96 or in other words $2876.96 in interest.

Now you decide that it will be better to put kill this loan and its high interest rate by putting it on your mortgage at a much lower rate of 7.5%..... lets see what happens.

$10,000 loan
The interest rate is 7.5%
The period of the loan is 30 yrs

You will actually end up paying $25,171.20 or in other words
$15,171 in interest.


Ex2

EDIT: TO MAKE SMALLER

These calculations are very complex but the examples showen above are very simplified versions to prove a point. Always go to a financial adviser or broker first.

Sorry but I have to disagree with you. I'm assuming this HP will be consolidated into the mortgage account revolving credit facility where your wages and payments go into/out off.

I hope people can understand my line of thought. This is just how I view it. Could be wrong but could be right just as equally.

If you have money on HP at a higher interest rate and paying it off over 4 yrs, then putting it on your lower interest rate mortgage is better. (Ignoring early payment penalties etc).

That's because those few dollars per week that would have gone into your HP, is now actually staying inside your mortgage paying off the former HP loan portion.

Therefore you'll still be paying less interest cost on that particular loan. It's just integrated into your bigger mortgage and slightly harder to picture it as a saving. The mortgage will also take slightly longer to pay off as a result of this debt consolidation, but you still save on interest cost overall.

Ofcourse, the above understanding of mine is wrong if the former HP money went into

[ManDownUnder]

The mortgage will also take slightly longer to pay off as a result of this debt consolidation, but you still save on interest code overall.

An interesting though - cheers. The quote I took out of your reply sort of sums it up for me... andI'd need to disagree with it... if you have the discipline to pay it off at the original payment levels

Simply because if you have a loan at 13%, and you refinance it at the lower mortgage rate, it'll be quicker to pay off.

You'd have been paying it off anyway if you had not consolidated your debts but now have more money available for your mortgage as the interest rate is lower...

I must admit my first "debt consolidation" thought was related to pushing it out over 15 years (NEVER 30 years Speedy LOL... that's TOO long)

MDU

[Mooch]

I'm not even close to being in a position to get a mortgage. But what do you guys think about Mortgage Brokers?

Read a piece in the Business Forum section of The Press June 29.

It was about how they're payed and the passing on of that cost to customers. It talked about how early on it used to be a 1% fee but now is generally comprised of an initial referral fee (up to 0.85%) and an annual trail commision (of 0.25%) which is payed for the life of your loan.

The reason for the article was the BNZ is the first large bank to publicly declare it's refusal to continue accepting broker loans.

It also talks about the potential lack of objectivity that the brokers have when they can be earning substancially more pointing you to one bank over another.

It suggests being more inquisitive with the broker you use, ie get them to explain why certain banks were eliminated, how many they looked at and why etc.

It also suggests that it would be better for the consumer if they payed the broker direct for their services.

Thoughts?

If your paying rent , then your already paying someone elses mortgage ( I know this because I'm a landlord). Mortgage brokers can come into there own , Some banks can be a bit picky about customers , so the brokers can cut lots of time down by giving you a choice of the ones that will.

The banks won't advertise that you can get sightly reduced interest rate . Often a broker can also find a bank that is willing to wavier some of it fees and give you money towards the lawyers fees . But also remember that a broker is commission based so check with friends / family if your unsure , or ask here.

Some brokers also run "free" property buying seminars , These are worth going along to gain further knowledge (But don't get pushed into anything) The goods one will also talk about setting up trusts and LAQC's if you decide to invest in property (Eg someone else pays the mortgage).

Further to MDC's account flow info I look for the following when dealing with banks

No Mortgage setup fee
Cash back from the bank towards the layers porperty bill ( $400 - $600 posible)
Reduced interest rate (up to .5 %)
No bank or transaction fees on accounts.
Personal contact at bank ( Money manager)
Reduced rate credit card
Flybuys on Mortgage if possible (Have a holiday on the bank)
Flexiable repayments (Meaning you can put lumps sums on )

my thoughts anyway....

[WarlockNZ]

Holy crap ... i'm going to re-read this again and again until i understand it .. and then i'm going to PM all of you buggers and get you to explain it again ...

MDU .. can i pick your brain .. LOL .. seriously.