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NZ Home Buyers Guide
Here we look at the types of ownership and what to look for when buying your first home.

Guide to applying for a NZ home loan
This 5 step guide outlines what you will need to prepare and what we will do to assist you with your mortgage application.

NZ Mortgage Repayment Calculator
Calculate your monthly or fortnightly repayments with this mortgage repayment calculator.

Want to buy NZ Property but live Overseas?
At Approved we have many off-shore clients - Expatriate Kiwis and people looking to emigrate or invest in New Zealand.

NZ Bank Fees
Here we look at the various fees associated with mortgage finance.

The Legal Process
See how the legal process works when purchasing a property

Are you Protected?
Approved's Insurance Guide

News
  Economic Updates
Get the latest economic news here
Saving & Investing
  After being mortgage brokers for many years it becomes apparent that it does not matter what your income is?it's what you do with your income that really counts. Full story...

Why buy NZ Rental Property?
Here we look at the advantages of investing in New Zealand rental property and why the current demand is so high.

Why Have an LAQC as your Investment Vehicle?
If you are investing in rental property in New Zealand you may benefit by setting up a Loss Attributing Qualifying Company.

 



Tips for Saving and Investing

Your Income

After being mortgage brokers for many years it becomes apparent that it does not matter what your income is it's what you do with your income that really counts. We see people earning $100,000 per annum who cannot save themselves even a 5% deposit. We also see people earning one third of this income level but amassing sizeable property portfolios. One example is a Vietnamese client of ours who came to NZ with nothing only 20 years ago. He has always earned a moderate wage but is now a multi-millionaire property investor.

How to Save Money

Spend less than you earn. Sound like a simple concept? It is! But saving is so hard! There are so many enticing advertisements for the latest consumer goods resist! And do a budget. Foregoing present consumption means you will have much more in the future. The world's greatest investor, Warren Buffett, the world's third richest man, decided against buying his baby a cot when Warren was in his twenties, deciding instead to make one himself out of a drawer and blankets. Buffett, who has averaged 25% per annum in his investing career reasoned that the $100 to purchase a cot would be worth thousands of dollars in the future due to the power of compound interest. Now that example is a little extreme of course but you get the idea of how powerful compound interest can be.

Approved's Top Twelve Saving Tips:

  1. Be frugal. This is the number one way to make your money go further. Make your own lunches, don't buy expensive clothes, and never buy new cars, and especially don't borrow money that you don't need car loans are one of the biggest destroyers of income that we see!

  2. Don't keep up with the Jones'. 'Allocating time and money in the pursuit of looking superior often has a predictable outcome: inferior economic achievement' (The Millionaire Next Door by Thomas Stanley and William Danko). Buy assets. Assets provide an income, liabilities don't. Read 'Rich Dad Poor Dad' by Robert Kiyosaki to find out about the difference between assets and liabilities.

  3. Establish clearly defined written goals. There was a famous survey at Harvard University about written goals. The researchers surveyed found that the graduates with written goals equated to 3% of the graduation year. Twenty years later this same year was surveyed again. The 3% with written goals were not only happier and more satisfied with their lives but the financial numbers also had a remarkable conclusion: the 3% with written goals had achieved more wealth than the 97% added together! So set written goals! If they are not written and read each day there is little point in having them so get writing.

  4. Minimise taxation tax is likely to be your largest expense by far. Learn how to minimise it. Establish a company to help create tax-deductible expenses. Purchasing a rental property would be a great way to start minimising tax (see rental properties).

  5. Establish your own business. Two thirds of American millionaires are self-employed whilst the general population consists of only 20% of self-employed people we expect this is probably fairly similar in NZ as well.

  6. Budget. "Whatever you have, spend less." - Samuel Johnson. According to 'The Millionaire Next Door' over half of the millionaires have budgets for monthly expenditure, nearly all of the other half invested a large proportion of their income (a concept known as 'pay yourself first') before spending money, hence they had a 'forced' budget anyway.

    Why not do this NOW! Print off the following simple form and find out where all that money is disappearing, if you can't find anywhere you can save money I shall eat my hat! By budgeting and recording how much you spend each DAY, you can quickly realise after a month or so that you're wasting hundreds of dollars where you needn't when you think about how much you could save by paying those hundreds off your mortgage you'll wonder why you never did a budget in the past. Don't need a budget? Imagine being a shareholder in a company that suddenly announces to its shareholders that 'from now on the company will not budget anything' Shareholders would run a mile!


    Household/property

    Amount

    Food

    Amount

    Entertainment

    Amount

    Rates/water

     

    Groceries

     

    Sky TV

     

    Gas

     

    Lunches

     

    Books

     

    Electricity

     

    Takeaways

     

    CD's

     

    Phone

     

    Bars

     

    Newspapers/mags

     

    Lawn-mowing

     

    Restaurants

     

    Videos/movies

     

    Security system

     

    Snacks

     

    Holidays

     

    TOTALS

     

    TOTAL

     

    TOTAL

     

    Transport

     

    Financial

     

    Health/Education

     

    Petrol

     

    Superannuation

     

    Doctor

     

    Servicing

     

    Accountancy

     

    Dentist

     

    Repairs/maintenance

     

    Legal fees

     

    Optometrist

     

    Tyres/W.O.F

     

    Child support

     

    Medication

     

    Registration

     

    Provisional tax

     

    Vet bills

     

    Parking

     

    GST

     

    Education fees

     

    Bus/trains/taxis

     

    Savings plans

     

    School body

     

    TOTAL

     

    TOTAL

     

    TOTAL

     

    Household

     

    Clothes/personal

     

    Insurances

     

    Renovations

     

    Clothing

     

    Life

     

    Appliances

     

    Haircuts

     

    Health

     

    Furniture

     

    Skin care/beauty

     

    Income protection

     

    House painting

     

    Sports m'ships

     

    Home/contents

     

    Landscaping

     

    Dry cleaning

     

    Car

     

    TOTAL

     

    TOTAL

     

    TOTAL

     

    Personal Loans

     

    Miscellaneous

         

    Personal loan

     

    Donations

         

    Car loan

     

    Xmas gifts

         

    Credit Cards

     

    Birthday gifts

         

    Store Cards

     

    Sports equipment

         

    Hire Purchases

     

    Hobbies

         

    TOTAL

     

    TOTAL

     

    GRAND TOTAL

     

    Other budgeting tips include stopping smoking a packet of Winfield Red costs $10.05 - a packet a day therefore equals $3,668 per annum. But it's actually more than this amount remember the income you receive is taxed by the government first! Giving up drinking can also substantially reduce costs and you'll never regret not having another hangover!

    A tip from Anita Bell's book 'Pay Your Mortgage Off in Five Years' is to make your own dog-food either read Anita's book or go to these web sites for a few recipes: www.twodogpress.com/dogfood.html or http://soar.berkeley.edu/recipes/dog/indexall.html. Or for your cat: http://www.fosselman.com/recipe.html

  7. If you get a pay rise or if interest rates come down, don't decrease your repayments pay the same and the loan term can be decreased dramatically. On a $200,000 loan at 9% per annum an additional $20 per week will cut four years off your mortgage.

  8. Use Revolving Credit effectively. Revolving Credit Facilities (RCFs) operate like a big overdraft and are sometimes referred to as 'flexible' or 'overdraft' mortgages. RCFs may be the ideal mortgage option for the following reasons:

    • Flexible repayments and easy access
    • Interest savings where spending is disciplined
    • Combining day-to-day finances with your loan account

    RCFs operate like a normal bank account with chequebook and bankcard facilities. You can access the funds if you require, or you can leave it to operate like a normal loan account. Some RCFs allow you to borrow back up to the limit without bank approval.

    You can arrange for your salary to be direct credited to your loan account reducing the outstanding amount on your loan straight away, and because the interest is calculated daily your interest bill is reduced as soon as the money hits the RCF. Over time, this system reduces the interest costs of your loan, helping repay your loan quicker, if you budget well you can pay off your loan much faster.

    A further way to save on interest is to use your credit card to pay for your living costs. You then repay the credit card from your RCF (the credit card is interest free until the due payment date). The RCF has all of your pay until the last possible day, which reduces your average loan balance. This reduces your average interest charges, which shortens the term of your loan.

    You can use your RCF as your cheque, savings and loan account. With your salary going into the RCF and an ATM card, you won't need a cheque account. Extra money can be used to reduce your loan so you won't need a savings account and you can re-access this money whenever you want.

    RCFs are not for everyone successfully running an RCF requires disciplined repayment and spending habits. While a huge, flexible overdraft may sound great, a floating rate mortgage still allows you to make lump sums payments, as well as providing the consistency of fixed repayments.

    NOTE: mortgage 'eliminator' type products with huge establishment costs are often just revolving credit facilities with a budget attached.

  9. Use your time productively. Don't waste time watching television, do something a little more productive read books about how you can increase your wealth.

  10. Choose employment that you enjoy, this way you will enjoy earning the wealth creation process!

  11. Never pay interest on credit cards or other debt. It quickly mounts up and becomes a major burden.

  12. Save money on banking fees. The additional few dollars that can be generated by avoiding certain bank fees can also dramatically decrease the term of your loan.

Next: Investing in Rental Property

  
Are you looking to arrange a NZ home loan? Tell us about your circumstances with our brief questionaire and we will email you back within 48 hours with a confidential appraisal. Apply here

What do I need to do to apply for a NZ home loan? You will need to prepare the right documentation before meeting with your NZ Mortgage Broker. Here's what you will need.

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- Ian and Liz, First time home buyers.

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