Your house will likely be your greatest asset and most significant source of debt. So, in these unsettling times, it’s a smart idea to find out if you have the best mortgage deal.
The Reserve Bank has maintained the official cash rate (OCR) at 1% and signalled that it would move it lower to stimulate the Kiwi economy in the aftermath of the coronavirus crisis.
It’s playing a cool hand and you should, too.
It’s valuable to work through your financial commitments as it might ease any anxiety and put you on a firmer financial footing.
Your financial goals should be at the forefront of your thinking. If you intend to enter the property market to find one of the great buying opportunities out there right now, then gear your finances so you can move quickly.
The advice of an accountant or qualified financial adviser is critical, and we share these six tips as general guidance only:
Don’t panic. Take a longer-term view than what’s on the news tonight. If you are worried, then think through the problem before taking action. As we said, consider professional advice.
Ensure you’re on the lowest mortgage rate available that suits your circumstances best. A little bank shopping will reveal what’s out there.
Consider locking in your rate, as this will give you medium to long-term certainty.
Investigate options to extend your mortgage or, if necessary, defer payments. But be aware, deferral gives you a bigger bill down the track.
Alternatively, see if you can increase your borrowing limit, as this will give you wiggle room. Get it set up before you need it.
If you’re expecting your income to fall, even in the short-term, protect your cash flow by culling some fixed commitments, such as the expense of running two cars when you can survive with one.