Article: Tools To Task

What You Need To Know To Prepare For Auction with Carie Townley

Gearing up to attend an auction for a property of interest can be both exciting and nerve-racking, so being well prepared is the first step. To avoid disappointment and potentially extra costs down the track, it’s wise to have a pre-purchase inspection done to the property, which will detect building defects or other issues like termites/pests.

Let’s have a look at what you can do to maximise the chances of a smooth auction process.

Have your home loan pre-approval
This is likely, the most important part to help with the purchase of new real estate. Having home loan pre-approval puts you (the bidder) in a negotiating position. It also means you now have the green light from the lender and are aware of your maximum borrowing capacity, giving you the confidence to start bidding.

Have a deposit
Often, a 10% deposit will be required on the day as part of the terms of the auction, in other instances, cash may be what’s needed. Ensuring that some form of deposit is ready on the day, will increase the chances of landing the property as well as make the process more efficient for everyone.

Know your limits
Take the time to understand how the auction process will work, in the heat of the [bidding] moment, it can be easy to get carried away. Knowing what your ceiling figure is, and keeping your cool will help you stay in control and within your financial limits. Now it’s time to enjoy the ‘under-the-hammer’ experience.

Market Update
Lack of available funding from NZ banks right now but don’t panic!
Though it’s not news that New Zealand has seen a decline in home lending in recent times, the last three months have been particularly difficult. The RBNZ (Reserve Bank of New Zealand) has put in place LVR restrictions that the banks must abide by. The bank is only able to lend to 10% of their portfolio [for whole market] to those who wish to buy owner-occupied property and have less than 20% deposit. If it’s for investment, however,  the client will need to have a deposit of 40% with the banks only having a 5% cap available to lend outside of this rule.

With interest rates in the country at an all time low, deposit rates are low and less people are putting their money in the bank to avoid low returns. Quite simply, there is a lack of available capital to lend but people are queuing up to borrow, it’s never been harder to borrow in New Zealand.

What’s the future looking like for consumers?

The borrowing has changed as a result; an application that would usually be sent to one bank, could now be to sent to several, with each bank having different available capital at different times.

Ironically, midst a lending drought, more people are seeking the service of an adviser to obtain funds.

A mortgage adviser has the experience of working with different lenders and the knowledge of which would provide the right outcome for each client to help maximise their borrowing ability and capacity.

Life is difficult for your clients that are looking to raise finance right now, as such our service has never been in greater demand, we do look forward to taking care of your clients’ needs.

For a personal mortgage reduction analysis to identify the strategies that are in your best interest, contact Carie today on 0275 228 940, email .(JavaScript must be enabled to view this email address).

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