NZ 1st homebuyers are ScReWeD...

[fungus pudding]

I think we're on different wavelengths mushie. Contributions from equity participants are not taxable...that is what I am referring to. What happens immediately!

If its a simple prop up of the company (because it cashflow negative) its not tax deductible, simple as that. I'm not talking about future cashflow...I'm talking about propping up an equity position.

We were never talking about dividends. Interest is not a factor if we are buying a company with out-right cash - which is what would be happening if it was a cash injection to prop up a company.

Enough about this anyway...

Yes. The subject was interest payments which decrease your taxable position if interest rates rise, and increase it if they fall. You came up with this introduction of capital to a company and purcasing shares.

[minimoke]

The subject was interest payments which decrease your taxable position if interest rates rise, and increase it if they fall. You came up with this introduction of capital to a company and purcasing shares.

Actually the subject is buying your first home – but the side tracks we head down can be quite enlightening.

[skeet]

Whats everyones thoughts of the Welcome home loan?? For first home buyers.

[fungus pudding]

Whats everyones thoughts of the Welcome home loan?? For first home buyers.

Like all those dopey schemes, they make it harder for first home buyers and acheive the opposite of what is intended, by feeding straight into the price of lower priced homes.

[minimoke]

Whats everyones thoughts of the Welcome home loan?? For first home buyers.

For me they break the number one rule of mortgages – and that is you must have commitment. I can’t see why anyone would want to lend to someone if they don’t have the financial commitment to save a deposit. Having a mortgage isn’t necessarily easy – so we shouldn’t give people an expectation that just because they have low income and an inability to save they too can own their own home. That’s just setting some up to fail.

Then you have the tax payer propping up the lender through the insurance mortgage – so the tax payer is covering part of the risk of dodgy borrowers.

They are not available through main stream banks (there’s a message!) – you have to go to Kiwi bank or a couple of Building societies / Credit unions and may not suit your overall banking needs. Criteria is a bit vague – like you have to meet the Welcome Home criteria as wells and the lenders criteria

You may have to pay extra insurance which adds to the repayment commitment may be larger putting more stress on the repayments.

[The Great Gold Guru]

Hi Minimoke,

Thinking of buying a few rentals in your fair garden city over the remainder of 2009. Seena couple of very nice houses in the Burwood region in the mid $200's. Rent of around $325pw ... also a couple in Hornby and Bryndwr ... any recommendations besides the "must haves" of insulation and heat pumps. I presume a garage is pretty essential in CHC over winter unless you want to spend 20mins scraping the ice off your windscreen every morning.

Any preferred locations in CHC ... property prices seem REALLY good value , heaps of choice as well , some good bargains to be had if your patient and find the right "desperate" vendor.

[minimoke]

Hi Minimoke,

Thinking of buying a few rentals in your fair garden city over the remainder of 2009. Seena couple of very nice houses in the Burwood region in the mid $200's. Rent of around $325pw ... also a couple in Hornby and Bryndwr ... any recommendations besides the "must haves" of insulation and heat pumps. I presume a garage is pretty essential in CHC over winter unless you want to spend 20mins scraping the ice off your windscreen every morning.

Any preferred locations in CHC ... property prices seem REALLY good value , heaps of choice as well , some good bargains to be had if your patient and find the right "desperate" vendor.

Tricky one. I personally wouldn’t buy in Hornby. Can’t really think what is there to recommend it unless the tenant wants to be in walking distance to their supplier. (apologies to posters that live there!).

Garage and heat pump are “nice to haves” and you’ll pay a bit more in rent for them. Also one of those DVS ventilation system seem quite good for getting rid of condensation which is a real problem as people lock up their houses over winter. Get on the right side of the street so the sun properly aligns to get that extra free heat in winter. Watch out for big deciduous trees – tenants may not be so good at unblocking gutters at this time of year.

School zones will get you a premium – or at least be close to a school if that is your target market. And somewhere close to a bus route.

Burwoods OK and you might get your best ROI there. Close to QE II Park swimming pool, Bottle Lake forest (bike riding) and the beaches for summer and the “ring road”. Not too damp. Out of the three I’d probably go for Bryndwr. Good schools, close to malls, city, Uni, airport and main roads north and south . You’ll pay a bit more but get a greater range of tenants.

Shrewdys renting at the moment – he can probably give an insight into what renters like him want.

[The Great Gold Guru]

Thanks very much for the feedback. I was thinking Bryndwr would be your first pick ... Merivale is a great area and being next door is not going to harm the capital growth over the next few years. Get a good tenant with kids at the local schools and you might be able to "set and forget" it without handing 10% of the rent to a management company. Getting 10% extra on the rent by letting in less desirable areas only to hand it to a management co. charging you 10% a few months later cos the tenants are too high maintenance seems rather pointless to me !

[minimoke]

Bryndwr would be your first pick ... Merivale is a great area and being next door is not going to harm the capital growth over the next few years.

Its also next door to Fendalton – and cheeky real estate agents will call it “Outer” or “Northern Fendalton”.Get a map and draw the high school zones for your target areas!

[upside_umop]

If OCR gets to 2.5%, wouldnt necessarily see rates come below 5%. Most banks now have priced in a cut in OCR to 4% but yet are still up above 7% for any length of time (3,4,5,7 year mortgages). It could be possible to see the 6 month and 1 year under 5% but not for any fixed amount of time. Because if houses stabilize, and economic growth picks up and so will inflation expectations ----> higher expected forward rates. I'd like to see a 6% 5 year rate...that would definitely catch my attention! Whats NZ's equivalent to LIBOR like? I cant remember its name....

Well, well, well...what have we got here? We only saw sub 6% 5 year rates for about a week with one bank...again, we wont see sub 5% term rates...

What does this mean? People will again hold off buying a house as they dont have the certainty and security that they thought they had. This isnt the best of news for the housing market....lets see if its reflected in the figures over the coming months. Maybe the media will crank up the latest trends over these rates and along with more commentary from Bernard Hickey.

http://tvnz.co.nz/business-news/bank...-rates-2592200

More retail banks on Friday rushed to boost mortgage rates, continuing the squeeze on home buyers seeking longer-term loans.

The Bank of New Zealand said its fixed housing rates for three, four, five, and seven-year terms were reflecting the rising cost of long-term funds.

New Zealand banks are reported to be finding it increasingly expensive to make long-term borrowings offshore as lenders there contract to their "local" markets. This has resulted in rapid rises in longer-term fixed rates around the world as inflation risk rises while central banks print money.

"Continuing volatility in the offshore markets has caused costs for longterm funds to rapidly rise," said Blair Vernon, BNZ's general manager of strategy and marketing.

"These significant increases have been reflected in our longer term fixed oursing rates".

BNZ said its standard and Fly Buys rate had been fixed for three years at an annual rate 6.59%.

But shorter term costs partly priced off domestic factors such as the official cash rate (OCR) had eased, and the six-month fixed term "classic" rate had been dropped from 5.69% to 5.49%.


The ANZ National bank became the second bank - with Westpac - to lift its two-year mortgage rates in the past week.

ANZ National said its new interest rates for fixed home, residential investment, and business equity were: two years 6.25% (up 30 basis points) three years 6.75% and four years 7.15% (both up 60 basis points), and five years 7.5% (up 75 basis points).

The bank has lifted some of its rates for the second time this week.

And industry website interest.co.nz styled the rush to lift mortgage rates as "March madness", noting that Kiwibank has lifted its five-year rate for the second time in a week: it has gone up a total of 76 basis points to 7.25% to match other banks. Kiwibank's three-year rate has been lifted 51 basis points to 6.5%, and its four-year loans by 66 basis points to 7.15%.