Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Borrowers could save more than $90,000 interest

02 April 2014

Borrowers could potentially save more than $90,000 interest costs on average home loan
CANSTAR releases annual home loan star ratings report today, assessing 95 home loans from 10 lenders.

After a three-year breather, the cash rate is finally on the rise again, with the Reserve Bank of New Zealand (RBNZ) announcing a 0.25% increase to 2.75% in March. Combined with last year’s high-LVR volume capping, loan conditions are becoming more challenging for would-be and recent buyers. Nevertheless there are healthy savings for borrowers who are prepared to negotiate, with analysis of 95 home loans by financial research and ratings organisation, CANSTAR, finding a difference of 59 basis points on current floating home loan rates.

On a $300,000 home loan over 30 years, a 59 basis point difference equates to potential interest cost savings of $93,000 over the life of the loan, as well as potentially cutting the term of the loan by more than four years.

“I think it can be a shock for home buyers when they realise the total cost of their mortgage over the long term,” said Derek Bonnar, CANSTAR General Manager – New Zealand. “Even in our current low-interest environment, the difference between the highest and lowest floating mortgage rate equates to $113 per month on a $300,000 loan and potentially much greater savings if borrowers negotiate the lower rate but keep their repayments at the same level.”

Loan sizeInterest rateMonthly repaymentTotal repayment over life of loan (30 years)
$300,0006.19%$1,835$660,766
$300,0005.60%$1,722$620,005
Saving $113 per month$40,761
If borrowers negotiate low rate but keep repayments at higher level…
$300,0005.60%$1,835$567,333,
Saving $93,433

Source: CANSTAR. Based on $300,00 loan with 80% LVR over 30 years. Rates on CANSTAR database.

“The interest rate on your home loan remains one of the biggest factors affecting the cost of the loan over its lifespan,” said Mr Bonnar. “For households, keeping their repayments slightly higher when negotiating a low rate could potentially mean a fantastic overseas holiday, or retiring a year earlier. It is well worth the effort.”

CANSTAR makes home loan comparison easy. The Home Loan Star Ratings, released today, compares 95 home loans from 10 lenders across five categories of floating, fixed rate and line of credit loans for both residential and investment purposes. The star rating report is a useful way for mortgage holders to assess how their current lender compares, as well as to narrow down products worth investigating further.

“Across the five loan categories assessed, several mortgage providers stood out as offering 5-star value,” says Mr Bonnar. “These included Kiwibank, achieving a 5-star rating in four of the loan categories, followed closely by Westpac, with a 5-star rating in three categories. SBS Bank achieved 5-star ratings in both the Residential Fixed and Investment Fixed categories and ANZ were 5-star rated in the Line of Credit category.”

“The best value mortgage for each home owner is going to depend on their individual situation, but with potentially many thousands of dollars to save, taking the time to shop around is a great return on investment.”

Home_Loans__Report_NZ_2014.pdf

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Half Empty: Fonterra's 2017 Opening Forecast Below Expectations

Fonterra Cooperative Group raised its forecast farmgate milk payout for next season by less than expected as the world's largest dairy exporter predicts lower prices will crimp production and supply will pick up. The New Zealand dollar fell. More>>

ALSO:

Pest Control: Mouse Blitz Team Leaves For Antipodes

The Million Dollar Mouse project to rid Antipodes Island of mice is underway with the departure of a rodent eradication team to the remote nature reserve and World Heritage Area. More>>

Gongs Got: Canon Media Awards & NZ Radio Awards Happen

Radio NZ: RNZ website The Wireless, which is co-funded by NZ On Air, was named best website, while Toby Manhire and Toby Morris won the best opinion general writing section for their weekly column on rnz.co.nz and Tess McClure won the best junior feature writer section. More>>

ALSO:

Pre-Budget: Debt Focus Risks Losing Opportunity To Stoke Economy

The Treasury is likely to upgrade its forecasts for economic growth in Budget 2016 next week but Finance Minister Bill English has already signalled that more of his focus is on debt repayment than on fiscal stimulus or tax cuts... More>>

ALSO:

Fulton Hogan's Heroes: Managing Director Nick Miller Resigns

Fulton Hogan managing director Nick Miller will leave the privately owned construction company after seven years in charge. The Dunedin-based company has kicked off a search for a replacement, and Miller will stay on at the helm until March next year, or until a successor has been appointed and a transition period completed. More>>

ALSO:

Gordon Campbell: On Electricity, Executions, And Bob Dylan

The Electricity Authority has unveiled the final version of its pricing plan for electricity transmission. This will change the way transmission prices (which comprise about 10% of the average power bill) are computed, and will add hundreds of dollars a year to power bills for many ordinary consumers. More>>

ALSO:

Half Empty: Fonterra NZ, Australia Milk Collection Drops In Season

Fonterra Cooperative Group says milk collection is down in New Zealand and Australia, its two largest markets, in the first 11 months of the season during a period of weak dairy prices. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news