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

 

Farming: Alliance Plans To Start Docking Farmer Payments

Alliance Group, New Zealand's second-largest meat cooperative, plans to start withholding some stock payments to its farmers from next week to bolster its balance sheet and force suppliers to meet their share requirements. More>>

ALSO:

Gambling: SkyCity First Half Profit Rises 30%, Helped By High Rollers

SkyCity anticipates the Auckland business will benefit from government gaming concessions which were triggered on Nov. 11 in recognition of SkyCity’s $470 million Convention Centre development. Morrison said the concessions would allow the Auckland business to lift its activity during peak period, noting it had a record revenue week over the Christmas and New Year period. More>>

ALSO:

Money For Light: Kiwi Scientists Secure Preferential Access To Synchrotron

Science and Innovation Minister Steven Joyce today announced a three-year investment of $2.8 million in the Australian Synchrotron, the largest piece of scientific infrastructure in the Southern Hemisphere, to secure preferential access for Kiwi scientists. More>>

Telco Industry Report: Investment Hits $1.7 Bln A Year

Investment in the telecommunications sector is $1.7 billion a year, proportionately one of the highest levels in the OECD, according to a report released today on the status of the New Zealand sector. More>>

ALSO:

PGPs: New Programme Sets Sights On Strong Wool

A new collaboration between The New Zealand Merino Company (NZM) and the Ministry for Primary Industries (MPI), announced today, aims to deliver premiums for New Zealand's strong wool sector... More>>

ALSO:

Restrictions Lifted: No Further Tau Flies Found

The Ministry for Primary Industries (MPI) confirms that all restrictions on the movement of fruit and vegetables in Manurewa, Auckland, due to the Tau fly, have been lifted as of 2.26pm on Sunday 7 February. More>>

Crowdfinding: Awaroa Beach To Become Public Land If Appeal Succeeds

Conservation Minister Maggie Barry says a privately-owned beach will become part of the Abel Tasman National Park if an online crowdfunding campaign to buy it succeeds... More>>

ALSO:

Meat Workers Union: Waitangi Mondayisation Flaunted By Large Employer Of Maori

At the AFFCO Talley owned meat plant in Rangiuru, the company has resorted to bullying and threats... saying they could be disciplined and their union sued for an unlawful strike if workers exercise their rights to a paid day off tomorrow. More>>

Earlier:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news