Arrangements struck include mortgage repayment holidays, longer mortgage terms, and switching to interest-only payments
About one in five home loan borrowers have negotiated with their mortgage provider to figure out how to lower their home loan repayments, according to new Canstar research.
Arrangements clinched included mortgage repayment holidays, longer mortgage terms, and switching to interest-only payments, Canstar said.
Jose George, Canstar New Zealand general manager, said the study underscored the rising pressure on households as 10 consecutive interest rate hikes have added hundreds of dollars more to the home loan repayments of many borrowers each month, Stuff reported.
About 60% of mortgage holders reported reducing their spending on non-essentials, such as dining out, entertainment, and fashion items; while one in five said they have cut down their spending on both essentials and non-essentials, including groceries and car usage.
“At times like this, we really encourage New Zealanders to step back and consider all their household outgoings, and if new arrangements can be made,” George said.
“It is a good time to consider if you are with the right home loan provider or have the right mortgage structure. There are also ways to cut back on home loan repayments, such as negotiating with your existing bank if you are about to refix your loan, or structuring your debt differently.”
John Bolton, Squirrel founder, said many of its clients wanted to manage their repayments to reduce the impact of higher rates.
“That could be refinancing to get cashback offers and a better rate, or pushing out the loan term,” Bolton said.
Glen McLeod, director at Edge Mortgages, said more borrowers should converse with their lenders on anything to do with loans – including the rates they were refixing on.
“A large number of the lenders in New Zealand are using electronic methods to re-fix customers’ home loans, which does not provide them with any advice,” McLeod said. “Basically, here are the rates, choose the one that suits you best and check here then done.”
He encouraged home loan borrowers to seek advice with a financial adviser who specialised in mortgages.
“It is not as simple as choosing the lowest interest rate as you may find that 12 months later your interest rate and repayment could be a lot higher,” McLeod told Stuff.
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