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 Looking into buying a property but not sure where to start? Want to buy another home but not sure if you should? Jodi Cottle, our nzgirl Mortgage Dr is here to help you!
A mortgage broker at Sable Mortgages, Jodi is here to answer all your mortgage questions! She developed a passion for property investment from an early age and has built a solid career in the finance industry both here and in the UK mortgage markets. This week she helps out an nzgirl who already owns one home, but wants to spread her fingers...
If you need a bit of advice and direction, just drop Jodi an email here!
___________________________________________________________________________ Dear Jodi,  I’ve got a mortgage and I was lucky… I brought a house about four years ago, got a great deal and managed to pay off a chunk while earning pounds and renting it out etc. Now I am looking around and seeing some amazing deals on the market. Just last week the two bedroom house across the road from us came up for sale. It’s going for less that the Government valuation (a STEAL). And I was really toying with the idea of buying a second home. My friend brought a house with cash for $90,000 less that what it was on the market for! It seems to be a buyers market, and I’d love to bag a bargain. However, how silly is it really to buy now? Can I actually afford it? Will the banks lend me money? My place is worth approx $400,000 but I only have $250,000 on mortgage (weird how we say ‘only’ when it’s about a ¼ of a million dollars!). Can I afford to buy another $400k home? Do I need to look at something smaller? What will the mortgage payments be? Is the renter market going to help or hinder my plans? Thanks, Greedy Torbay Hi Greedy Torbay, How silly is it to buy now? Not silly at all! In fact I think now is the very best time to buy and my reasons for this are as follows:  1: Now is a time when interest rates are coming down at quite a drastic rate enabling you to obtain rates that haven’t been available for the past two-three years. 2: Now is a time when there are lots of properties and few buyers therefore as a buyer, you can negotiate far better discounts off the purchase price. 3: Now is a time when you as the buyer, have more time on your hands to make an informed decision on the property you wish to purchase and not rush into anything like you would have to in a seller’s market. Can you afford it? I can’t answer that until I know you incomings and outgoings but as a generalisation the first question I would ask you is; what would you have spare on a monthly basis to top up a new mortgage? And whatever the answer to that question is, is what I would base the purchase price around and therefore the new mortgage amount. The idea of an investment property is to ensure that the top up portion that you would be paying is affordable, otherwise you could end up in a very tight and scary position which is obviously not the outcome we want.  Will the banks lend you money? With your existing home being worth $400,000, you are in a very strong position from an equity point of view, if you only have a mortgage of $250,000 against it; this means that you are only mortgaged at 63% which is great! So again, from an equity point of view; purchasing another property worth $400,000 is possible however without seeing any income and expenditure details I can’t give an answer on if the banks would lend another $400,000. Have a play around the Westpac website, they've got great morgage calculators and rates, and free guides and checklists to help you out. In an appointment with me I would actually look at incomings, outgoings etc to find out what you could comfortably afford and this would answer the question on if you needed to look at something smaller. Mortgage payments on a $400,000 mortgage would cost around $608/week Interest Only and this is based on a 7.90% one year interest rate. After an assumed rental income of say, $450/week, you need to be comfortable of the top up amount of $158/week ($608-$450). Of course this isn’t taking into account other property costs such as rates & insurance which you would also need to look at. In regards to the rental market – I recommend that you talk to Property Managers and do some research. Find out what tenants are looking for, where they are looking etc, and have this information assist in your decision on what property to purchase. This should increase your chances of keeping the property occupied which is essential. Hope this has all helped! Happy house hunting! Jodi
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