Avalon’s Money Thread: Can I get a decent affordable mortgage?
Filed under: Avalon's Money Thread, Interest Rates, Credit Cards & Mortgages in NZ
I’m a sick puppy; I think mortgages are really interesting once you understand how they work! The Anita Bell Mortgage book is really the best thing there is for explaining it all (Other than my book of course) and reading that will put you streets ahead when you have to go asking banks for shed loads of money to buy your own piece of beachfront New Zealand.
Firstly it’s always worth negotiating with the banks over your mortgage. The more you need to borrow the more clout you have, so don’t be shy. The worst that can happen is they say no and they may well say yes!
I got 0.5% off my variable rate on the Revolving Credit mortgage (that’s the ASB orbit account) and I also negotiated a refund on the monthly fee of $10 but forgot to negotiate a refund on ALL fees, so I do still have to pay $2.00 a time to set up automatic or bill payments I’m currently paying 9.05% instead of 9.55%, that’s on a mortgage of $100k. This is variable so goes up and down as the bank rate changes, but I stay 0.5% below the advertised ASB rate at all times.
I got 0.25% of the 2 year fixed rate so I’m paying 7.42% instead of 7.67% that’s on $165K.
Note: Current rates are 6.4% on the variable rate and 5.42% on the fixed rate mortgage. As discussed before here, we have also reduced the level of the mortgage by over $120,000 by using the tricks we learned.
I also got an agreement to refund all fees payable on my parents and brothers NZ accounts, up to $20 a month on each account.
AND – I got my first year Credit card fees removed, as well as the fee for joining the Credit card reward program. All in all, over the first two years, it is saving quite a packet.
A lot of what reductions you can get depends on the numbers – $265k mortgage is quite high. But my top tip, even if you aren’t looking at anywhere near that much is: shop around and TALK to the mortgage managers. I had 6-7 meetings with the guy at ASB; asking loads of questions about how things work in NZ. I also knew what I wanted to do to save money because I have read Anita Bells books on the subject a few times I built up quite a relationship with the guy before we ever signed on the line!
If anyone is patronising, or doesn’t give you the time of day, walk and go to the next bank or even another branch of the same bank. With ANZ I never got further than a first meeting with for this reason, that and they will give a measly 0.1% discount on the rate and charge you for it! Westpac nearly got my banking business, except when I was passed on to the “personal Relationship manager” and he was utterly obnoxious! Patronising and arrogant and he spoke to me as if I was 12 years old with a piggy bank! Bear in mind at this point I was well on the way to getting my finances sorted, had budgeted till I was blue in the face and could tell exactly what I had in the bank to the cent. I was not a happy bunny.
One thing I would suggest is ask every bank for quotes, and ask then them all to negotiate. I rapidly took two banks off my list because they wouldn’t move on rates (ANZ and HSBC). You will rapidly get to know what the deal is and get a feel for the best way to structure the mortgage.
The main options for mortgages are:
Fixed Rate Mortgages (fixed for 6 months up to 5 years – some now for up to 10 years)
Flexible rate Mortgages (your bog-standard old fashioned normal type mortgage)
Revolving credit accounts. (See below)
Be aware that you can split your mortgage into chunks, fixing some for different lengths of time, having some on a normal flexible mortgage, or some on a “Revolving Credit” (See next note). This is something I found really bizarre, because we just don’t have this in the UK. But to be honest I really like it. I just split mine into 2, but I’m due to look at it again in July07 and I’m thinking of doing a three way split: some on Revolving, a 1yr fixed rate, and a 2 yr fixed rate. It means you have a bit more flexibility to work with interest rate changes, and by splitting the mortgage up you can pay off your mortgage faster by making the overall interest rate lower.
QUOTE: Paying fortnightly instead of monthly is a very smart way to reduce mortgage costs.
Too right! We don’t do this because of the way we have ours set up it actually doesn’t give us an advantage. With a revolving mortgage often at a higher interest rate, you need to keep all your pennies in that account as long as possible. If you don’t have one of them, fortnightly is better.
If you use the “fine tune your loan” calculator on Westpac It will show you exactly how much money you can save between a monthly mortgage and splitting the amount in half and paying that fortnightly. Plug in the numbers for a monthly mortgage and hit calculate. That tells you the monthly payments and how much interest you pay overall. Under “Change payment frequency” – click option [a] (half monthly amount paid fortnightly) and hit recalculate. It then tells in nice friendly red letters just how much you save overall and how much time you just knocked off your mortgage. If that doesn’t make Mortgages interesting – nothing will.
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Avalon’s Money Thread: Banks and Bank Charges.
I have to make clear at the outset that I do not accept that bank charges are fair at all. I know all the reasons: how can I possibly expect the bank to work for free; they aren’t a charity etc, but banks make enough money out of us as it is and they don’t need to make any more. You don’t pay Whitcoulls $5 a month for the privilege of being able to go in and buy a book – so why should you pay the banks to hold on to your money. They make money by investing your savings, or charging you higher rates of interest than they pay, when they lend you money.
I utterly object to being charged to spend my money. I don’t care what they charge or why they do it, it’s not their money, its mine! It’s a principle thing and at the end of the day no amount of justification for charges actually diminishes my principles.
Bank fees in New Zealand are ludicrous and applied for the most spurious of reasons. ASB will charge you for having to ask their permission to spend your money! (The netcode release fee is a charge applied if you wish to spend over $500 over the Internet. This is for “security”. (Theirs not ours by the way – and yes – having a hubby who works in IT Security – I do indeed get the inside track on just how much we are being expolited by the banks on this issue). Apparently the banks got stung by fraud and so introduced net code. OK we all need security but I have never had to ask permission to spend my money, not even when I was 5. As it’s for their benefit though, why do I have to pay? The online spending limit used to be $2500, but due to a phishing attack I now cannot spend over $500 via the Internet without permission.
As others have said, you can get round this. Everything in the New Zealand banking system seems to be negotiable, especially once you have a mortgage or an account with $50k in. There’s nothing to stop you asking your current bank to match the best offer you can get elsewhere, we did this with our mortgage.
Note: Nogotiating with the banks is a lot tougher right at the moment, but as with everything – once the “resession” is over – the banks will come round and be more ameniable.
You can wangle your way round fees, especially service fees such as getting bank cheques and moving large sums of money for bills etc if you get a good “Personal Relationship Manager”. If you cannot do this, careful use of the system can minimise fees even if you can’t stop them.
Firstly be aware that getting small amounts of cash from an ATM is EXPENSIVE. You can get charged upto 50c each time. So when you get cash, get amounts that make it worth it. It always cheaper to get cash back at the supermarket paying usually only 20c. Never get cash from another bank ATM on top of the 50c charge, you get another 50c charge and it really adds up. (Do that 7 times – that’s a cappuccino ) Decide how you handle cash, its different for everyone, but we now use cash much more than we did in the UK, where we thought nothing of using switch (eftpos) for sums as small as £5, now we have a minimum we allow of $25.
(Currently becuase we have a Mortgage account – we dont actually get charged anything for taking cash out – it’s included in our monthly “base fee” which is now non-negotiable!)
It is worth being aware that fee free banking is finally coming to NZ. It’s been here a while with the proviso that you keep minimum balances, often $3k-5k. Now some of the banks are offering no transaction fees on their current accounts. In some cases you can get no monthly base fee by opting out of being sent paper statements. I’m not so keen on that idea, but that’s because for me the statement arriving tells me its time to balance my accounts. You have always been able to negotiate your fees here, but it has tended to rely on having a lot of business with the bank (savings or mortgage or business accounts), but this change means the fee free banking is open to more people not just those of us with a fair amount of money tied up with the bank.
Current ASB charges:
Streamline account:
$3 a month base fee (waived if you have “Statement Stopper”)
$1 a month for a netcode token
25c each day you use Netcode
$2 to set up an automatic payment or bill payee.
Fastcheque is now free.
Their credit cards cost from $12 – $40 each every 6 months, and their credit card reward program costs $10 each for 6 months. Why they shoudl charge you to join the rewards program is beyond me – anything for a fast buck I guess!
Avalon’s Money Thread is a series of posts which were originally written in 2007 for an Immigration Forum. They came about by answering questions that forum members asked, about how to cope with the often difficult financial situation they face in New Zealand. They formed the basis of what was eventually to become the book Avalon’s Guide: after another year or so of drinking way too much coffee and finding out way more about taxes, money and investing that any sane person should.
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The joy of the shipping container arriving.
Last night, at 6.30pm our very last load of our UK lives arrived at our New Zealand home.
This is the third batch we have shipped over: the first was mine and hubbys household goods, shipped with John Masons once we sold our house. The second was the majority of my Parents household when they sold their house a few months later. This was the remainder of their stuff – the few things they needed to carry on living in the UK.
Of course when I saw “the few things” – what I really mean to say is that there was still enough stuff to fill half a 20ft container. That’s after we have shipped two full 20 ft containers already. And we got rid of a lot of stuff before we moved.
Now the scary part starts – trying to figure our where the hell to squeeze all this stuff.
This lot was shipped my Crown Relocations – who also handled my parents first container.
Again, we are hugely impressed with the service. More importantly, once again, not a whiff of the old “MAF Fees Scam” that is way too prevalent in the industry on the New Zealand side. This is where the New Zealand subcontractor charges you way more for the MAF inspection of your shipping than they are being charged by MAF.
The excuses given by these scam artists are varied and laughable.
We have never been scammed in this way – but many Migrants have – and some of these companies seem to have also bullied at least one forum owner into not allowing such facts to be aired on their forum.
John Masons used Allied Movers as their New Zealand subcontractor when we moved over here, and apart from some issues getting hold of the company to arrange delivery – we had no problems. If you use Crown as the shippers – it’s the same company on each side of the move – so you don’t even have to deal with a different company – and they have offices all over New Zealand. We were charged $150 for MAF to steam clean some outdoor furniture and tools – and that was it. A far cry from the hundreds of dollars that some migrants are charged for a MAF inspection that should cost around $100.
So once again – hats off to Crown Relocations. We had a great service, the stuff is all here, and we have had 1 broken glass. This takes our grand total for breakages over three container loads to:
3 broken glasses and a broken wooden box.
Ok, more unpacking to do. It’s like Christmas.
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Avalon’s Money Thread – Is it cheaper to live in New Zealand?
The cost of living here is to my mind very high – given the low wages and the quality of things you buy. So I think it’s vitally important to bear this mind and take a very honest look at your financial situation before you come out here.
I’d have to say I think this is where we fell down in our research before we came here. Although we are coping pretty well now – I did get a shock – despite having been here twice before. Despite all the prep work we did – I had a feeling that we would probably have missed something – and it would be big. Turned out it was the cost of living. Coupled I think with the realisation that we really didn’t want to have to curtail our standard of living “too” much.
Some things just don’t justify the prices imho – but then the same can said anywhere I guess. I find it odd that its often cheaper to ship books in from amazon.co.uk for example than to go to Whitcoulls (who by virtue of bulk shipping must be able to get books shipped here a lot cheaper than me as an individual – surely).
Things like petrol still seem really cheap to me – but we aren’t exactly earning a “normal” kiwi wage –and to be fair – we have had the benefit of a fuel card for a year, which helped enormously. I do feel that for most people – these costs must be prohibitive (but then that doesn’t stop people driving gazillion litre 4WDs)
(Note – we have now lost the fuel card – my view on the cost of petrol has therefore become more – how shall I put it – “colourful”)(Note – you can get vouchers for 4-10c off a litre from certain supermarkets. It can be worth buying an extra tin of something to take you up to the next “level” of voucher))
Quote:
I think people feel ripped off as many of them see New Zealand as a “cheap ” place to be. The perception of the land of milk and honey has gone. As have the $3- £1 days.
Hopefully this perception will be dulling a little thanks to forums like this. We felt that with hindsight (that magical ingredient) the information giving at Expo’s and online was “massaged” to present NZ as cheap; they just left off the cheerful! NZ stats cost of living figures are not even funny. The problem with the 3-1 is that many goods are still priced at that, if not 4-1 or more, while the actual rate just doesn’t justify it. However, you won’t notice if you get into the rather good habit of not converting everything, it will drive you mad! We are having this problem with flights at the moment. A flight would cost £750 in the UK, but £1000 from here. From what I can see it’s because the 1-3 rate is being applied for the NZ price. That’s $625 difference – which is a LOT of money here. (178 coffees worth in fact 
)
When I actually sit down and look back on how much we have spent on things in the last year, it really is a mixed bunch of whether we feel we are paying more than we would have done in the UK, or less. There are many things we won’t pay for here because we don’t feel the price is justified by what you are getting. Gym membership is a good example. In other cases I’ve found things seem expensive, but then when I work it out, its actually rather cheap, food and entertainment would be a good example. Cheap night at the cinema, decent wines- also not too bad.
It isn’t always wonderfully inexpensive to live in New Zealand, not by a long shot. Even some migrants – for all the money we can bring over from selling our over inflated houses struggle with the cost of living (I mean putting food on the table and a roof over their heads – not going to watch cricket or going to the theatre!) Also bear in mind that if you cannot buy a house outright – your mortgage will be higher than at home because the interest rate is so much higher, and house prices are still rising in New Zealand.
It’s swings and roundabouts. Some will find it laughably cheap to live here and be able to live a wonderful life. Others will struggle and be very unhappy, but it’s so much down to what the individual situation is regarding money. My feeling is be prepared for a high cost of living and learn how to deal with your money while you are in your home country, then when you get here you will have the skills to deal with what you find.
Avalon’s Money Thread is a series of posts which were originally written in 2007 for an Immigration Forum. They came about by answering questions that forum members asked, about how to cope with the often difficult financial situation they face in New Zealand. They formed the basis of what was eventually to become the book Avalon’s Guide: after another year or so of drinking way too much coffee and finding out way more about taxes, money and investing that any sane person should.
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How to get promoted in Immigration New Zealand?
Filed under: NZIS & Immigration issues, The Family Sponsorship Saga
Have a serious complaint made against you!
I have recently discovered that the Head of the Family Residence Team in London, the person who made my life such a misery with their bad attitude and abusive style of management, has been made Acting Branch Manager of INZ London in the absence of the current Branch Manager.
This is what happens when the head of INZ refuses to disipline his staff and put his derpartment in order.
The worst thing is there are plenty of people within INZ who actually deserve these promotions. They don’t treat applicants like they are the dirt beneath their feet, they know what they are doing, they understand how difficult this is for those of us going through the process and they manage to do their jobs without resorting to bullying, incometenace, lying and writing emails in fluffy pink bold!
I wish we were only applicants being treated like crap by this person – but we are not. The reason they get away with it is because the people in Charge are not willing to manage the situation. They didnt even get a slapped wrist for completely screwing up a simple application – they got promoted.
How sick is that? 
And Mr Annakin wonders why his department is held in such low regard!
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Avalon’s Money Thread – Negotiating Wages.
I think it’s worth remembering that by and large – we are coming out here as Skilled Migrants. Which means we have skills that New Zealand needs. How many of us have skills on a list that says they are in an extreme shortage here? So why are we accepting lower wages
I picked up a piece of advise about negotiating on house prices – which (bear with me) works really well on wages to.
If you tell the company what you will accept – they will not pay a penny more (generally speaking – anyway). If you say to the company – offer me what you think I’m worth, then you get to know their top price. Bear in mind – if they don’t get you to do the job – who else are they going to give the job to? It takes a strong constitution to do this but it can be worth it – it worked out for us anyway.
When we were looking at comparison wages – we wanted 3x UK total package. It may sound like a lot – but many goods here can cost more than 3x UK prices so I personally think its only fair. We accepted way less than that (nearer 2x), but have now moved on and got almost 3x. The next move is on the way – and we aren’t looking to move down the scale!
(Edit: This is a Lot harder to do right now obviously – Ive already blogged about how Hubby didnt get the expected and promised pay rise when we was made a Permanant Employee at IBM. But bear in mind – the recession won’t least forever, and the cycle will come round again when you will be able to negotiate better wages).
I’ve often thought the biggest weapon employers have in keeping wages low is our utter reluctance to tell others what we earn. We seem to think it’s a dirty word or something. It takes some “constitution” but it’s certainly worth asking co-workers flat out what they are being paid.
We are in the fortunate situation here that Hubby’s job has quite a small “community” of people who do it – and they are often having coffee with each other (coffee – really is the source of all goodness in life)- so they all know a/ what’s going on among the various employers, and b/ what the salaries are. OH has just been offered an op by a recruitment firm – so his first step was to buy a coffee for the guy who took the job 12 months ago when it was last offered. He knows what the guy was being paid, and what he had to do for it. Makes a big difference in deciding whether to go for it or not, and how much you would want to do the same job.
Avalon’s Money Thread is a series of posts which were originally written in 2007 for an Immigration Forum. They came about by answering questions that forum members asked, about how to cope with the often difficult financial situation they face in New Zealand. They formed the basis of what was eventually to become the book Avalon’s Guide: after another year or so of drinking way too much coffee and finding out way more about taxes, money and investing that any sane person should.
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Avalon’s Money Thread – Will you have to take a lower wage?
We also had to take a large pay cut when we first came here – but it didn’t take us long to find out that Hubby had been ripped-off because we were not Kiwi’s. Apparently the lady who hired Hubby was dancing around the office because “she had got this really great guy dead cheap!” It was pointed out to her that if he were that great – it wouldn’t take long for him to leave! But the theory is that if they hire a migrant – they have got your loyalty for at least a year. So, on the basis that we knew the value of his experience – we went shopping for better offers, and got 3! All of which would pay nearly the old UK rate!
You CAN make decent money over here. It’s just not true to say that it can’t be done. OK, so not everyone can earn big bucks, but then that’s the same anywhere. We were earning good money compared to most people in the UK, and we are here too.
I honestly do not believe that you have to earn less to be happy or that by taking a lower salary you are somehow automatically gaining a “lifestyle”. Why can’t you have both? What you may have to do is spend less than you earn!
I can and have been very happy on no money, and I’ve been miserable and very poor while earning very good money. However, I also manage to be pretty contented and happy while earning a decent and fair wage. It’s just wrong to pay a migrant less than a Kiwi for doing the same job. The same as its wrong to pay men and women different wages for doing the same job.
Any company will pay its employees the least it can get away with. (Sometimes its called exploitation – why do we accept it?) It doesn’t mean we have to take it if there’s a better choice elsewhere. I feel (imho only – its just a feeling – not based on ANY factual evidence – just what I’ve picked up) that there’s quite a con going on in convincing migrants that they will have to take massive pay cuts to come here. Whether its because you “have no NZ experience” or “we cant afford high wages here”. Fine – we have no NZ experience – but hey – we have UK experience and by and large – if you want to be a “world player” you need that experience – so pay for it! In Hubby’s job for example – NZ experience just means you know the worst way of doing the job. UK experience means you may have some idea of how it’s SUPPOSED to be done!
NZ has apparently got a booming economy and a surplus of cash (edited to add – even now that it doesnt – we can afford to pay our MP’s a salary in excess of $100k plus upto $50k in tax free “expenses”). Why should the shareholders be the only ones getting a cut? The workers should be fairly and equitably paid. I hope one day that migrants will get paid a fair wage for doing the job and not get talked into “necessarily” earning lower wages than they deserve.
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Avalon’s Money Thread – Will you be worse off in New Zealand?
Without a doubt, most people are. But it’s certainly not written in stone that you have to be financially worse off here than you were back home. We are actually better off financially here in NZ than we were in the UK. It is possible, but for my money (excuse the pun) you probably have to “Think outside the box” most of the time to make the numbers work. We have done this with a mix of watching what we spend so its less than we earn, saving to invest and getting educated about how exactly to invest and how to use the money to our advantage rather than the bank’s.
One of the things that attracted us to New Zealand was the lower taxes and the ability to accumulate assets without being constantly taxed on them (No stamp duty – no capital gains on selling a second home, etc). We had the impression that we could indeed get ahead financially better than we could back home. We already had a fantastic lifestyle in the UK. We lived in (imho) one of the most beautiful parts of the country, and the view from the house is not that dissimilar from the have here (apart from instead of a castle in the distance – we have a pool in the garden). Many of the things people do come to NZ for, we had in the UK. But we would have struggled to get a good financial base behind us. It was something we were already working towards, but felt coming here may make the difference.
We live on one salary – by NZ standards quite a healthy one, and because we are careful with our money – can’t afford to be flash. But that should pay off in a few years. We also wanted my Parents lousy pensions to go that bit further. Here it will. It will still be tight – but not as tight.
So far – it’s working out reasonably well. For all the financial problems there are in NZ (and there are lots) I have never seen the kind of “wealth creation” industry in the UK that there is here.
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Avalon’s Money Thread Part 1 – Introduction
As this is no longer live on the forum it was originally intended for because the owner will not allow links to this blog, I decided it was about time to publish the original version here, where at least I get credit for it!
These are the posts that were significantly updated, rewritten and expanded to form the book: Avalon’s Guide Emigrate To New Zealand.
So now I need to make a disclaimer (just in case).
I am NOT a financial advisor. Or a banker. I have absolutely NO qualifications in anything even vaguely resembling economics or accounting (not even an NCEA!). And I’m not a lawyer. However – as this is in no way Immigration Advice – I am not breaking any New Zealand laws in writing it. Oddly enough – even though these posts do contain Financial Advice – that is not illegal. I cannot however give individual investment advice.
Everything in here is stuff I’ve read in books or done in my own life – and is part of my personal experience over the last few years. Its all my own opinion and should be taken as such. Its all stuff I’ve learned the (mostly) hard way.
Hopefully anyone who needs to can get something positive out of this. Some of this obviously is a bit out of date – but then that’s what the book is there for. This should also give people a taste of what the book reads like.
I hope you all enjoy it!
Helen
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Hubby’s views a different perspective
Filed under: Hubby's Views, Jobs & Work, Life in New Zealand
When we first arrived in NZ, I got a new mobile phone. Since I was working for Telecom, this meant it was the latest 3G camera phone with everything you could want (Sanyo 7400). A far cry from the five year old Nokia 6310 I had just a month previously; A black LCD screen, no camera and I was doing fancy things by using the InfraRed connection to my laptop, so the phone worked as a modem for me to send email while I was on the train.
So I was full of the joy of a new phone, taking photo’s of random stuff on my way to work. Below, Civic Square with Wellington City Council offices in the background and the Majestic centre (where I now work) towering over.
HMNZS Wellington, now sunk as a scuba diving destination.
That didn’t last long, on account of my commute being a 2 minute walk from the appartment to the office. So then I started taking photo’s of stuff generally out and about.
Suffice to say, my photography skills are not that great – unlike the folks over at Wellington Daily Photo, who find all sorts of interesting things to take pics of.
However, one of the joys in my job is having meetings at the top of tall buildings. And on a good day admiring the view from them. So to follow will be posts from an alternative point of Hubby’s views.
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