Will Auckland property prices grow forever?

Have you ever noticed that house prices are never published with volume figures like the stockmarket?  Why is that?  If rising house prices are on thin volume then they are less likely to continue to grow than if they are backed by a lot of volume.

Should you increase your mortgage to pay off unsecured debt?

The answer is it depends.  For example, if you were obtaining an advance on your mortgage anyway, then it is more prudent to pay off unsecured debt than to purchase a vehicle for example.  If you weren’t going to do it anyway then hypothetically consider the situation where your mortgage balance was higher, would you take out a personal loan to reduce your mortgage balance?  Anyway, it does not have to be all or nothing, you could perhaps obtain an advance to pay off half of your unsecured debt.

Gem Visa

The Gem Visa is an innovative new credit card from GE Money that provides six month interest free on purchases over two hundred and fifty dollars and longer terms on certain purchases.  It also offers an optional Shoppers protection insurance package.  It has an online application form which gives a response within sixty seconds, where an approval is an approval (unlike some banks which often ask further questions and perform further checks even if the system says the card is approved).  The card also supports payWave which simplifies payment.  You do not have to pay off your interest free purchase before using your card again.  It is a good idea to track your interest free purchases in a spreadsheet or accounting program to make sure you are on track to paying them off within the required period.

List of finance companies in NZ that did not fail during the GFC

With all of the media attention that was paid to finance companies that failed, here is a list of some well known NZ finance companies that didn’t fail:

Avanti Finance
Instant Finance
MoneyShop

It might be more worthwhile to examine how the finance companies that survived the crisis did so rather than why the ones that collapsed failed, i.e. which aspects of their lending and debt collection policies allowed them to maintain positive cashflow and/or profitability during that time period.  Perhaps finance companies with a higher ratio of small loans where loan arrears on individual loans are more common have a broader statistical base and so are able to make more informed management decisions that those finance companies where the lending consists mainly of only a few large loans (perhaps to entities that are in some way associated with the financier where lending criteria and/or interest rate had been relaxed).  In a sense, finance companies with a higher ratio of small loans were more highly diversified.

Swift Codes for New Zealand Banks

ANZ:  ANZBNZ22
ASB:  ASBBNZ2A
BNZ:  BKNZNZ22
National Bank:  ANZBNZ22
Westpac:  WPACNZ2W

Note that the swift code for ANZ and the National Bank are the same because on the 26th June 2004 the National Bank of New Zealand Limited and ANZ Banking Group (New Zealand) Limited amalgamated to become ANZ Banking Group (New Zealand) Limited.

Types of Personal Loans

The following types of personal loans are available:

Unsecured – No security required (e.g. car or boat).

Secured – Security required (e.g. recent model car or boat)

Debt consolidation loan – Details of loans too pay off required usually requiring extra paperwork in that confirmation of the details of each loan from the original lending institution for each one.

 

Obtaining an ITIN (USA International Tax ID)

An ITIN can be obtained by completing Form W7 and filling it out by following the instructions in iw7.pdf.  These forms can be found by googling “fw7.pdf” and “iw7.pdf” respectively.  Then the form can be posted to the IRS.  Note it is also possible to use an acceptance agent, however they will typically charge a fee.

In New Zealand, a cost effective way to obtain proof of identity is to take your passport to the issuing authority, i.e. a Department of Internal Affairs office (do not post it there) and ask them to certify it.  They will then post it to Wellington (after giving you a receipt) and courier it back to you once the certified copy has been made (this service is free of charge since Apostille Certification is only required if another entity certifies the copy).

Are Credit Cards Inherently Evil?

Credit cards are a financial tool, and like any tool they can be used correctly or incorrectly.  They can be useful to address temporary cash flow shortages, for example you may have a mortgage with a fixed interest rate that is a lot higher than the floating rate, which ends soon, and after it finishes your expenses will be greatly reduced.

List of Selected Credit Card Issuers in NZ – now with user-friendliness ratings

The following is a list of selected credit card issuers and products where applicable:

American Express, User-friendliness: 10 out of 10
ANZ – Visa, User-friendliness: 7 out of 10
ASB – Visa and Mastercard, User-friendliness: 10 out of 10
BankDirect – Visa, User-friendliness: 10 out of 10
BNZ – American Express, Visa and Mastercard, User-friendliness: 9 out of 10
Diners Club, User-friendliness: 10 out of 10
GE Money – GEM Visa, User-friendliness: 9 out of 10
HSBC – American Express, User-friendliness: 8 out of 10
Kiwibank – Mastercard, User-friendliness: 0 out of 10
National Bank – Visa, User-friendliness: 10 out of 10
TSB – Visa, User-friendliness: 8 out of 10
Westpac – Mastercard, User-friendliness: 1 out of 10

User-friendliness is a rating given by SurfNZ Finance based on card features, customer service ratings and a number of other criteria.

Note: Be wary of online credit card applications as each application results in a credit check and too many credit checks in a certain period of time may result in a “credit risk” rating from Veda Advantage (NZ credit bureau) even if you have no defaults and you were shopping around for a better interest rate.  Also, be especially careful of ASB as the online application may state you have been “Approved” at the end, reportedly however they may delay sending you your credit card for an indefinite period.  Additionally, the lending requirements appear to be stricter and the auto-approve limits are apparently much lower than they were pre-2007.

Debt Consolidation Loan

There are many companies that offer debt consolidation loans in New Zealand.  The requirements for a debt consolidation loan usually include bank statements for the last three months, unless you are applying to borrow from your current bank.  The banks, ASB and ANZ both offer online applications for a debt consolidation loan.  At the time of writing and until the 31st May 2012, ANZ is advertising an interest rate special of 14.95% p.a.  Many finance companies also offer debt consolidation loans with online applications available for many of them, these companies include FinanceNOW and GE Money.  However the banks will usually offer preferable terms.  More often than not, a credit check will be part of the loan application process, this may either be part of the online application process or it might be run manually later.  NZ citizenship or permanent residency is usually another requirement.

If you are an ASB Bank customer, and you use internet banking, they have an online debt consolidation application form which makes the whole process hassle free.  However note that BankDirect and ASB Bank share information and appear to have combined lending limits, so if you phone BankDirect to discuss a lending matter, you may end up speaking with an ASB staff member.  Additionally one of our readers mentioned that ASB Bank have a six month stand down period,  during which time no further credit applications will be approved; this might only apply to that customer or might be a general policy (even though our reader stated there was no mention of this in the loan terms and conditions).

One website visitor wrote that the Kiwibank Personal Loan Team misled them into believing that their loan would be approved once adequate security had been provided, however on provision of that adequate security, the website visitor was told that the loan was still conditional and then subsequently told that the loan had been declined, so ended up as a waste of time.  Keep in mind though that Kiwibank Personal Loans are actually managed by GE Money,

The interest rate of the debt consolidation loan may be less than your current loan or credit card rates, however  check the required monthly payment for the debt consolidation loan and compare it to your total current payments because if the new amount is larger then it may have a negative impact on your cashflow/budget.  One alternative to a debt consolidation loan that is often suggested is to either increase your income or reduce your expenses, however usually this option has already been explored previously.  Another option for credit card holders is to apply for a balance transfer to a credit card with a low introductory interest rate.  Many people take advantage of this by repeating this balance transfer process every time the introductory interest rate expires.  When exploring these options, a spreadsheet is useful to track your current income and expenses, current repayments and projected repayments to ensure that the change in debt structure is appropriate.  Also, it is advisable to seek the advice of an Accountant first.