Let’s face it, we don’t like talking about life insurance because we’re also talking about death. Yet it’s pretty much vital if you have a family or anyone who relies on you financially, whether they live with you or not. But there are key legal differences between being the life assured and/or the policy owner that can catch people out when it comes to estates and estate planning.

The purpose of life insurance is to ease the financial burden and compensate for the inevitable financial consequences that accompany the loss of life if others depend on you financially, or you have debts such as a mortgage. Life insurance is just as important whether you’re the sole bread-winner of the house or at home looking after your family.

There are a few terms to get your head around with life insurance, so here’s the rundown... The life assured is the person whose life is insured on a policy (“the life insured”). The policy owner is the person who ultimately receives the funds from the policy when you die. You can be both the life insured and the policy owner, or you can be the insured but not the policy owner and vice versa. If you are the life insured but not the policy owner, you can still pay the insurance premiums but you can’t cancel or change the policy without consent of the policy owner. Importantly, all information about the insurance policy is sent to the policy owner, and only the policy owner can make changes to the policy or cancel it.

Here’s where understanding the differences and consequences between being the life insured and/or being the policy owner come into play. If you’re both the insured and the policy owner, any claim payment will be paid to the law firm acting in your estate. This will be held in trust pending finalisation of your estate, with eventual distribution 6 months after grant of probate or letters of administration. Any estate can, however, potentially be the subject of Family Protection and/or Relationship Property claims, and any life insurance payment will form part of the disputed asset pool. Either of these types of claims have the potential to override your Will (if you have one), and could involve a long and expensive estate dispute.

But where you are the life insured, and a person such as your spouse or partner is the policy owner, your estate is not entitled to receive any claim payment - it gets paid directly to the policy owner.

So as you can see, proper estate planning means getting the right legal advice and looking at not only making a Will and reviewing it every 3-5 years, but also checking for unintended consequences from your life insurance policy and the claim payment not going where you perhaps intended it to.

It is said that up a one third of relationships and marriages end up in separation or divorce. So often a couple work hard to get themselves into a strong financial position, only to find that they are starting again when the relationship falls apart. Then it seems that bright, secure financial future has suddenly been halved - and a lot of time, money and stress has been sucked up in the legal separation process. Often one person ends up buying the other out of the family home, or the home has to be sold. Equally as often, the money-go-round doesn't stretch far enough for each person to properly move on.

Where to start in re creating what you have lost and making up that financial time? One key factor is try and stay in the property market if you can because property can gain value quicker and, while interest rates are lower, it's easier to move up or down the property ladder if you're on it rather than trying to break in from scratch. Also, you may find that there simply isn't anything available to rent with the current reported New Zealand rental property shortage.

The best way is firstly find out what your lending options are, and what you can afford to buy. Be aware that it's very common that one person in a separation will find it harder to obtain finance and does not fit within main Bank lending criteria in general, or their Loan to Value Ratio (LVR) is is too low and Banks simply can't lend. But there are non-bank lending options available at pretty competitive rates when compared with bank rates. Exploring those options and getting pre-approval based on your settlement agreement is the way to go. A pre-approval gives you some certainty around your price range and affordability: let's face it, it'd be embarrassing enough signing up for a new home only to find your finance declined on top of all the other stress on your plate right now.

What information do you need to provide to get started?

Proof of deposit (which can be in the form of equity of an existing home or cash settlement or other funds);Draft or signed Separation Agreement;Details of your current financial assets and liabilities;Bank statements (you may already have a separate bank account set up);Proof of income.

If you’re not sure about your financing options, then get in touch with us and we can give you a free, no-obligation indication relating to your situation very quickly.

Email office@mortgagebox.co.nz | t: 073933134

If you’ve ever owned a home before, and think you’ve missed the boat to qualify to use your KiwiSaver member savings to buy a replacement home, there are still workable options.

It’s important to remember that the KiwiSaver previous home owner options don’t mean that you can own an existing property, and buy a second one with your KiwiSaver, because that defeats the purpose of the savings scheme: to help people get into their first home – not give investors a leg-up. The criteria is a bit higher for those who have owned a home before, but your situation might be that it is worth going through the process and finding out where you stand.

For previous home owners, your application is still made to your KiwiSaver provider, and it is Housing New Zealand as the Government entity who determine eligibility. A base eligibility check-list for previous home owners buying an existing/older home includes:

You have not previously used your KiwiSaver for a first-home withdrawal;You have been a KiwiSaver member for at least three years;You have previously owned a home but no longer own or have an interest in the property;You do not have realisable assets totaling more than 20 percent of the regional house price cap for existing/older properties. Realisable assets are things you own that could be sold to help you buy a home (eg: car, boat or caravan worth more than $5,000.00, shares, investments etc). So if you were buying a home under the Rotorua Regional House Price Cap of $400,000, you can’t have realisable assets worth more than $80,000;Your income level is under $85,000 in the previous 12 months for one buyer, and $130,000 in the previous 12 months for two or more buyers.

So there are still options if you are thinking about buying again, and wondering how it all works. If you’d like to talk about your situation further, get in touch with us - we’ll be more than happy to help you work everything through.

For first-home buyers, saving for a home deposit can be daunting, and with the prices moving so quickly you may be feeling like you'll "never get there". But there is a low-deposit solution with the Government-backed Welcome Home Loan package, which means getting into your first home is that much easier!

Welcome Home Loans packages are only available from a handful of banks and non-bank lenders which is underwritten by Housing New Zealand with the Government setting the base eligibility criteria. This means selected lenders can provide loans that would not otherwise meet their own normal lending criteria, and/or Reserve Bank loan to value ratio (LVR) requirements.

As well as minimum deposit criteria, there are other criteria, including an income cap and regional house price cap. Note there may also be other specific lending criteria of the participating lender which may include good credit and stable employment history among other requirements.

Minimum Deposit

To be eligible for a Welcome Home Loan package, you must have 10% deposit. This could include your KiwiSaver member contributions, HomeStart Grant, and/or fully gifted deposit (if the lender will allow this).

Income Cap

To be eligible for a Welcome Home Loan package, your maximum yearly income can only be up to $85,000 (before tax) for 1 person. For two people your combined yearly incomes must be under $130,000.00 (before tax).

Regional House Price Caps (existing homes)

This varies by region, but for existing homes in Auckland the home must be under $600,000. For Hamilton City, Tauranga City, Western Bay of Plenty District, Kapiti Coast District, Porirua City, Upper Hutt City, Hutt City, Wellington City, Tasman District, Nelson City, Waimakariri District, Christchurch City, Selwyn District, Queenstown Lakes District, the home must be under $500,000.00. For the rest of New Zealand the home must be under $400,000.00.

Regional House Price Caps (new homes)

Housing price caps also apply for new homes, so contact usif you require further information about utilising the Welcome Home Loans package for a new home.

Other Criteria

You must live in the home you are buying. This means you can't use the Welcome Home Loan package to buy an investment or rental property because this defeats the purpose of helping people get into their own homes.You cannot own any other property and not own assets over a certain amount.A Lender’s Mortgage Insurance premium of 1% of the loan amount will apply. The lender may also charge apply a loan application fee. In most cases any fees will be built into your loan. You must be a New Zealand citizen or permanent New Zealand resident (holding a ‘Permanent Resident Visa’).

At Mortgage Box we think the Welcome Home Loan scheme is a great idea. And as the availability of properties for sale tightens and the dream of home ownership moves further out of reach for some, getting into your own home using the Welcome Home Loans package is certainly worth looking at sooner rather than later.

If you'd like to chat or get more information about your options around first-home buying and the Welcome Home Loans package, don't hesitate to give us a call 07 3933 134, or contact us on email: office@mortgagebox.co.nz.

This information is current as at 1 March 2017.

Many people reading this blog will either have a current mortgage, had one in the past or about to buy a home and apply for a mortgage. So far you may have had a good experience with your mortgage broker or lender, or you may not. You may have heard stories about people being pushed into signing up for mortgages, loans or other credit or insurance products that didn’t suit their needs or they couldn’t really afford, and you may have heard what happens when things turn to custard. But greater public and consumer protection has been in the pipeline for some time.

Big regulatory changes have been occurring across the New Zealand finance industry, and even bigger professional education changes are afoot for mortgage brokers because of our job in providing advice on financial products and loans. Before your eyes glaze over, it’s important to understand some of the changes and why.

Some regulatory changes and improvements have already been brought in to help protect the public and borrowing consumers. These include longer cooling-off periods when signing credit contracts, mandatory independent dispute resolution processes, requirement to follow responsible lending codes, and the ability to have oppressive credit contracts reviewed. But there's more to come ...

In the past there have been virtually no industry barriers or qualifications required of a person who decides to become a mortgage broker. The new changes already in the pipeline include standardising education qualifications so everyone has the same underpinning qualification. This means implementation of a new NZQA industry standard financial adviser qualification, coupled with requisite ongoing annual professional development requirements. There can't be anyone who doesn't agree that the change to industry qualification standards will go a long way to ensuring industry consistency and education for competency and conduct of all mortgage brokers and lenders, as well as improving protection for the public and borrowers. Someone put the importance of this in context recently with their comment that, basically, a person could be in any occupation one day and a mortgage broker the next. That's probably a little simplistic, but you get the idea.

Strange as it may sound, as it relates to mortgage brokers, we welcome all the changes. We believe the public most certainly deserve better industry protection, and that the industry changes across the board are a good thing because they also help protect everyone from each other: consumers from mortgage brokers, mortgage brokers from themselves, and borrowers from themselves.

Some might think industry regulation is an overkill. But during our recent global financial crisis we’ve all read, heard or have first-hand knowledge of situations where things have gone horribly wrong for ordinary people. And then we all wonder how such things could even happen in this day and age. The regulatory shake-up and clean-up of the financial advisory and mortgage broker industry is a good thing. Consumer interests must always be put first, no matter what.