BORROWERS Mortgage Commentary 10 / 2011
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Issue 2011 / 10   17 June 2011

Welcome to the first fortnightly General Finance Mortgage Commentary for 2011.  We aim to keep you informed on developments at General Finance Home Loans and the mortgage market in general.  Previous issues of this commentary can be found on our website

The Money Market

This morning (9am on 17 June 2011) the money markets were at the following levels:
Official cash rate    2.50% (unchanged)
90 day bill rate       2.66 (unchanged)
1 year swap rate    2.84 (down from 2.92)
3 year swap rate    3.73 (down from 3.85)
10 year bond rate   5.00 (down from 5.11)
Kiwi dollar         0.8060 (down from 0.8160) 

More on Trusts - What is a Resettlement?
If you have had your trust for a number of years, you may find that it is outdated and not as flexible as you would like.  This can be addressed by resettling your trust.  A new trust is set up to meet your new objectives.  The assets of the old trust are then resettled into the new trust.  Resettlement is a major exercise. There will be legal costs and you will need to get your accountant involved to advise on such things as tax losses and depreciation claw backs. The existing trust must also contain a clause allowing it to be resettled.  This is a major undertaking but may be worth doing in certain circumstances.

Open Ended Bridging Finance Available
Through our associated company, General Finance Limited, we have bridging and short term finance available. One of the attractions of our product is that it can be open ended. This covers the situation where you are moving towns, have bought but have not yet sold your existing property in the town you are leaving.  We are happy to lend on these types of propositions.  This is different to the banks as they prefer you to have sold your existing property before you buy or you are able to settle contemporaneously. With us, we can build in maximum flexibility.

Helpful Booklet from the Tax Department
For those about to purchase their first rental property, or for existing investors wishing to learn more about the tax treatment of rental income, there is a straight forward booklet prepared by the Inland Revenue Department. It is entitled "Rental Income". It covers all the usual topics such as depreciation (which is changing from this current tax year), deductible and non-deductible expenses, and boarder income (as opposed to tenant income). It is a useful summary and can be obtained from any Inland Revenue Office by asking for IR 264 booklet on rental income or online at .

Insurance on Older Houses
We have already discussed insurance on two or three occasions in our newsletters this year. However, it is an important issue, and people are paying more attention to it, particularly after the recent earthquakes in Christchurch. We are also seeing insurance companies becoming tougher. Our advice is, if you are selling your home and buying another, sort out your house and contents insurance well before the settlement date. It is too risky to leave it to the settlement date to arrange, as the insurance company may require additional information and this may well delay your settlement. One area, where insurance companies are asking more questions, is the condition of the wiring in houses - particularly those built pre 1945. They may request a certificate confirming the wiring is in a sound condition. This is easy to achieve a fortnight before settlement but impossible to do on the day.  

Mortgage Interest Rates
For updated mortgage interest rates, either for new business or applicable to your existing loan, please contact your Lender (below) or the General Finance Limited Loan Administration Department.

As everyone's personal circumstances are different and the tax treatment of their affairs is always determined by their own circumstances, you should not act on any comments made in our Commentary without obtaining your own independent professional advice.

General Finance Limited is a Registered Financial Services Provider, with registration number  FSP8882.