Finance & Strategy Expert
Finance & Strategy
Ask Kris Pederson, director of Kris Pederson Mortgages questions relating to Mortgages, Finance, and Strategy
Kris is a respected commentator on the property and finance markets in New Zealand and overseas. He spends his time working closely with his support team sourcing clients leading edge finance strategies.
We live in Hawkes Bay. Because of the hot property market at the moment we are looking at selling our rental property. It is freehold, valued at around $350,000 and returning $330 per week. We are both working and live in a rent free house on a farm.
We are thinking we would like to buy a holiday home in Taupo and rent for casual holiday stays. But we are unsure if this is the best option - or would we be better off putting the money into the bank and getting interest off the $350,000?
Is it wise to use the free legal transfer service offered by Kiwibank when refinancing (rather than paying for your own conveyancing)?
I own my own home in Auckland, two rentals in Hamilton (main house and minor dwelling) and one in Tauranga. I have had all my properties recently valuated (and all the houses are making a great increase in value) as I planned to sell them to an LTC and pay off a lot of our home mortgage.
If I do that they will be negatively geared (5% gross yield Tauranga, 6% yield hamilton houses). Next year will be a difficult one cash flow for us as I have to change jobs which is likely to mean a paycut and my wife not working when she has a baby. So I have been toying with the idea of selling the Tauranga property and putting the Hamilton one in the LTC as it can look after itself with the rent.
Should I be holding all the properties and trying to ride out our low income period? I fear that if we decide to hang on to them and money gets too tight we may have to sell and if the market drops, the bank may decide to sell our personal home if we are unable to sell the Tauranga property.