Should I lock in a home loan rate?
Q. Seeing as the official cash rate was kept on hold this week, and there was even a suggestion that the Reserve Bank was considering the possibility of an increase, should I try to lock in an interest rate on my home loan now? Or can I afford to wait?
A. I asked Nick Tuffley, who is chief economist at ASB. His team revised their forecast after Wednesday’s announcement. They had been expecting one more official cash rate cut this year but now do not expect that to happen.
But he said he still did not think that retail interest rates would increase dramatically. They might not fall much further unless there was a serious outbreak of coronavirus, he said, but an increase might not happen until 2022, either.
Tuffley said, with the way that rates were being offered, a oneor two-year fix seemed a good bet. He said the premium that you would have to pay for a longer-term fix did not seem worthwhile given where rates were likely to be when those shorter terms finished.
Q. I’m thinking about putting my house on Airbnb for a couple of months while I’m out of the country. Is there anything I need to do to prepare for this?
A. There are a few things to think about here.
You’ll need to tell your insurance company what you’re doing, in case it affects your cover.
You will also need to consider your tax liability. You’ll need to pay tax on the money you earn – and in some parts of the country people who rent out a house for more than a month a year have to pay a bed tax. You’ll also be able to deduct some expenses.
If you’re likely to earn more than $60,000 you will have to register for GST.
Think about how you’ll manage things like giving visitors a key if you’re not going to be in the country, and how you’ll organise to have the property cleaned between guests.
Do you have any personal finance or consumer questions you would like answered? Email susan.edmunds@stuff.co.nz