Survey shows financial advice helps Kiwis manage their mortgage

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An independent survey of 2,000 New Zealanders has revealed that people who get professional financial advice show good financial behaviours more frequently than those who don’t.

No matter what they earn, Kiwis who get financial advice were shown to be more:

  • Confident about making major financial decisions
  • Positive about where they’re at financially
  • Prepared for retirement

Commissioned by Financial Advice New Zealand, the survey was independently designed and managed by CoreData Research, a global specialist in financial services research. Continuing a set of ‘wellbeing index’ questions from the previous year, the 2021 survey also looked at financial behaviours.

To do this, New Zealanders were asked about:

  • Their financial plans
  • What financial products they have
  • When they last reviewed them
  • Whether they made changes
  • If they thought the changes would make a long-term difference to their financial wellbeing

The resulting report is called ‘Better behaviours – research on the value of financial advice’. It looked at the differences financial advice makes to how people manage mortgages, budgeting and planning, KiwiSaver, insurance, investment and retirement planning. Across all areas, people receiving professional advice showed good financial behaviours more often.

Below we discuss some highlights from the mortgages section.

The benefits of financial advice on mortgages

Although there was roughly the same level of home ownership in each group of survey respondents (advised and unadvised), people who receive professional financial advice are more likely to actively manage their mortgage rather than leaving it on set-and-forget.

According to the survey, here’s the percentage of each group that use these important mortgage management strategies (advised vs unadvised):

  • Reviewing your mortgages each year – 86% vs 68%
  • Reviewing your loan structure when a fixed interest rate period ends – 76% vs 59%
  • Increasing mortgage repayments when your income rises – 61% vs 53%

The survey also dug a little deeper into each mortgage management strategy to compare what action people took or considered taking.

Actions taken after a mortgage review

Both groups of people, advised and unadvised, were asked to select the changes they made after reviewing their mortgage. People who receive professional advice are more likely to make changes and 90% of them expected the changes to save them money in the long term.

Here’s the breakdown for advised vs unadvised people’s actions after a mortgage review:

  • Increased the payment amount – 34% vs 31%
  • Changed the mix of fixed vs floating – 21% vs 17%
  • Paid off a lump sum against the mortgage loan – 24% vs 14%
  • Changed part or all to a flexi, revolving or offset mortgage – 18% vs 9%
  • Increased the amount of the mortgage loan – 18% vs 7%
  • Decreased the payment amount – 12% vs 7%
  • Changed banks – 9% vs 5%
  • Didn’t change anything – 16% vs 27%
  • Other – 2% vs 4%
Actions considered when a fixed interest rate period ends

The survey asked how likely people were to consider various actions when a one-year fixed interest rate was coming to an end. Here’s the percentage of each group, advised vs unadvised, who said they were likely or very likely to consider each action.

Whether to:

  • Fix for a different term – 73% vs 67%
  • Contribute more each payment – 72% vs 54%
  • Review the overall loan structure to reduce the mortgage more quickly – 76% vs 59%
  • Move providers based on interest rates – 52% vs 32%
  • Move to a floating type of mortgage – 38% vs 26%

Clearly, people who get professional financial advice consider more options when deciding what is best for their situation, even if that turns out to be making no change at all.

Action taken when income increased

When asked what they would most likely do if their income increased, the percentage of each group that would choose to increase their mortgage payment was similar across both groups (61% vs 53%).

However, in people less than 26 years old the difference was huge. In this age group 75% of people getting financial advice would choose to increase their payments, but only 20% of unadvised people would do the same.

Given the effect that increasing your repayments can have on your long-term wealth, this is another clear example of how professional mortgage advice can provide significant benefits.

How to get professional mortgage advice

Most mortgage advisers or brokers are paid a commission by the lender you choose to take out a mortgage with. That means their advice can be free, although it always pays to ask about any fees or charges before you sign up with an adviser.

Choosing a good mortgage broker/adviser can be a challenge, so to help you get started we’ve partnered with some of the very best. To find out more, see our page on how to find a mortgage broker.

To learn more

For more about using a mortgage broker, see our articles on:

For more about the full survey commissioned by Financial Advice New Zealand, see their report called:

DISCLAIMER: The information contained in this article is general in nature. While facts have been checked, the article does not constitute a financial advice service. The article is only intended to provide education about the New Zealand mortgages and home loans sector. Nothing in this article constitutes a recommendation that any strategy, loan type or mortgage-related service is suitable for any specific person. We cannot assess anything about your personal circumstances, your finances, or your goals and objectives, all of which are unique to you. Before making financial decisions, we highly recommend you seek professional advice from someone who is authorised to provide financial advice.

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