Buying Your First Home?Buying your first home can be extremely satisfying but also a stressful time.
As well as the excitement of getting into your own home there are a number of things that can cause a lot of stress. After all, for most people this will be the largest purchase that they have made.
Planning and sensible advice can make the process a lot easier.
What you need to know
The key questions you might have may include;
- How much deposit do I need?
- What will the repayments be?
- Which is the best lender?
- Should I use a Mortgage Adviser?
- What else do I need to know?
How much deposit do I need?
Deposit requirements vary between lenders and are based on criteria that can change over time. While most lenders say the ideal deposit is 20% of the purchase price there are lenders that lend with deposits as low as 10% and even sometimes lower.
Lenders will often require that at least some of the deposit must be a genuinely saved and can be demonstrated with a minimum of 3-months savings history in either a bank account or investment including KiwiSaver.
If you are a first home buyer and have been in KiwiSaver for at least 3 years you may be eligible to withdraw the money in your Kiwisaver (except for the $1,000 kickstart). You may also be eligible to access a Kiwisaver Homestart Grant which is available from Housing New Zealand. Previous home buyers may also be eligible to withdraw from their KiwiSaver and a Kiwisaver Homestart Grant but must first apply for approval.
In some cases you might qualify and benefit from the Welcome Home Loans package where you may be able to borrow up to 90% of the purchase price.
Another option could be the use of a guarantor who can offer security for the portion you need to borrow over 80% of the purchase price. Your guarantor should be close family and be in a strong financial position. They would need to seek independent legal advice before agreeing to act as a guarantor.
Your Mortgage Link Adviser can advise you on what you level of deposit you will need.
What will repayments be?
It is important to know what your repayments will be so you can ensure that you will not be putting yourself under too much financial pressure when you buy your first home.
Do not forget the other expenses associated with owing your own home, such as council rates, house insurance, life/mortgage repayment insurances, repairs and maintenance and body corporate fees.
It is also important that you plan for times when interest rates may increase, or if your income decreases e.g. you start a family.
Your Mortgage Link Mortgage Adviser can advise you on mortgage repayments and also show you how to pay off your mortgage faster.
Which is the best lender?
Everyone wants to know which is the best bank or lender and which one offers the lowest interest rates. The answer will vary for each individual situation and your Mortgage Adviser can advise you once they have a clear picture of your financial situation and requirements.
When comparing lenders you need to consider a lot of things including which lenders consistently have competitive interest rates, lower account fees and offer you the most suited loan structure. For first home buyers with a low deposit you will need to consider what additional costs the lender charges. This are referred to as Low Equity Fees or Low Equity Margins and these vary considerably.
Should I use a Mortgage Adviser?
To ensure that you are provided the best advice, you should use a Mortgage Adviser that has access to a range of banks and other lenders plus whom has the experience and knowledge to help you get the best mortgage and show you how to structure the mortgage so you can pay it off more quickly.
Good Mortgage Advisers are also able to help you through the whole process of buying your first home.
What else do I need to know?
Buying your first home can be stressful and you should work with your Mortgage Adviser to make sure you are able to make the process as easy as possible.
Get your mortgage pre-approved – your Mortgage Adviser can arrange this.
Research the property to avoid surprises – LIM reports, building reports and valuations can help.
Manage the risks – house insurance is a legal requirement with a mortgage, but Income or Mortgage Protection Cover is essential if you are reliant on your income to pay the mortgage.
Buying your first home is a big decision and you want to make sure you do it right.
Ask your Mortgage Link Adviser if in doubt. Most Mortgage Advisers have seen many people just like you and are used to dealing with the excitement and stress that often comes when buying your first home.