Purchasing your First Home

31 July 2015

First home buyers are amongst the most active home buyers at present.  Here are a few tips to help you prepare yourself to be in the best position to secure finance

Be Realistic on your purchase price

Many first home buyers are looking to purchase a house that is their dream home.  The novelty of a new home can wear off quickly and  if there is a substantial mortgage to be paid the dream home can become a financial nightmare.  We recommend identifying your plans/goals short and mid term (2 – 5 years).  If your plan is to have children within the next year then you know you’ll have to accommodate a lesser income for at least a certain period of time and an increase in living expenses.  This can affect the level of purchase price that you should go to.

Keep external debts to a minimum

Lenders are very focussed on good account conduct for first home buyers.  They look at the external level of debt – how much is it, what are the repayments, how long has it got left to go and most importantly – what was the repayment conduct like.  Clear debt as quickly as you can and keep a record of your repayment history to show how well you operated that account.  If your repayment record is not so good we suggest tidying it up so that when you’re ready to purchase a new home you can at least show that your recent history was satisfactory.

Keep your credit report clean

Lenders will always do a credit check through Veda (previously Baycorp) to establish if there are any adverse items on the credit check.  Keep your credit clean ie pay your bills on time.  If you have a disputed item with a creditor make sure you keep a written record including correspondence between the parties or evidence of payments.

Save your deposit – consider Kiwisaver

Lenders like to see that you have saved a deposit.  Kiwisaver offers a great opportunity as those contributing to it for longer than 3 years can withdraw their and their employers’ contributions to put towards the purchase of a first home.  Lenders will consider this as having saved for your deposit.  You can also apply for a grant from Housing NZ called “Homestart” (previously  First Home Buyer’s Subsidy) which allows an advance of $1,000 for every year that you have been contributing to Kiwisaver up to $5,000 per person.  So if you are a couple you could get up to $10,000.  

If you are considering purchasing your first home always the best place to start is a talk with a Mortgage Adviser/Broker.  They are able to assess your current situation and identify your options. They can guide you through the whole process and manage your loan even after it has settled.  And best of all – they are free for this service.    

 

Published In Whakatane Beacon

This post was written by

Trish Marsden - who has written 96 posts

Comment on this post