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Top Tips For First Home Buyers

Author: Jamie Quinn
Buying your first home is an exciting yet daunting journey. In New Zealand's dynamic property market, being well-prepared can make all the difference. This guide provides essential tips to help first home buyers navigate the process with confidence, from setting goals to understanding the support available from the government.

Setting Realistic Goals

Setting realistic goals is the foundation of a successful home buying process. Start by assessing your financial situation comprehensively. This includes understanding your current income, savings, and existing debts. Use these figures to set a realistic budget for your home purchase. It’s also important to consider your future needs, like family planning or career changes, which might influence the size and location of your home. Research the housing market to get an idea of what kind of properties fall within your budget. Remember, your first home doesn’t have to be your forever home; it’s more important that it’s an affordable stepping stone into the property market.

Building Your Dream Team

dream home 1

A strong support network is essential for navigating the real estate landscape. Your dream team should include the following:

Real Estate Agent:

Choose someone with a good track record who comes highly recommended. They should have extensive knowledge of the areas you’re interested in.

Mortgage Broker:

A broker can offer you a range of mortgage options tailored to your financial situation that you might not find on your own.

Lawyer:

A legal expert will handle all contractual aspects of the home buying process, ensuring that your interests are protected.

Building Inspector:

This often-overlooked professional can assess potential homes for structural problems and other issues that could cost you in the long run.

Financial Advisor:

If you're unsure about your budgeting or how a home purchase fits into your overall financial plan, a financial advisor can be invaluable.

Getting Mortgage-Ready

mortgage ready

Preparing for a mortgage is a critical step toward buying your first home. This phase not only determines your eligibility for a loan but also impacts the terms and rates you'll receive. Here's how you can get mortgage-ready:

Saving for a Down Payment:

The size of your down payment significantly affects the terms of your mortgage. In general, a larger down payment means a lower interest rate and cheaper mortgage insurance costs. If possible, aim to save at least 20% of the home’s purchase price.

Understanding Mortgage Options:

There are several types of mortgage products available, and choosing the right one can have a big impact on your finances in the long run. The two most common types are fixed-rate mortgages and adjustable-rate mortgages (ARMs). A fixed-rate mortgage locks your interest rate for the life of the loan, which provides stability in your monthly payments. An ARM might offer a lower initial rate, but the interest can vary over time, which might increase your payments unexpectedly. Weigh the pros and cons based on your financial stability and how long you plan to stay in your home.

Learning Mortgage Terms and Conditions:

It's crucial to understand all the terms and conditions associated with your mortgage. Know about any potential penalties for early repayment, which can affect you if you decide to refinance or sell your home.

Getting Pre-Approved:

Once you feel ready, seek pre-approval for a mortgage. This involves a lender examining your financial background and credit rating to determine how much they would be willing to lend you. A pre-approval not only gives you an idea of your budget but also strengthens your position when making an offer on a house, showing sellers that you are a serious and capable buyer.

Government Support for First Home Buyers

Take advantage of government schemes designed to help first home buyers:

First Home Grant:

If you have been contributing to your KiwiSaver for 3-5 years, you might be eligible for a grant of up to $10,000 for buying an existing home or up to $20,000 for a new home.

First Home Loan:

This program allows qualified buyers to obtain a mortgage with only a 5% deposit under special terms.

KiwiSaver First-Home Withdrawal:

This allows you to withdraw some of your KiwiSaver balance to purchase your first home.

Understanding and utilising these aids can significantly reduce the financial strain of purchasing your first property.

Don't Be Afraid to Compromise

While it’s natural to have a wish list for your first home, flexibility is key. Prioritise your needs over your wants. For example, a shorter commute may trump a larger kitchen, or an extra bedroom might be more critical than a large backyard. Consider different types of properties and locations, as being open to compromise can sometimes lead to better opportunities that fit your budget and long-term goals.

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