First Home Buyers – Stepping onto the Property Ladder 

Doing anything for the first time often creates a certain amount of anxiety – even fear. Few things more so than the decision to step onto the property ladder and buy your first home. You’ve stuck pictures on your vision board, followed all your favourite interior design Instagram influencers and dreamed about the day you’ll own your own home. But the decision to commit to your biggest financial outlay to date needs to be carefully planned to ensure that the entire process runs smooth. Think of it as a goal you’re working towards that needs a professional project manager to keep everything on track. You’re heading for the ultimate prize – a new address and your name on the title.

It’s All About the Groundwork

Before you set foot in an open home, or scroll the Trade Me ads or call your friendly real estate agent to ask about the market, your first port of call needs to be a Fundmaster mortgage broker to ascertain the most important element of all: How much can I afford to spend? The answer will dictate the location and type of home you buy and even whether you can afford to buy right now.

Saving Tips that Get you there Faster

So, starting with the dollars and cents you are realistically able to spend is critical. For example, lower-quartile house prices in Auckland in July 2019 were about $650,000, so if you want a 20 per cent deposit, you’ll need $130,000. That’s a daunting amount of money so having a savings plan to build up a nest egg for your deposit is key. Some ideas to get you on track are:

• Have a savings plan where you are setting money aside each week from your pay packet. This will develop good budgeting habits and “ring-fence” your money for future property investment. Try putting it in a separate bank account and even use a different bank to impose some blocks on yourself to accessing it so it accumulates untouched.
• Look into ways in which you can increase earnings – have you got a “side-hustle” that will bring you some secondary income? Babysitting, home cleaning, party plan selling, making home baked goods for the local deli, anything that can yield some extra cash to be stashed in your home deposit account will help.
• Cut back on the luxuries that you absolutely do not need. A gym membership can be replaced with a home-based workout; make coffee at home and take it on the train in your keep-cup rather than stopping at the café as you drive to work and pay to park. It seems like “nickels and dimes” but these all add up and the reduction in spending makes your bank account cashflow look good too.

Your Fundmaster mortgage broker will be able to assist you with down-payment planning so that you have a goal to work towards and can begin getting your ducks in a row to acquire that dreamed-for first home.

Crunching the Numbers

A Fundmaster mortgage broker will meet with you at this initial stage and go through your complete finances, discussing your budget and what your loan obligations are going to be. Our handy calculation tool will give you a good indication of your repayments. It’s a valuable snapshot of what to expect from a range of different scenarios. Some of the factors your broker will need to know to make your application look as attractive as possible are:

• Do you have a KiwiSaver savings account and what are the total funds and eligibility of the applicants for the loan?
• What is your eligibility for a KiwiSaver Home Start Grant through Housing New Zealand?
• Are you receiving financial assistance from family members – the “Bank of Mum and Dad” - and if so, how much are they putting in?
• What savings do you have and how are you setting regular funds aside?
• What other material assets do you own?

Next Steps

At this point your Fundmaster mortgage broker will collate this information - your income, liabilities, expenses, amount of deposit, and prepare an application to connect you with the lender that’s right for you. This is the time to be aware of any hidden costs and additional funds you will need at the time of purchase and conveyancing. These could include all or most of the following:

• Legal fees
• Pre-purchase building inspection fees
• Pre-purchase registered valuation costs, if required
• Insurance premiums – for both the dwelling and if applicable, mortgage protection insurance
• Council rates obligations
• Furniture removal costs

Not in a Position to Buy just Yet?

Whether you’re doing this exercise with your Fundmaster broker or on your own tapping the details into our online calculator you may discover that you’re not yet in a financial position to purchase your first home. Remember that if you have been declined by a bank for a loan in the past this must be declared in subsequent applications. A past rejection could impact on the outcome of your application. But by using a broker from the get-go you’ll be able to apply for a mortgage knowing that you are presenting the best possible case to secure the funds.

Thinking of buying you first home? Talk to a Fundmaster mortgage broker today and let us help you take the first step on your exciting journey toward home ownership.