Buying your first home is a monumental life event – exciting! But for first time buyers, it can be a little overwhelming and even intimidating. There are a lot of things to do before you sign any papers or even go house hunting.
We have put together a list of our top 8 steps to help prepare you for buying your first home.
1. Revise your Budget
If you are serious about buying a house soon, you’ll want to consider revising your budget. When you apply for a pre-approval, your potential lender will want to see that you make responsible spending habits. Have a look at recent receipts and transactions. Are there areas you can reduce spending? Such as your weekly takeout meal, or daily coffee. Can you limit your online shopping? Where else can you reduce your expenses? Consider comparing your utility bills such as your broadband, power and mobile. You can make great savings just by comparing, and switching to a new provider. Tightening your budget, and reducing your spending habits will help you better save for your budget and increase your chances of a pre-approval. You can also use a mortgage calculator to help figure out how much you need to save, and how much you can afford to pay for your monthly loan repayments.
2. Save for your Deposit
With a revised budget, you may be able to save more money towards your deposit. Remember, a deposit is generally 20% of the property’s value. This can be a large sum of money, so if you can increase your weekly or monthly savings, you will be doing your future self a big favour! Another way to save for your deposit is to increase your Kiwisaver contributions. Your employer will match your contributions, so this is a great way to quickly meet your deposit goals. Be sure that you are in the right Kiwisaver fund. There are several types of funds available, and each of them work in different ways. Have a chat with our friends at National Capital to make sure that you are in the right Kiwisaver fund for your house buying goals.
3. Decide the Kind of House You’d Like
It’s helpful to go into the house hunting process knowing what kind of house you’d like. Consider you non-negotiables. Do you need 3 bedrooms? Do you want a standalone home? Consider the area you’d like to live in, and the types of amenities you want to be close to, such as grocery stores, gyms, cafes, and schools. Decide your negotiables. These may be things such as a shared driveway or the size of the garden. Figure out whether you are willing to put in money to renovate the property. Or would you prefer a house that doesn’t need any work done? Planning your requirements and preferences will help you narrow down your scope, and make the house hunting process more purposeful.
Things to Consider When Choosing the Right Location
4. Compare Home Loans
Before you apply for a pre-approved loan, make sure you do your research and compare the different home loans available on the market. A home loan is a huge financial investment and commitment, so you want to make sure you are making a fully informed choice, and the right choice for you and your goals. Money Compare’s user-friendly platform makes it easy to compare the different home loans on the market so you can find the best deal possible for your family.
5. Get in Touch with a Mortgage Advisor
A mortgage advisor/ broker can be a valuable resource. A qualified mortgage broker will have unique insight into the industry and market, and will be able to help navigate you through the often overwhelming process of applying for a loan, and putting in an offer. Here at Money Compare, we have experts on hand to help you through the process of buying your first home. Simply request a call back by clicking the button below and a fully qualified mortgage advisor will be in touch.
6. Apply for a Pre-Approval
A pre-approval is an important step in the house buying process. Getting pre-approved for a home loan gives you a ballpark figure for the amount of money you can borrow. This means you can view houses within your budget and plan accordingly.
7. Apply for a First Home Grant
If you are a first time buyer, you may be eligible for a First Home Grant. If you are eligible, you can receive up to $10,000 towards your first home deposit. The sum you can receive will depend on your income and the type of property you wish to purchase.
Check First Home Grant Eligibility
8. Time to House Hunt!
With your pre-approval figure handy, and your preferences and requirements planned, you are now ready to start viewing open homes. Be sure to reference your preferences and non-negotiables when viewing homes. Ask questions. And if you find a home you like, be sure to visit multiple times to make sure you are happy with the traffic, surrounding noise, light, and general atmosphere of the community.
Further Reading:
A Comprehensive Guide to Buying Your First Home in New Zealand
