How to buy my first home?
Buying your first home is such an exciting time, it can also be extremely overwhelming, I want to share with you 4 tips to help you feel calm and confident throughout the process.
Where do you even begin?
Step #1 Research the type of house you want to buy. How many bedrooms? Bathrooms? Do you want to renovate, DIY or not? Where do you want your kids to go to school? All these questions lead to how much do you need to purchase the property you are after. This will then determine the deposit you need.
What is the deposit you need? 20% - yes you can have a 10% but the bank is going to want more details and there are going to be more hoops for you to jump through.
Pro tip, don’t wait for pre approval start going to open homes and talking to the real estate agents about what they think about the market, properties that are coming up and if they have recommendations on mortgage advisers in the area.
Step #2. Talk to a mortgage broker
Not sure who to talk to? Ask friends or family for recommendations.
Give them a call and have a chat see if they share the same values as you, you are going to be working alongside them? You need to feel comfortable being able to ask them all kinds of questions and know they are going to guide you through the process.
This is where understanding your personality is key, how do you want to be supported through this process.
Your mortgage broker job is to tell the bank a story about you so they come back with a big YES, so you want to make sure that your broker can do this and that they understand you and your situation.
A Pro tip, a good mortgage broker is going to give you tips on how to set up your application for success.
Step #3. You want the bank to say Yes to your application and one easy way of doing that is having a clear banking structure.
a. Show clearly what is going where and why
b. Know what is coming in
c. Ensure you have a Surplus – a mortgage broker can run through a quick calculation with you to make sure it is serviceable and if it isn’t they will share tips on how to improve your application.
Step #4. Create a strategy – Know what the banks are looking for before you get started.
a. Research may tell you that banks will give you a loan is 6x your annual income, however banks actually take a more conservative approach at 4 or 5 x your income. This is your Debt to income ratio.
b. You need to have a surplus on your serviceability calculator - this is where your deposit plays a part. If you have less than 20% then the banks will want to see more surplus compared to a 20% deposit.
c. Cancel and close any buy now pay later accounts - banks really don’t like these.
d. The bank will take the limit of your credit card not the balance so if you have a limit of $10k and a balance of $1k the bank is going to take that debt of $10k.
Knowledge is power when entering into the exciting chapter of buying your first home, you want the process to be enjoyable.
If you are stuck at tip number 1 in regard to your deposit and you would like to boost your savings there are a number of strategies around this depending on your timeframe.
A key one is you can access your KiwiSaver for your first home purchase – review the type of fund you are in now to make sure it is in alignment with you. Need help? Send me a message
There are also other investment options available to you. This is a great opportunity to discuss your options with a Financial Adviser – Here at FoxPlan and The Healthy Wallet Project we can help you. Contact me and schedule in a non obligation free chat today.
If you would like to work with me to achieve your goal of home ownership, The Healthy Wallet Project is a 6 week cashflow confidence program where we go deeper into the six important steps and you will walk away with a clearer understanding of what it is you want to achieve, and with a cashflow plan in alignment with the life you want to create.
Schedule in a call today - I would love to help you set up your financial foundations for success.
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