There is no doubt about it, the process of buying a home has changed markedly since your parents were investing in property.
With prices skyrocketing and lenders being more reluctant to approve mortgages, you want to do everything you can to improve your chances of buying a home.
So, what are the all important things you should be focusing on to help you on your way to home ownership?
They are, maintaining a good financial health, having a deposit or financial backing, and utilising the expertise of a mortgage broker to give you the best chance of securing finance.
Let’s look into those three points in more detail.
Maintain Good Financial Health
When you are wanting to borrow money, the first thing any lender will look at is your financial health. They obviously want to know if you are going to be a sound investment.
That means they will check many aspects of your financials. Any loan history will play a major part in their decision. Banks want to know if you have kept up with payments on other debts.
Every time you pay your bills late or miss a repayment date, it is a little black mark against your name. If you clock up too many of those black marks, then it could prevent you from getting a mortgage.
The other major thing they will check is how much other debt you have. They want to ensure that you will be able to meet the repayments on your mortgage. You will not be able to do that if your funds are tied up in paying off other debts.
Also be mindful of what you spend your money on. Too much frivolous spending will deter banks from wanting to lend you money. Again they will be worried about your ability to service the loan.
A Deposit Or Financial Backing
You know as well as I do that no bank will lend you 100% of the funds you need to buy a home. So, you are going to need either a deposit or some financial backing.
Don’t panic! Many people assume that they still need a 20% deposit to get into a home. But you don’t. Depending on the circumstances, you can get approval of up to 95% lending.
There are certain criteria that apply to obtain this level of lending, but it can be done. Especially if you are buying or building a brand new home.
If you have access to your own KiwiSaver funds, then you have already made a start on your deposit. I often find that in the Auckland market, if two working professionals have KiwiSaver funds then they will generally have enough to get into their first home.
The thing about a first home is that it doesn’t have to be a castle. To get onto the property ladder, you may have to lower your expectations or move suburbs to get a cheaper property. Once you have a property it is so much easier to then upgrade and get where you want to be.
If you are in the position of wanting to upgrade to a bigger home, then the banks will ascertain what your property is worth and what equity you would have in today’s market. They would then assess if you have got any other debts and what your family situation is - ie. how many kids you have and if you will decide to have more. All of these factors go into determining what the next level of borrowing will be and the type of house you can afford. The last thing you want to do is overload yourself with debt
Use A Mortgage Broker
When it comes to obtaining a mortgage, there are so many options - there are 5 main banks and countless other lenders. Imagine the time it would take for you to ring them all to find out if they would lend you the money for your home.
Plus, how would you know what questions to ask to get the kind of mortgage structure that will suit your individual situation?
That is why it is best to utilise the knowledge and expertise of a mortgage broker like myself. Not only do I have a strong relationship with all of the major lenders, but I know what offers are out there in the market to get the right kind of loan structure for you.
I can get you the best interest rate available, so whether you are trying to buy your first home, upgrade your current home, or simply refix your current mortgage, then I can help.
Give me a call for any mortgage broking requirements.