What support is out there for first-home buyers
How to strengthen your borrowing power
Other good things to know
How we got into our first home - one young Auckland couple shares their story
We started with a mortgage broker and we had so many questions that our first meeting was two or three hours. We also took some time reading up online and any brochures we were given. We needed to learn, for example, what a LIM report was, the different types of property you can buy (leasehold, free-hold, cross lease) and why it was important to get a builders report.
Myron loved it straight away. I needed a little convincing... it needed a lot of love! The thing that got me over the line was the location – it was opposite a reserve and walking distance to a marina. I felt it was a nice place to raise a family and it felt right in my gut. The other thing that we really liked about it was that it was free-hold so we would own the land and we could even subdivide if we liked.
- Don't rush the process.
- Be careful not to be attracted to a place that has been recently renovated; sometimes vendors do them up as cheap as possible to look appealing.
- Do your best to see past something that is run down, and call on friends or family that are builders to take along to a property if you really like it.
- Don't get your heart too set on any one property, more often than not there will be lots of other buyers who would also love to own it. Go in with a mindset of "It would be great if we could get this house, but not the end of the world if we don't." There will always be another house that will suit your needs.
- When buying a house think about what the maximum amount is that you'd be willing to spend on it. That way you can decide on a good number to offer and allow some wriggle room to negotiate if you can.
- The majority of people interested in our house were investors. We knew this house was a family home and we wanted to let the owners know a little about us so we wrote a handwritten letter to them which we asked the agent to present with our offer. The letter thanked them for opening up their house and it also gave them a little insight about who we were (small, young family looking for their first home). So, for those of you looking for your first home sometimes it's those simple touches that can make the difference and make you stand out!
And last but not least - how to pay off that mortgage faster
If your repayments are $973, for example, round them up to $1000 – every dollar counts towards reducing that debt faster.
If your monthly repayments are $1000, over the course of 12 months you'll pay $12,000. But if your repayments are $500 per fortnight, over the course of the year you'll pay 26 x $500, which is $13,000.
If you come into some money or build up extra savings in your rainy day account, put it on your mortgage. It's always better to service debt first because you're likely to be paying a higher interest rate on your mortgage than you'd receive in interest from savings. But ask your bank how much you can pay off as a lump sum before you're charged a penalty fee. Different banks have different criteria for how much extra you can put down per annum before incurring penalty fees.
This can be done at BNZ or Kiwibank. Say you have a home loan of $200,000 and you also have savings accounts and they're worth a total of $10,000. You can offset the savings accounts against your home loan to reduce the amount of interest you pay on the loan - so instead of paying interest on $200,000 you only pay interest on $190,000.