Tips For Buying Your First Home
Buying your first home can be a scary experience. House prices in New Zealand are notoriously high, and it can seem impossible to manage. But owning your own home doesn’t have to be a pipe dream: here are some tips on preparing yourself for your first home:
Get Preapproval
A preapproval will let you know how much the bank will lend you and what the additional costs and conditions will be. With a suitable deposit you can obtain preapproval online or over the phone.
Write a Budget
The banks will approve you for a much larger mortgage than you can actually manage. Use a mortgage calculator to work out your repayments and create a household budget. Remember to plan in events like planning a wedding or starting a family.
Work out your repayments on a higher interest rate – 8% – to cover interest rate increases. If you pay even $50 extra per week on your mortgage, you’ll own your home sooner. Don’t sign on to a mortgage that’s more than you can handle.
Watch out for Low Equity Fees
If you’re borrowing more than 80% of your home’s value, you’ll probably encounter a low-equity fee. If you’re borrowing 95%, the Low Equity fee for a $400,000 home could be well over $10,000. The banks won’t tell you about these fees, so it pays to talk to a mortgage broker and research carefully before committing to a low equity loan.
Put in lots of offers
While house prices may seem scary, there’s scope for negotiation and plenty of bargains to be had. If all that’s turning you off a property is the price, name your offer, because you just never know what the seller will be happy to settle for.