There will be a lot of Kiwi’s wanting to get onto the property ladder this year – are you one of them?
Do you plan to buy your first home in 2018?
Getting On The Property Ladder
We hear all the time how hard it is to buy your first home and of course it is not easy.
Buying a home is a big decision and commitment.
In many cases this will be the biggest purchase that you have ever made, and with that comes the biggest debt that you’ve ever had too.
Buy it’s the Kiwi dream to own your own home and something that many of us strive to do.
So how do you get started?
Big Decisions… Getting Started
The first of the big decisions is to make sure that you are ready for the commitment – both buying a long-term asset and the commitment of the dreaded mortgage.
But there are a lot of things to consider and everyone is different, so will have different thoughts.
Where to buy – of course a first home is normally purchased within a budget and that means buying a house that you can afford rather than your dream home. Your budget will often dictate the type of house but also the suburb.
How much to pay – this may also be dictated by what you can afford. The key here is to work out what you feel comfortable paying, not just relying on what the bank say you can afford. Sometimes the banks will lend you a lot more than you are comfortable with paying, and other times it’s the opposite – the banks say you can only borrow a certain level yet you know you can afford a lot more. Remember that banks criteria is all different so what one bank says you can borrow might be quite different to another bank. A mortgage broker can help you with this.
Which bank? – most people by default go to their own bank first; however this is not always a good decision. As mentioned above the banks are all different and while the money is the same, the cost of the money and ability to borrow can be different.
Buying an existing home or new – in most cases buying an existing home is more affordable as the house already has everything established; however buying new is worth considering. When you buy a house and land package or a recently finished new home there are a few advantages. For starters the finance criteria is different and that means you can buy with a lower deposit. Other advantages in buying new is that they are more efficient (less heating costs etc) and you should have a number of years before you have any significant maintenance bills. New homes are also quite nice to live in.
There are a lot more decisions to make when you are buying your first home, but this should get you thinking.
Take Time Getting The Right Loan
Buying your first home and getting the finance may seem the hard part, but what many people seem to overlook is the years ahead of paying the mortgage.
A mortgage is a large financial commitment and therefore you should spend some time to make sure that you get it right.
Unfortunately many people just take what they are offered by their banks, and it’s not until they have wasted a few years that they decide to seek advice on how to best structure things.
The loan structure is the most important thing as a good structured home loan will allow you to pay it off faster which can save you huge amounts. You also want to ensure that it’s you, not the bank that ultimately have control over the loans.
Remember that banks are there to make money for their shareholders, and that does not always mean they will be encouraging you to pay of your home loan faster and doing the bank out of those profits – it almost certainly will not be about lower bank profits!