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First home buyers urged to get their house in order

23 June 2017

First home buyers urged to get their house in order

With reports of house prices plateauing in some areas, including Auckland, could the moment first home buyers have been waiting for arrived?

Trying to get a foot on the housing ladder can be an overwhelming experience. Apart from the prospect of parting with your life savings and taking on what can feel like a mountain of debt, your world becomes littered with acronyms such as LVR, DTI, QV, CV and LIM.

Jose George, general manager of Canstar explains:

“News of prices levelling out, and even falling in some places, is obviously good news for those who have struggled to get on the housing ladder, but it’s important that buyers make sure they are properly prepared before they try and enter the market.

“The obvious place for people to start is looking is at mortgage providers, the rates they offer and the services they provide. It’s worth putting the time and effort into familiarising yourself with terminology as well as researching current lending rates as getting the best deal can save thousands of dollars in the long run.”

According to Canstar’s online comparison tables, the difference between the highest and lowest advertised 2 year fixed rate (80% LVR) home loan for first home buyers is .70%. In dollar terms this could mean paying an extra $142 per month if servicing a $350,000 loan over a 25 year period.

George goes on to say:

“Rates are obviously very important but first home buyers should also look at what help is on offer. There is a lot of support being offered by home loan providers and our advice is to take whatever you can get.

“The process of buying your first home is exciting but also usually a huge learning curve that can be a bit of a bumpy ride in places. Getting the right advice and support at the right time can make a world of difference and save you stress and money in the long term.”

Things to think about

You don’t know what you don’t know, right? As well as thinking about mortgage rates and repayments, first home buyers are faced with unfamiliar legal and financial paperwork as well as building and local council reports and surveys. It can be mind boggling and more than a little daunting the list below covers the basics:

Gather evidence of income and outgoings. Lenders can offer a lot more support and in some cases, a better deal if they have a clear picture of your financial position. If you plan to utilise your KiwiSaver, you will need to provide statements for that too.

Know your budget. This might sound like an obvious one but it’s easy to use an online calculator and get carried away about what you can afford. You might not be paying rent in the future, but on top of your mortgage repayments, you will need to pay for utilities and insurance. Day-to day costs like food and travel also need to be included.

Research the market and the area where you are looking for a property. Is the area at risk of flooding? Is there future development planned in the area? Commute to work? Schools? Shops? All things you need to think about….and more.

Do your homework on the house. If you find a property you are interested in you need to conduct a thorough program of research. This should include (but not be limited to) title searches and builders reports, you don’t want to spend all of hard earned cash buying someone else’s problem.

You’ll need legal representation. Usually not until you sign contracts but it an expense to in mind.

The top rated provider

Canstar recently evaluated the price, costs and features of 40 products across seven providers. For the seventh year running, Canstar are delighted to announce Kiwibank as the first home buyers Bank of the Year, 2017.

Accepting the award, Kiwibank Group Marketing Manager, Mark Wilkshire said:

“This is recognition of the huge commitment Kiwibank have to first home buyers.

“We get to know our customers and support them every step of the way through face to face and online assistance and education. Our customers should walk away from the process knowing exactly what they’re getting into and how much it is going to cost.”


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