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Award measures value to first home buyers

Award measures value to first home buyers

CANSTAR CANNEX releases inaugural First Home Buyer award today.

CANSTAR CANNEX today released its inaugural First Home Buyer award after a comprehensive study of 10 lenders that market 40 home loans between them. In the CANSTAR CANNEX research these lenders were rated not only according to the loans they offer but also targeted services that address the special needs of first home buyers in today’s challenging environment.

Affordability is a perennial problem for New Zealanders trying to get a foot on a rung of the property ladder for the first time. While it is a very real issue for first home buyers, the affordability obstacle can be overcome by following a structured process leading up to that all-important purchase.

That’s where financial institutions should step in to educate first home buyers about how they should be preparing themselves, setting savings goals and offering savings vehicles that provide incentive towards the end goal of home ownership, according to CANSTAR CANNEX.

“We couldn’t go past Kiwibank in awarding our First Home Buyer honours for outstanding service in this area of specialised lending,” CANSTAR CANNEX New Zealand National Manager Derek Bonnar said.

“While all banks provide a variety of services that assist New Zealanders buying their own homes, Kiwibank offers the best range of educational support, calculators and product features that narrow the deposit gap. The flexibility of Kiwibank’s loans stood out and the bank offers home loan specialists across the North and South islands.”

“This is quite a coup for a bank that doesn’t have dedicated branches as such, basing itself instead in post offices across the country,” Mr Bonnar said.

“We were impressed with the ease of access to the fleet of mobile lending specialists Kiwibank provides. When the time comes for the first home buyer to take the plunge, obtaining a home loan online is often not for the novice.”

“There’s no substitute for a real person, such as Kiwibank’s home loan specialists to walk them through the maze, give advice and make the steps straightforward,” Mr Bonnar said.

CANSTAR CANNEX congratulates Kiwibank for the excellent job it is doing for New Zealand’s first home buyers and hopes this award spurs lenders on to create more innovative measures to benefit this market.

According to Mr Bonnar, there are 5 key steps prospective first home owners should take when aiming to buy their first property.

1. Planning
Setting a savings goal for a few years in advance is a must. Do a budget and work out what you can afford to save. After all, there’s no point setting your heart on a mansion if you can only afford a cottage. As a general guide, your mortgage repayments should not exceed 30% of your before-tax income. Keep in mind, any existing debt will reduce the amount you can borrow for a home. A deposit is just one cost associated with buying a house. Others include loan application fee, legal costs, insurance, and inspection fees. See a lender for a preliminary discussion on estimated costs and what size loan you can afford.

2. Homework
Decide on a plan of action. Do you intend to buy or build? Are you after a house, townhouse or unit? The state of the market can vary greatly between suburbs and property types so it is vital to know how much money you can afford to spend before wasting your time looking around in the wrong suburbs. Short list the area you are interested in, then shop around for the best lender. Obtaining pre-approval is wise in a competitive market. Often there are multiple offers for properties and sellers always go with a pre-approved offer. Pre-approval costs nothing and most lenders offer this service even before you begin your search. It is also wise to search out a solicitor or conveyancing firm to handle the legal documentation when you buy.

3. Buying a house
There are two main ways to buy a house or unit – private treaty or auction. At a private treaty you negotiate the purchase of the house, including the price, directly with the seller or more usually, a real estate agent representing the seller. It is a good idea to be aware of the prices being paid in the area and always remember that the seller’s agent is acting only for the seller. Be aware that after you have signed the contract, you normally have a cooling-off period. An auction, on the other hand, can be quite scary so it’s worth attending some auctions beforehand to get an idea of how they work. Make sure you have your lawyer look over the contract of sale before the auction and don’t get carried away at the auction. Set your absolute limit and stick to it. There are plenty of other properties if you miss out. If you are successful, you will need a cheque (personal or bank) to cover the 5 to 10% deposit required on the day.
4. Pre-settlement
This is the time for building, inspections. Check compliance of the property with local council by-laws, especially extensions. Check that chattels such as curtains and other items not wired in are included in the contract. If they are not, you probably will not get them. Finally, know the terms of the settlement such as when you have to pay the balance of monies and take possession.

Post-settlement
When you finally buy your perfect home, kick back and enjoy it. This purchase, no doubt, is an important and expensive one. From now on, the biggest and most obvious change will be in your finances. You may want to direct any excess funds into your home loan account instead of a savings account, to pay the mortgage down faster. Don’t forget the date your home loan is due every month. Better still, divide the amount in half and pay it fortnightly to save in interest over time.

Consumers can download the CANSTAR CANNEX first home buyer report and methodology on www.canstar.co.nz

ENDS

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