Buying a home is a dream of many Kiwis. It always has been, and always will be – even if it is perceived that it is now more difficult than ever.
With the fact that this is a large step for anyone, there is no such thing as being too careful.
Where do I start?
When you are looking at purchasing a home, there are key components you should have to ensure you are prepared appropriately.
- A cash deposit. For the most part this is a 20% minimum deposit requirement. Some clients can have above 80% lending, but this is usually more expensive by way of bank fees or rate margins, and not everyone will be eligible for this. If this is your only way forward, it is definitely worth seeing if this is an option for you.
- A steady and reliable source of income. If you are salaried this is at least 3 months in a role (or a role without a probationary period), and for self-employed clients this is 2 years of financial statements.
- Further cash available for unexpected costs that arise.
For the most part, number 1 and 2 will assist you in getting bank approval, assuming everything else is on track (e.g. clean account history, and stability in employment/living situation – all of which then will relate to what is referred to as ‘Character’ by a bank). Number 3 will assist in ensuring you have prepared for the worst, and is a means of caution amongst unchartered territory known as your first mortgage.
How does our government help?
Changes in mid-late 2016 to the Kiwisaver HomeStart Scheme meant that it was made easier to attain an owner occupied property, these are split by property type, region, and income threshold.
- If the property is existing, the scheme offers up to $10k
- If it is a new-build, the scheme offers up to $20k.
- Price caps in Auckland have increased to $600k for existing homes and $650k for new homes.
- In Wellington, Christchurch, Hamilton, Tauranga, Queenstown and Nelson-Tasman, this has gone to $500k and $550k for existing and new respectively.
- The rest of the country would be $400k and $450k for existing and new respectively.
- The income thresholds have increased to $85k for a single applicant and $130k for a couple.
While in the Auckland market historically the difficulty has been meeting the deposit requirement whilst saving and chasing house prices, it is evident that the combination of the above additional grants and also the fact that it seems the Auckland market has levelled off temporarily, that this dream could become a reality for more Kiwis.
How can we help?
The next step is assessing borrowing capacity, by way of applying for loan approval. Once you have crossed this step, you are then in a position to start hunting for your first home!
Being a first-home buyer can be stressful and confusing, but we can definitely assist in making the process simpler, that way you can spend your time on things more worthwhile, like finding the perfect home!
Click here to download our FREE ebook giving more detailed advice for First Home Buyers.