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Home Loan Advice

The buyers guide to your first mortgage

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Purchasing your first home requires careful planning and for most of us, a major budget adjustment.

 
By following the steps below, this will help you prepare for your first mortgage application, and can also help you maximise your lending potential.
 

Your Deposit – we can help you with a low deposit

As a first home buyer if you have a good income, we can help you with as little as a 5% deposit. In most cases you may already have this sitting in your KiwiSaver. If you started late with KiwiSaver and don’t have much in it, nor do you have much in way of savings, then there may be other options available to you.
 

Ask at the ‘bank of Mum and Dad’

Have you considered going to the ‘bank of Mum and Dad’? At Rethink, we work with many first home buyers who after talking with us, get a helping hand from their parents by way of a family gift. Your parents may have lots of equity in their home that they are happy to borrow against and gift you to help you get in to your first home. In many cases $50,000 is all it takes. If they would rather act as a guarantor for a portion of your deposit, then this can be an option too. This is where it’s important to have a good mortgage broker on you’re side.
 

Knuckle down and save with a realistic budget

If none of the above are options for you, then you know what you have to do – it’s time to be a grown up and knuckle down, create a clearly defined, realistic budget, and stick to it. Set yourself a savings goal and challenge yourself. A good option is to put these savings into your KiwiSaver account to turbo charge your KiwiSaver balance, after all it’s this balance that will be withdrawn later on towards your first home deposit.

TOP TIP – The more you can save towards your deposit, the less you will have to pay back to the lender in interest long-term, and the faster you will be able to pay down your home loan. When you become a client of Rethink’s, you become one of the family, we work with you long term, implement financial goals and how we can help you achieve these. If paying down your mortgage fast is one of your goals, we can help you implement a mortgage reduction plan, which on average gets you mortgage free 16 years earlier and saves you $329,000 in interest being paid to the bank.
 

Government and KiwiSaver assistance

If you’re a KiwiSaver member and have been making regular contributions for at least three years, you could be eligible for a Home Start Grant. The Home Start Grant is administered by Housing New Zealand and can provide up to $10,000 towards your first home deposit. If you’re borrowing with your partner or a friend, you can combine your first home buyer grants, which means you could receive up to $20,000 – that’s a good start towards your deposit.
 
You may also be able to withdraw money in your KiwiSaver account to help buy your first home with a KiwiSaver savings withdrawal – you can withdraw all of the KiwiSaver balance except for $1,000.
 

Don’t Shop Around

When you think you’ve got enough of a deposit together, don’t go applying for a mortgage with every bank you can think of because you trying to get the best mortgage interest rate. The reason why this is a bad idea is because each bank will do a credit check on you – the more searches you have in a small period of time will start to have a detrimental effect on your credit score. This can then lead to banks declining your application and you’ll likely find that a lender will not assess your mortgage application again for another 3-6 months. This is why it’s important to work with a good mortgage broker. We can assess your mortgage application on it’s merits and know exactly which bank it is best suited to. As mortgage brokers, we are independent, we don’t work for the bank, we work for you.
 

The Right Mortgage Advice

Wherever you are in your journey to home ownership, it’s important that you speak to an experienced mortgage broker as we have access to the whole market, not just the products your own bank will offer you. Getting expert mortgage advice is key to making the mortgage application process as smooth as possible. A good mortgage broker can help you figure out how much you can borrow for your first home, as well as help you with your KiwiSaver first home withdrawal application and Government entitlements. A good mortgage broker will review your home loan annually to keep you on track and smashing those financial goals.
 
This article contains general information and does not take into account your individual requirements. Please seek advice from a professional mortgage broker for a free personalised consultation.

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