Every journey begins with the first steps and the good news is your mortgage adviser will be able to ensure that you know how and when to take those steps!
As a mortgage adviser, my passion is helping first home buyers!
Getting ready to become a first home buyer is important. There is quite a few boxes to tick before you are able to get your first home loan approved.
What Banks look for from First Home Buyers
Deposits – most banks would prefer you to have a 20% deposit to buy your first home, however, the good news is that a good mortgage adviser will often be able to source mortgages for people who have less deposit than this.
Also, if you qualify, you may be eligible under the First Home Loan Scheme. Included in this scheme is the First Home Grant which may mean you can qualify for FREE money. For a couple, this means: up to $10,000 for an existing home and $20,000 for a new home!
Your deposit can be made up of, your KiwiSaver funds, (all apart from $1,000), the first home grant, cash savings, family assistance by way of a gift.
Income – the lender needs to be comfortable that you can afford the mortgage repayments.
- They consider your income and look at:
How long have you been with your employer? TIP: don’t change your industry if you are looking to purchase in the next 12 months!
- How long you have been in the same industry?
- Do you have a stable history of employment?
- Repayments are calculated at a much higher rate than the market rate to ensure that if rates increase you can still afford your mortgage payments.
- You can sometimes use the income from a flatmate or boarder.
Credit History – It is very important to have good credit history if you wish to get a mortgage. This becomes even more significant when you want to borrow more than 80% of the Loan to Valuation Ratio. In New Zealand, most banks and non-bank lenders will rely on your credit report which shows a credit score for you.
If you have had credit issues in the past, including unpaid fines it is a good idea to check your own credit record. You can read how to do this here
Remember every time you enquire about borrowing money, there will be an enquiry loaded against your credit score, whether you borrow funds or not. Lenders will be concerned with too many enquiries on your credit score so don’t take this lightly. Talk to a mortgage adviser first.
Your mortgage adviser is aware of this and will ensure that any credit enquiries on your credit score are limited.
Bank Account Conduct – As part of the due diligence for a mortgage the lender will review your account conduct. They are looking to ensure that you have disclosed all debts and other financial commitments, but they are also looking at how you manage your bank accounts. Your mortgage adviser will help you understand how to “clean up” your accounts if this is required, as part of “getting mortgage ready”. You must have a record of paying your bills on time, every time. This includes not missing a credit card payment and having no unarranged overdrafts.
Other Debt – To get a mortgage as a First Home Buyer, you will need to ensure that you have repaid any short-term debt such as personal loans, car loans, credit card debts, hire purchase etc. Also avoid “buy now pay later” schemes as lenders don’t like these.
Unsure? or Confused? No problem – just contact Trish for a no-obligation chat to talk through your options and how we can work together to get you “mortgage ready” feel free to reach out at 027 436 8367 or click here.
Remember my service is FREE!