First Home Buyer Insights from a Mortgage Mentor | Emma Johns

The journey to homeownership is a huge step that NZHL Whangarei South and Kerikeri Business Owner, Emma Johns, has guided first home buyers through over her 30 years working in banking and finance.

In this blog, Emma shares her views and advice for those looking to jump on the property ladder.

Read on to find out more.

First Home Buyers’ Market

The current housing market is favourable for first-home buyers with significantly lower property prices.  With fewer buyers in the market, there are plenty of properties to choose from and vendors are more open to negotiation, creating opportunities to secure good deals.

While higher interest rates are challenging to anyone with (or considering) a home loan, it’s important to remember, historically, interest rates have hovered around 6% and despite the recent rise in rates (and the cost of living), many Kiwis are still able to enter the property market and set themselves up with a solid foundation for their financial future.

Steps to Success

While first-home buyers are actively preparing themselves to buy (cutting back on spending and building their deposit) I encourage all buyers to take it a step further and manage their money as if they already have a home loan – by saving the difference between their rent and future mortgage repayments (estimated) to show affordability (your ability to pay your ongoing loan repayments) and give your savings a boost.

Reducing short-term debt and avoiding Buy Now Pay Later payment plans can help the loan application process, as short-term debt can impact or limit your ability to lend.

Financial Preparation and Budgeting

I cannot stress enough the importance of a detailed budget and owning your financial well-being.

To prepare for purchase, l recommend:

  • Tracking all income and spending
  • Speed up savings (where possible) – making sacrifices on non-essentials such as entertainment, takeaways, etc.
  • Setting financial goals
  • Bringing the entire family on the journey – it can make a huge difference to progress if everyone agrees on goals and where you’re willing to spend less.

When looking at properties being realistic is important – a first home isn’t necessarily a forever home.

Striking a balance between affordability, lifestyle, and long-term financial goals is key – for many, a first home is a stepping stone – and while you may be able to borrow more you must be comfortable with the ongoing repayments. Purchasing outside of a set budget can often lead to unnecessary financial stress.

Paying off a Home Loan Faster

Home loans should be set up to support your goals right from the start.

Paying down a home loan faster reduces interest costs (sometimes significantly) and increases cash flow (to support your lifestyle or generate money through investment properties or the like).

While paying down your home loan can be challenging small actions can make a big difference:

  • Keep your repayments the same if you are moving onto a lower interest rate (paying more off your actual loan)
  • Look at splitting your loan into multiple fixed terms (2, 3 5 years, etc.) to limit the impact of interest rate increases
  • Have a plan for managing future changes in interest rates or living costs
  • Avoid additional debt by building an emergency fund for unexpected repairs or expenses.

Working through your home loan and finances can seem like a lot to manage, but your NZHL Mortgage Mentor is here to help.  As qualified financial advisers, our job is to ensure you’re set up to make the best use of your money and your home loan is still working best for you even when circumstances change.

With determination, careful planning, and informed decisions, it’s still possible to get onto the property ladder and build a strong foundation for your financial future – don’t be afraid to reach out and ask for help.

Please note –Emma Johns is a Local Business Owner and Mortgage Mentor at NZHL Whangarei South and KeriKeri and has written this blog based on her experience. This blog is intended to be general in nature and should not replace personalised financial advice by your mortgage adviser.