|Landing that first house in a hot market can be challenging, particularly given the introduction of new loan to value ratios (LVRs) for first home buyers. The good news is that preparation, understanding and smart choices can make a difference! Our team here at NZHL (New Zealand Home Loans) help growing numbers of Kiwis every year get the keys to their first home. Here’s are some tips we’ve learnt along the way.
Think and act ahead of time
Get advice and get sorted early. Our consultants often talk to First Home Buyers who might be a year away from an actual purchase—that’s fine, you should be making use of people who can help you make a plan to get you to where you need to be. This could be family and friends, but also think outside your normal sphere and consider professional advice. NZHL won’t charge you for the privilege of having that initial chat, or further chats for that matter! If you’re taking on a long term responsibility, you really want to try and plan things out ahead of time to make the most of the end game. Given it’s not unusual for our clients to pay off their home loans 10 years early, we like to think we can help with that end game conversation!
Know your LVRs
There’s lot of talk about recent changes to Loan to Value Ratios (LVR) in NZ, and of how, generally speaking, first home buyers now need a 20% deposit, which is a loan to value ratio of 80%. The part that most people don’t realise is that home buyer lending can still be done for people with less than a 20% deposit, just less of it. Lenders can still apportion some of their lending to buyers who don’t have a 20% deposit.
This means if you don’t hit the 80% LVR threshold or don’t have a 20% deposit, in some cases you may still be able to get finance, particularly if you have all of your ducks in a row.
A home loan preapproval gives you parameters to work with and—especially in a hot market—can help you move quickly when you need to, although lenders may still require information pertaining to specific properties.
Your NZHL consultant can guide you through the preapproval process, but being organised and proactive with the following items can really speed things up:
· Three months worth of bank Statements
· Debts itemised
· Pay Slips
The key is to make it easy for lenders to say yes.
Adjust your expectations
Parking, that extra bedroom, city fringe location… all of these you may need to compromise on. The reality with a hot market is that you can’t always get everything you thought you might have been able to afford even six months prior.
Figure out what the dealbreakers are for you, and plan to be flexible on the rest. First Home Buyers often tell us that for them it’s a bit of an adjustment journey, but after a few failed attempts it seems even sweeter when they land their first home. If you decide to go with NZHL, your consultant will be able to help you with optimisng your mortgage structure and mortgage interest rates to shorten the life of your loan and reduce the interest you pay.
We get it, it’s a big deal
At NZHL, we’re here to help you through the financial process of buying your first home. Providing personalised service and innovative tools to help you achieve financial freedom faster. Start your first home journey with NZHL today.