First home buyer
Buying your first home can be a daunting experience! There are so many factors to consider:- what location to buy in, is the property in sound condition, what should my opening offer be, when should I contact my solicitor, will I need to get a registered valuation, what about a building report?
First thing's first. Before you start looking for a house, contact me to find out how much you can afford to borrow. Together we can work through different loan amounts, repayments and various scenarios to enable you to choose a package you are comfortable with. After all - the mortgage will be with you for a long time!
pre-approval is highly recommended before you go house-hunting. This gives you written confirmation of the maximum amount you can borrow, which puts you in a strong negotiating position when you are ready to make an offer on a property. In fact, until you have a pre-approval, you really can't be sure what price range you should be looking in.
When we meet to arrange your pre-approval, I can take you through the whole home-buying process. This includes making your offer, what special conditions to include in an offer, when to get your lawyer involved, when to pay over your deposit, and an explanation of the legal process from start to finish. Naturally, we will also discuss the different types of home loan options available to you.
Once we obtain your pre-approval, I will stay in touch with you until you find your suitable home. You can contact me at any time to ask questions. Take advantage of the experience I have built up over years of arranging mortgage finance and buying/selling houses.
Once your offer is accepted, I will guide you through the purchasing process and keep you informed every step of the way. I will also liaise with your real estate agent and solicitor to ensure everything settles smoothly.
Our relationship doesn't end when you've bought the property. I hope you will be sufficiently happy with my service that you will contact me whenever you (or your friends and family) need another mortgage in the future.
Welcome Home Loans
For many first home buyers, the problem with obtaining a standard home loan is finding the deposit. Most banks currently require a 20% deposit. With a Welcome Home Loan, you only need a 10% of the purchase price of the house you are wishing to buy. The deposit can be gifted by a relative. Also, you can apply for a Kiwisaver Deposit Subsidy, or Kiwisaver Savings Withdrawal (see more on this below).
The maximum loan amount you can borrow with a Welcome Home Loan depends on where you live. In Wellington City, the house price cap is $425,000. For Hutt City, Kapiti Coast, Porirua City and Upper Hutt, the house price cap is $350,000.
You must be a New Zealand citizen to be eligible for a Welcome Home Loan, and you must have been in your current employment for a minimum of six months, with little or no other debt. For one borrower, you can have a maximum yearly income of $80,000 (before tax). For two or more borrowers, you can have a combined maximum household yearly income of $120,000 (before tax).
The Welcome Home Loan is to buy an owner occupied home only. It is not for rental or investment properties, and you must not own any other property. Some fees may be applicable, such as an application fee and a Low Equity Premium but, in many cases, these can be built into your home loan. Contact me for a no-obligation discuss to see if you qualify for a Welcome Home Loan.
Kiwisaver has a wonderful benefit available for first home buyers. It works like this - you must be in Kiwisaver for a minimum of 3 years paying at least the minimum contribution from your wages before you are eligible to withdraw your funds as a deposit on a home.
It is only your contributions and your employer's contributions that can be withdrawn, not any government contributions. You will need a statement from your Kiwisaver provider breaking down your fund into your contributions, your employer's contributions and government contributions - this is readily available on enquiry with your Kiwisaver provider.
Check out more information about withdrawing Kiwisaver here: http://www.kiwisaver.govt.nz/new/benefits/home-withdrawl
In addition to being able to withdraw your and your employer's contributions from Kiwisaver, there is also a one-off First Home Buyer's subsidy available from the government. It is $1,000 for every year you qualify in the scheme (minimum 3 years) and is available for each borrower who qualifies.
Check out further information about First Home Buyer subsidy here:http://www.hnzc.co.nz/rent-buy-or-own/buying-your-first-home-with-kiwisaver/kiwisaver-deposit-subsidy-changes-from-october-2013
Note that the following qualifying criteria applies to First Home Buyer subsidy, these changes are effective from 1st October 2013:-
- You can not have a combined income of greater than $80,000 (1 borrower) or $120,000 (2 or more borrowers)
- The maximum house purchase price value is $485,00 in Auckland city, $425,000 in Wellington city and Queenstown, $350,000 in Hutt City, Upper Hutt, Kapiti Coast and Porirua City, and $300,000 in most other areas
- Buyers must have a deposit that is equal to, or in excess of, 10% of the purchase price, including the addition of the subsidy.
- Some second home buyers can qualify if they can prove they are in a similar financial position as a first home buyer (generally have been financially impacted by a matrimonial split).
Your lawyer has to action the First Home Buyer subsidy and the Kiwisaver withdrawal process, as funds have to be controlled to ensure they are used exclusively for the house purchase. Note there is a minimum 10 working day turn-around for withdrawal of both (best to allow longer) and funds are not available to be used as the deposit on the house purchase contract.
What if I am not in Kiwisaver?
If you are not in Kiwisaver, there are some other options for your deposit:
- Many lenders will accept a deposit gifted to you from a family member or friend to buy your first home.
- Another option in some cases is for your parents (or other close family member) to provide a limited guarantee against their family home (subject to the family member taking independent legal advice).
Contact me to discuss your circumstances and I will come up with a solution that suits you.