If you’re gearing up to buy your first home, you’ll know all too well the many emotions that accompany the prospect of this huge milestone: it’s thrilling, daunting and nerve-wracking all at the same time.
Being as prepared as possible for the journey of first-home ownership is a smart move. And that of course includes taking a good look at your finances and what will be required to successfully apply for a home loan. As a starting point, here are four key things to consider when getting financially fit for home-ownership.
Are you a job-hopper or a long-termer? Understandably, saving a deposit is often the only thing first-home buyers focus on. But while getting your deposit ready is important, so is your job history. Your ability to earn a regular income is one of the main criteria that lenders will look at when determining whether you can pay off your mortgage – and how much you can borrow. And the duration of employment can count too; too frequent and too many job changes can be a red flag for lenders.
As you’ll know, KiwiSaver is not just a long-term retirement scheme: it could also help you to jump onto the property ladder. As a KiwiSaver member, there are two ways that you could use KiwiSaver to boost your deposit: (1) you can either make a first-home withdrawal from your account, or (2) check if you're eligible for a Home Start Grant. Your first property might be closer than you think.
While you grow your deposit, it’s a good idea to also shrink your debt. If you have credit cards, store cards or other short-term debt, try to pay as much off as possible before applying for a home loan. As a general rule, the more debt you have, the lower your capacity for additional borrowing. And remember, lenders may detract the credit limit you have on credit and store cards when assessing your borrowing capacity; not just the amount of credit you have used.
Whether you’re getting ready to apply for a home loan or are just getting started with your planning, it's a good idea to check your credit record. Your past bill payment behaviour or any hiccups with credit defaults can impact your home loan options: it makes sense to know upfront.
If your credit record does have a blemish or two, don’t despair; there are options, and lenders like RESIMAC specialise in helping Kiwis overcome their credit history and move on to home-ownership.
Like to know more about getting ready to buy your first home? Talk to one of our Lending Specialists at RESIMAC Direct. We’re expert at helping Kiwis assess their home loan options.
See if you qualify. To get a more accurate idea of how much you can borrow with RESIMAC Direct,