5 tips for first home buyers
Here at DUX we have helped hundreds of people to get into their first home. We answer a lot of questions and have advised many people on how to tweak their situation to make it a bit easier when its time to buy.
Here are 5 tips for first home buyers to help make it easier to get a mortgage and buy a home.
1. Reduce Credit Card limits
Banks count a percentage of your credit card limit as a monthly expense, not the balance owing. So if you have a $20 000 limit on your cards, they will assign a larger expense per month than if you have a $10 000 limit.
So, it’s a good time to reduce your card (and overdraft) limits before you apply for a mortgage. Get rid of any cards you don’t need, and reduce the limits as much as you can.
2. Consolidate your deposit
If your savings are in multiple accounts, then start to merge them into one place, to make it easier for the bank to see it all
Also, if you are getting a gift, get this into your account 3 months before you want to apply, as this then just counts as savings, rather than a gift. Its not critical, but it makes it a lot easier.
3. Be careful changing jobs
If you change jobs just before you buy a home, this may make it harder to get a loan. If the new job has the 90 day ‘fire at will’ trial period, then the banks will want to have this clause removed or the 90 days to have passed before they give you a loan.
If you need to get the Welcome home loan, you need to have been in your job for a year (there are exceptions we can advise on). So if you are about to buy a home, consider sticking where you are, or get advice on this. Once you own a home, you can change jobs with no issue.
4. Get your KiwiSaver into Conservative funds
While its best to have your KiwiSaver (or SSRSS or other super funds) in growth funds when saving for retirement, if you want to get the money out to buy a home, this could lose you some money. With growth funds, they can go up and down a lot more, ie are a lot more volatile. We have seen people lose $1000 on the day they get the money out as the market shifted.
So if you are wanting to use your KiwiSaver for your deposit in the next couple of years, a conservative or moderate fund will reduce the volatility. Once you buy the home, you can ramp it back up to growth.
5. Get a DUX pre approval
While you can walk into a bank and likely get a loan offer without much fuss, letting DUX do it for you will get you much more advice on the process of buying a home, and paying back the mortgage faster than the bank wants. You will save a ton of money over the course of the loan, and the entire process will be much easier and stress free.