First Home Buyers Guide
The following are some FAQ (frequently asked questions) that are often asked by First Home Buyers - those who are new to mortgages and lending.
Lending from banks for the first time can be confusing - an information overload at times. As a first home buyer you need to have things explained clearly and fully - without assumptions that go over your head. As a mortgage broker, we find many people are not clear about the answers to these types of questions regarding a loan or mortgage when buying their first home.
The questions and answers below on our FAQ for First Home Buyers regarding home loans and lending may get you thinking about purchasing your own home. We want to guide you in the right direction financially. If you have more questions, please call Chris on 07 577 1209 or use the email form to Get in Touch and we will respond with clear answers.
FAQ for First Home Buyers
Who can help me with a home Loan?
Talk to Chris or Tristan at Rapson Loans & Finance Ltd. They will make sure you are on the right path to get into your first home.
Do I need to have a Kiwi Saver account?
If you are not currently a member – join. After three years you may be able to withdraw your contribution plus your employer’s contributions. This can contribute hugely to your deposit. You may also be eligible for the Home Deposit Subsidy of $1,000 per year, up to a maximum of $5,000. So yes, Kiwi Saver is a great help for first home buyers.
Can I get a home loan when I have other loans - like a car loan, credit cards, hire purchase or student loan?
Yes you can get a home loan when you have other debt but it is a good idea to minimise this debt as much as possible. This other debt can significantly reduce the amount you are able to borrow for your first home. Discuss this with us as we can guide you where to apply surplus funds and maximise the opportunity.
Do I need to have savings?
Yes you need to have savings to show the bank that you can save and manage your money. The bank will be more comfortable providing a home loan when they see that you have those sort of disciplines around money.
How much credit limit should I have on my credit cards?
Ensure credit card limits are at the minimum limit required. Even though you may not use your credit card, the limit is likely to be used by lenders for debt servicing assessment purposes.
How do I manage the other costs of purchasing a home?
Yes, there are other costs involved in purchasing a home. We can assist to minimise these costs as well as preparing you for them. We make you aware – no one likes this kind of surprise.
I have been in overdraft – will this affect my first home loan?
For your bank accounts, it is important that you ensure your accounts are kept within approved limits at all times. Past Bank Statements are required to confirm your good banking history.
What is a deposit to secure the property?
This is an agreed amount that is required as part of the purchase contract to be paid to either the Solicitor or the Estate Agent when finance is approved and the contract becomes unconditional. This is often negotiated as a dollar amount ( i.e $25,000) or a percentage of the property value ( i.e. 10%)and can be discussed with real estate agent when negotiating on price.
What deposit do I pay to the bank?
The loan deposit money that you pay to the bank is the difference between the purchase price and the loan amount; specifically the borrowers contribution to qualify for a loan. We can look at getting you into your first home with as little as a 5% deposit ($5,000 per $100,000 of home value). This amount must be saved up over a three or six month period and can include Kiwisaver funds. We will discuss this fully with you when we meet as lending policies vary between the banks and is subject to change from time to time.
Can I get my loan approved before I start looking for my first home?
Yes, pre-approved finance is a good idea. We can arrange for a pre-approval that will be valid for 60-90 days. This will give you confidence that you are looking for a home within the right price bracket for your personal financial situation. We will always provide advice & guidance around this during our discussions.
Were these FAQ's regarding home loans helpful? If so, please tell us by using the email form on the right to Get In Touch. We would love to hear your views and answer your questions.