Jumping into the property market is no small adventure. In fact, for many Kiwis, it is actually the biggest decision and commitment they will ever make. Thus, it is not one to take lightly. But if you take all the right steps, do your due diligence and strike at the right time it could become one of the best decisions you make.
If you are in a position where you are investigating your options follow the tips below to put yourself in the best position possible.
Discover your borrowing power
When we talk about your borrowing power, we are referring to the amount your bank or lender will allow you to borrow. This limit is directly affected by your financial position and will essentially inform you of what housing options are realistic.
While your borrowing power is mostly affected by how much you earn, there are several other factors which could alter how much you are eligible for. Consider what your regular expenses are, such as living costs, loans or debts, as these will all be inspected by your lender and may limit what you are able to borrow.
Put a plan in place
Once you have a good understanding of what your borrowing power is, the next step is to design a plan for how you are going to save for your deposit. Sit down and take stock of both your income and expenses to understand exactly what you are capable of setting aside.
When you combine this with your borrowing power, it will give you a clear picture of exactly what you can realistically afford. From here you can start putting the wheels in motion and start working towards your dream home.
Would an investment property be viable?
For many, buying a house is the opportunity to step out of the rental market by finding a place of your own. However, have you considered buying a house and then renting it out? This is referred to as ‘rentvesting’ and there are a number of reasons why some people, especially first-time buyers, should consider this.
Namely, if you are unable to afford to buy in the area you desire, buying a house in another, more affordable area and renting it out is not a bad option. This way, you are on the property ladder and starting to benefit from owning a house while still living in the area you love.
Ideally, the rent you receive will mostly cover your mortgage repayments while allowing you to start growing some equity of your own. Which will help in the future when you decide to try and buy another house.
What help are you eligible for?
There are a number of grants and schemes available to help first-time buyers get their foot on the property ladder easily and with as little stress as possible.
KiwiSaver HomeStart Grant, KiwiSaver and even KiwiBuild are all initiatives that, if you are eligible, are great ways to help make that homeownership dream reality.
However, there are certain criteria and checks that will determine if you are eligible for any of these initiatives. So don’t just assume you are eligible, make sure you do your research and speak to your lender to see if you are able to tap into these initiatives.
Look at buying off the plans
If you are a first-time buyer, there are a few benefits to purchasing straight off the plans. Not only are you guaranteed a brand new house, that you can make your own but there are certain financial benefits as well.
Particularly, the fact that you get to split the payment of your deposit up into two smaller instalments. Typically, when you buy off the plans, you will be required to pay half of your deposit up front and then the other half upon completion.
This is great as it lightens the financial strain of paying a $100,000 deposit up front and during the time between the first payment and the second, you will have a little bit of extra time to save.
Getting on the property ladder is something that a large majority of Kiwis aspire to, however, it is no small feat. But, if you do the above steps, you could find that you are able to achieve it sooner than you may have thought.
If you wish to talk to us about the steps you can take to speed up the buying process, get in touch today and our friendly and experienced advisers will be more than happy to help.
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