There is a lot to think about when looking to purchase your first home. Below is a list of ten things to get right. There may be more of course so it it important you surround yourself with valued experts who can help - real estate agents, solicitors and mortgage brokers are people you should connect with early on in your journey. Good luck!
1. Maintaining good financial conduct - By being responsible with your money, you can avoid potential issues when applying for a home loan. The bank will review your bank statements, so it's important to avoid dishonored direct debits and unarranged overdrafts to avoid being seen as a risky prospect.
2. Searching in the right price range - First-time home buyers often look at properties that are beyond their budget, which can lead to buyer fatigue and settling for the first affordable option they find. It's important to set a budget and stick to it to avoid making this mistake. Getting a pre-approval from a bank helps this process.
3. Making careful and informed offers - It's important to thoroughly inspect a property and check for potential issues before making an offer. If something seems too good to be true, it's worth doing some additional checks to ensure you're not overlooking any potential problems.
4. Testing all features and appliances - A building inspection will cover structural issues, but it's also important to test all the appliances and features of a property to ensure they are in working order. This includes the heated towel rails, spa pool, dishwasher, dryer, drains, electric door, hot water, central heating, fans, and oven.
5. Planning for upfront costs - When buying a property, you will typically have upfront costs ranging from $1,500 to $3,000. Make sure to include this in your budget to avoid any surprise expenses.
6. Accurately estimating borrowing costs -By being realistic about your budget and planning for higher interest rates, you can ensure that you are only borrowing what you can comfortably afford. This will prevent problems from arising in the future. Your mortgage broker can provide this detail.
7. Planning for changes in circumstances- It's important to consider how changes in your life, such as having children, traveling overseas, returning to school, or joining a commune, may impact your finances. If you need insurance, there are options available to help protect you and your home.
8. Aiming to pay more than the minimum - By paying more than the minimum mortgage repayment, you can pay off your mortgage more quickly and avoid the costs associated with higher interest rates.
9. Considering all options when choosing a mortgage - The lowest rate is not always the best option, as it may come with hidden costs. By considering all options and looking at the overall cost, you can ensure that you are getting the best deal on your mortgage.
10. Being mindful of additional debts - Once you have a mortgage, it's important to be mindful of taking on additional debts, such as interest-free hire purchase agreements for household items. While these may seem like a good deal at the time, they will eventually need to be repaid and can cause financial strain.
First Home Buyers should consider checking in with and engaging with expert mortgage advisers like at MortgageMe.
MortgageMe services the local Hawke's Bay Hastings and Napier are but can also work remotely with first home buyers around New Zealand. Click here for more information or reach out on the form below.