For many New Zealanders, this will be the biggest financial investment they will ever make.
There will be a lot to think about throughout the process, and you will receive plenty of advice from others. With so much information overload, you may be thinking, “Where do I start?”
From adjustments you can make to improve your “lending” to figuring out exactly how much you can afford to borrow, the overview below will give you everything you need to know for your first home loan – in five steps. easy.
1) Find a good mortgage specialist
Just as you’ll be looking at dozens of places before finding the right first home to buy, it’s a good idea to be equally careful when choosing a home loan provider.
Banks often provide mortgage specialists to help you navigate while providing help and advice. They are often home loan experts and it can be helpful to engage with them early on in a first home buying experience.
Westpac Mobile Mortgage Managers are located across New Zealand and have deep local knowledge. They can come to you when and where it’s convenient for you – at a coffee shop, at your home, before work or after work! They can even schedule a virtual meeting online.
A good home loan provider like Westpac knows how daunting buying your first home can be and will walk you through every step. Have a read of their downloadable Free first home buyer’s guide with lots of information to start with.
2) Know how much you have
Before applying for a loan, you will need to calculate how much money you can group together for a deposit – which will ideally represent 20% or more of the value of the property you want to buy.
Your deposit can come from several sources which can include your personal savings, gifts or loans from family and your KiwiSaver savings.
If you have less than 20% down payment, contact your preferred loan provider as they may have options that are right for you. Options include shared actions, first home loan or family springboard. Certain eligibility criteria may apply, so contact a Westpac Mobile Mortgage Manager to find out more
Saving for a deposit can take some time, but there are a number of things you can do to increase your deposit faster – try these Westpac’s Top Tips to help you save.
* Everything you need to know about your first home deposit
* QUIZ: Knowledge is essential: what do you know about buying your first home?
3) Make yourself more lendable
The biggest factor in how much you can borrow will be your income minus your expenses, but there are other adjustments you can make that could improve your “lendability” or the likelihood of your loan being approved.
This can include showing that you can save consistently each pay period, getting rid of debts like purchases on credit or items for rent to purchase, and avoiding Buy Now, Pay Later services.
Consider the type of debts you have. “Good” debt is money you have borrowed to buy something, like a house, or something you need to develop your career, like a qualification. “Bad debt” is money you have borrowed for consumption, such as electronics, appliances, clothes, or vacations.
Bad debts have a big negative impact on your ability to borrow for a first home, so pay them off first.
4) Gather what you need to apply
Make friends with budgeting tools, manila folders and excel sheets because you will have to provide details of your income, proof of your deposit, the amount you wish to borrow, your expenses (eg childcare) and details of the property you wish to purchase, if any.
If you are an employee or employee, you will need to provide three months of statements or three consecutive payslips. If you are self-employed, you will need your latest financial statements prepared by your accountant or your most recent IR3 summary.
For any other debt, such as student loans, hire purchases, Buy Now Pay Later, or credit cards, you’ll need statements from the finance company or supplier. If you are not used to dealing with your potential lender, you will need three months of bank statements from your main transaction account(s) and if you pay for most things with a credit card, you will have also need these readings.
5) Securing the loan
Once you’ve sorted your deposit, the next step is to get a home loan.
Because everyone’s circumstances are different, lenders like Westpac will look at how you earn and spend your money.
The lender will assess factors such as whether you have high-interest consumer debt and other debt, how many dependents you have, how responsible you are for your money, and whether there will be any changes in your income or expenses over the next 12 months. .
Find out how much you can afford to borrow and keep your home search focused and realistic with the Westpac Affordability Calculator then determine the amount of your mortgage repayments on a property with Westpac’s mortgage repayment calculator.
Want to buy your first home? Thinking about it but not sure where to start? Head to www.westpac.co.nz for everything you need to know – from choosing the right Westpac KiwiSaver Scheme fund to help you with your deposit, to what you need to apply for a loan, to the purchase process itself.
And no matter where you are in your home buying journey, remember that you can always get in touch with a mortgage specialist to talk about getting your first home loan.
Westpac home loan criteria, terms and conditions apply. Resort fees may apply. A low capital margin may apply.
BT Funds Management (NZ) Limited is the program provider and Westpac New Zealand Limited is the distributor of the Westpac KiwiSaver Scheme (Scheme).
The above information is subject to changes in government policy and law, as well as changes to the Westpac KiwiSaver program from time to time.
Investments made in the Westpac KiwiSaver Scheme do not represent bank deposits or other liabilities of Westpac Banking Corporation ABN 33 007 457 141, Westpac New Zealand Limited or other members of the Westpac group of companies. They are subject to investment and other risks, including possible delays in the payment of withdrawal amounts in certain circumstances, and the loss of the value of the investment, including the capital invested. Neither BT Funds Management (NZ) Limited (as manager), nor any member of the Westpac group of companies, The New Zealand Guardian Trust Company Limited, nor any director or agent of any of these entities, nor any other person guarantees the Westpac KiwiSaver Performance, returns or capital repayment of the plan.