Before you start searching for a property, there are a few important things to have in place. This way when you find a property you love, you can move quickly to secure it.
Step 1: Savings and debt
One of the most important aspects of first home ownership is having a strong financial position. You can do this by paying off any debt you have and saving a deposit. To be approved for lending, your deposit may need to be up to 20% of the purchase price of the property. This deposit can be made up of savings, gifts from family, KiwiSaver and any first home buyer’s grants you may be entitled to. The amount you will need as a deposit will vary between 5% and 20% depending on the type of property you are purchasing and what lenders are able to offer at the time. You should speak to your bank or mortgage broker for more information on deposits.
If you are looking to purchase a property in the next few months, work on keeping your statements looking good for lenders, and only buy things you need. This will also help you to save more for your deposit. If you have any concerns, speak to your bank or a mortgage broker who can take a look at your specific situation and spending habits.
Step 2: KiwiSaver and Kainga Ora First Home Grant entitlement
KiwiSaver first home withdrawal:
Kainga Ora First Home Grant
The Kainga Ora First Home Grant offers first home buyers funds towards their purchase. To qualify:
You can make your application online through the Kainga Ora website. You can either apply for pre-approval, or full approval (if you have had an offer on a property accepted). Similar to KiwiSaver withdrawal, for full approval you will need to provide the details of the property you are purchasing, which means you need to have a signed Sale and Purchase Agreement in place. You can speak to your Lawyer about filling out these forms also.
Step 3: Pre-approval for a Home Loan
With either the help of your mortgage broker or by speaking to your bank directly, you will need to make an application for a home loan. Through the home loan pre-approval process your bank will assess your ability to afford to service a loan and will tell you exactly how much they can loan you based on lending criteria at the time. Once you receive pre-approval for a loan, you will have an idea of the price range within which you can search for a property.
Step 4: Consider other purchase expenses
Beware of unexpected expenses! We recommend having between $4,000 - $6,000 saved or available to you to cover the costs of the following, which you may need when buying your home (we will discuss these in more detail later):
In summary, you should start saving and reducing your debt, look into your ability to withdraw your KiwiSaver, find out if you are eligible for the Kainga Ora First Home Grant, be aware of the expenses you will need to cover, and speak to your bank or a mortgage broker to begin the home loan process.
Here at Hamertons Lawyers, we have friendly and experienced staff located across all three of our office locations – Whakatane, Opotiki and Kawerau who would love to help you with your purchase.
Once you are ready to engage a lawyer, give us a call or contact us by email to get your purchase underway.
*The above information is current as at 17 March 2022.
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