So you want to...buy your first home?
By MAS Team | 31 July 2019
Buying your first home can be a daunting prospect. Whatever age you are, it feels like something your parents should be doing, not you.
That said, it also feels like a huge accomplishment if it’s been at the top of your life to-do list – and with the right tips and tricks in your pocket, getting your foot on the bricks and mortar ladder needn’t be that hard at all.
Unless you’ve got bucketloads of cash, you will probably need to rely on borrowed money to buy your first home. And the amount you can borrow depends on things like your credit score – it all goes hand in hand.
Focus on knocking off credit card debts and make sure you’re making any regular payments on time for things like your rent, gym membership, and phone bill. It all counts toward your credit score which is essentially a way for lenders to see how financially responsible you are.
If you don’t have a credit card yet, it might be worth looking into a low interest or low balance option and putting one regular subscription or membership on there to build up your credit history as a responsible billpayer.
Once you have been contributing to KiwiSaver for three years, you’re allowed to withdraw the money that has built up and put it towards your first home purchase (as long as you leave at least $1,000 remaining in your account*.) Score! There is a slight catch – you must intend to actually live in the property, not buy it as an investment – but if this is your first home, this probably doesn’t apply.
It’s important to consider what KiwiSaver fund you’re invested in. If you’re planning on buying a house in the next few years, it’s worth sticking to a more conservative fund to protect your deposit from unexpected losses instead of a potentially volatile aggressive fund.
*Any money transferred into KiwiSaver from an Australian super scheme must also remain.
The minimum amount a typical lender will accept for a first home deposit varies between 10% and 20%, but if you can, do more than the bare minimum – the more you put down in a deposit, the less your mortgage repayments will be and the interest you pay.
Don’t worry if you’re not in a position to contribute more than 10%. If you do your research, you’ll find quite a few schemes out there getting behind young people and supporting them to make their first home purchase. These include:
There are also plenty of independent loan companies out there, like the Welcome Home Loan Scheme, so consider looking at these if you’re not eligible for a grant. Be sure to do your research to make sure you don’t miss out on any grants that could help you purchase your first home.
A lot of people forget that the price of the house isn’t the only cost involved in buying a home – there’s a pretty long list of extras you need to take into consideration. Here’s a quick breakdown:
So, you’ve done it – you’ve saved up enough to start the buying process. But, have you thought about putting aside a nest egg for moving in costs?
It’s important to remember that there will be a list of costly things to do in the weeks leading up to moving day. This could include urgent renovations like electrical work to make your house safe to live in, setting up power and internet accounts, securing your house and contents insurance or shelling out for professional movers or painters.
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