Dynamic presenter and Financial Adviser Tahei Simpson provides whānau with the keys to unlock their future and encourages first steps onto the property market. Wednesdays, 1.00pm (R), and On Demand.
First Home Buyers
Buying your first home can be incredibly stressful – and arranging the finance for that purchase is probably the most challenging part.
When assessing a loan application for first home buyers, lenders will consider the following:
How much you earn and how long you’ve been in your present job are the two major questions. There may be complications in measuring your income if part of your earnings are from overtime, bonuses or commission. If you’re self-employed, a mortgage broker or bank may need your financial accounts in order to assess your ability to repay the loan.
You may be able to include as earnings boarder income from flatmates, family support payments etc. This mortgage calculator will give you an idea of your borrowing capacity, but a mortgage broker will need to put together a full loan application for you to gauge that accurately.
The LVR stands for Loan to Value Ratio, which simply means loan amount divided by purchase price – and represents the maximum percentage of the purchase price you are able to borrow.
In 2013 the Reserve Bank acted to restrict bank lending to LVR of 80%. That meant that purchasers would need to have a deposit of 20%.
This restriction has recently been relaxed in the case of new constructions, and a maximum LVR of 90% applies to new houses. There are lenders who will look at 90% LVR loans even for existing houses.
As well as genuine savings your deposit funds can come from alternative sources, such as:
If you have been contributing to KiwiSaver for at least 3 years, you are able to withdraw the bulk of your fund to assist with a first home purchase.
You may also qualify for a First Home Buyers Subsidy, depending on your purchase price and earnings.
Help from family
If you simply do not meet the banks’ lending criteria, we may be able to arrange the loan by using assistance from a family member – perhaps by using equity in another property, or by way of guarantee.
Your Credit History
When assessing a loan all lenders will run a Credit Check to verify your credit history. This will show previously unpaid loans and bills that have been sent to Baycorp. A credit check will also show if you have been declared Bankrupt in the past.
Tahei can assist you throughout the whole process, not just with having the loan approved but in structuring the loan and negotiating with the bank to ensure you get the best possible terms. For more information, just Talk to Tahei.
Repaying Your Mortgage
There are a variety of ways of repaying your loan quickly to save as much money as possible over the life of the loan.
Most lenders offer a maximum loan term of 30 years. This means that you can take 30 years to repay the loan, however you are able to repay more rapidly if you wish to. Your mortgage is likely to be the biggest debt you will ever have and most of us would like to repay that debt as quickly as possible. It doesn’t take much in the way of additional payments to make real savings over the life of your mortgage.
Consider this: an extra $50pw payment on a $400,000 mortgage would save you over $100,000 in interest costs!
There are number of ways to increase your mortgage repayment. Here are some suggestions:
- Use Revolving Credit accounts to maximize your interest savings and repayments
- Increase your monthly mortgage payment
- Make lump sum repayments
- When interest rates go down, keep your payments at the same level
- Pay fortnightly instead of monthly
- Draw up a budget and monitor that regularly – find out what you’re wasting money on, and pay it against the mortgage
- Prepay the first monthly payment
If you want to review your mortgage, Talk to Tahei to see if you can repay your loan more quickly – you could save thousands of dollars!
To find out what savings you could potentially make, check this Mortgage Repayment Calculator.