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Buying your own home made simple

Buying your own home
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It's a New Year and a time for a New You. Why not buy your first home?

Don’t scoff. It's not as impossible as it sounds. People like you buy their first homes every year – because they believe they can. Just look at this story on Sorted.org.nz of 20-year-old Ondine Grace, who with some serious saving managed to build up a $20,000 deposit in four years.

The biggest hurdle to buying a house is overcoming the negative thoughts coming out of the six inches of grey matter between your ears.

Your first step may need to be to get out of debt. Even people on low wages manage to do this, so why shouldn’t you? You really can if you want to.

Next consider these six tips to first home ownership:

  1. You don’t need the average home. Whoever said first time buyers need to buy the average house? Buy an apartment, a unit, or a cheap starter home. Even in Auckland, Wellington and Christchurch one, two and even sometimes three bedroom homes can be bought for less than $200,000. If you don’t believe me, check out these links to Auckland, Wellington, and Christchurch sub $200,000 properties.* Property is even cheaper elsewhere in the country. Sure these properties aren’t your dream home. But they’re a step on the rung of the property ladder. Lots of first-home buyers are willing to put some elbow grease in to add value to properties with DIY.
  2. Find out how much you can borrow. Sometimes a mortgage is cheaper than paying rent. Westpac has a great calculator here, which shows how much house your current rent could buy. Or you can juggle the numbers in the mortgage repayment calculator at Sorted.org.nz to work out how much you can afford. For example, a $180,000 loan at 6% over $25 years costs $267 a week ($1,159 a month). I really recommend that first home buyers use a mortgage broker. It costs you nothing and a good independent broker will examine your entire financial situation and make useful suggestions.
  3. Use your KiwiSaver. By now you should have been saving into KiwiSaver for a number of years. With regular saving you can qualify for a first home deposit subsidy of up to $5,000 and you can also withdraw your savings. That could easily amount to $10,000 in total for a single person or $20,000 for a couple. That’s a decent deposit without any other effort.
  4. Look for other financial assistance. Do you qualify for the Welcome Home Loan, which allows you to borrow 100% of the purchase price? Or you might be able to get a shared ownership home from a housing association such as the New Zealand Housing Foundation You buy a share of the home you want from the housing association, and slowly increase the percentage that you own as you can afford to.
  5. Get a flatmate. It’s not the end of the world to share your home with a paying flatmate for a few years. That flatmate’s rent may even cover half of the mortgage, which really makes the numbers work for first-time buyers.
  6. Go to the bank of mum and dad. Not every first home buyer’s parents have money to give or lend. They may, however, own their own home and go guarantor on your loan if you’re struggling to meet the bank’s criteria. It’s best for parents not to do this if at all possible, because it risks their own home. However many do so willingly.

Finally, you can do it. Don’t look for excuses. Look for ways to make it happen.

*Do be wary when buying your first property to avoid leaky properties by getting an independent building report and/or reading the body corporate minutes. Also make sure you understand how leases work before buying a leasehold property.

Links:
Mortgage articles on MSN
My partner is self-employed – can we get a mortgage?
Fixed, floating or both – how do I choose what’s best for me
Is it a good idea to borrow more than 80 percent of a property's value?
How to inspect a property
We’re newlyweds – should we be buying or renting?
How to win at auction

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