Tips to get the bank to say 'yes'
Recognising that first-home buyers are most likely part of the technology savvy generation, a New Zealand mortgage broker has written them a guide in the form of an ebook only.
The author is Campbell Hastie, co-owner of Auckland-based mortgage broking company The Go 2 Guys.
Hastie says buying a home is within the reach of most Kiwis, even if house prices are going up.
"Saving for a deposit has never been easy, and if you're struggling, you're probably not trying hard enough," he says.
"Ask your parents about saving for a house and you'll hear tales of working three jobs, living on mung beans and using tea bags twice."
Hastie's book, entitled The Bank Said Yes! How To Get A Mortgage If You're A First Home Buyer In New Zealand, has saving tips and answers to the sort of questions first-time buyers ask, such as: "How much can we borrow?", "How do we save for a deposit?", and the tricky one, "How do we fix our bad credit rating?"
The ebook is aimed at helping young buyers negotiate the mortgage process and get them into a home more quickly.
The process may seem hard, and "a lot of stuff" is needed, but buyers just need to follow the application steps logically, he says.
"First-home buyers need to prove to lenders that they are the most solid, stable and predictable people around.
"Don't switch jobs or load up the credit card in the months leading up to your mortgage loan application."
Having a better understanding of how banks think improves prospective buyers' chances of a getting their mortgage application approved.
Buyers also need to be in reasonable financial shape for the bank to say yes.
He describes the process of buying a home as time-consuming, expensive and frustrating, and likens the feeling of saving for a deposit to climbing Mt Everest.
Most people have a basic idea of how to do it, but the numbers are big and emotions are high, he says.
"The reality is that it has never been easier to save for a house than right now, because the target has been getting progressively easier for first-home buyers to hit."
Hastie points to lower interest rates, the KiwiSaver deposit subsidy and lower deposit requirements as reasons home ownership has become easier to achieve in the past three to four years.
He typically sees first-time buyers with $20,000 to $25,000 saved, which puts them in a good position to buy, he says.
Campbell Hastie's tips for first-home buyers:
If you are part of the KiwiSaver programme, ask your provider how much you can withdraw for a first-home purchase. You might be closer than you think.
Go through the application process even if you're not quite ready to buy. Having a broker screen your application before it goes to the bank will help set you up for success and a good deal. Budget, budget, budget.
Understand your income and outgoings now and plan for how life will be once you have a mortgage.