It’s a fact that homeowners are wealthier than those who rent homes. In fact, the average net worth of New Zealand homeowners is $340,000.
If you’d like to get on the homeowner wealth train but are not sure if you’re ready, ask yourself the following questions.
How secure is your employment picture?
Love your job? More important, does your job love you? Job security – knowing you’re in it for the long haul – is a good sign that you can take on a monthly mortgage payment and be responsible for maintaining a home.
It’s also one of the things a lender will look at when considering how risky it might be to lend you the money for a home.
While it’s not impossible to get a mortgage when you’re new to a job, lenders like to see a two-year minimum term. If the new job is in the same field as your old one, it shows commitment to a field of work, which is attractive to lenders.
Do you have any money saved?
Don’t be discouraged by the fact that you need 20 percent of the purchase price of a home for a down payment. While this is true there are other options available.
Depending on your circumstances, you can obtain a mortgage for nothing down or a down payment as low as 5 percent. Then, there are other assistance for ‘low deposit lending’. The Welcome Home Loan supported by Housing New Zealand, which allows first home buyers to purchase with a 10 percent deposit. Then there is also Kiwi Saver. Each year the number of people using their KiwiSaver savings to buy a first home grows.
After three years of saving you can withdraw your own KiwiSaver contributions. You may be able to get an even bigger boost from KiwiSaver with the HomeStart grant or First-Home withdrawal.
There are some rules that your consultant can talk you through such as income caps and how much you may be eligible for depending on whether you’re buying as a single or a couple.
You will, however, need a bit of cash when you purchase a home for the deposit when you put an offer, lawyers fees, and moving expenses.
If you don’t have any savings, you may not be ready to buy a home. If you do have some money set aside, speak with a mortgage broker to find out if you qualify.
How’s your credit?
If you’re unsure, order your free credit report from www.creditsimple.co.nz. This site offers you free credit reports.
A good credit score is higher than 700. Borrowers with strong scores get lower interest rates so raising your score is a worthy endeavor.
This doesn’t mean you can’t get a mortgage with a lower score, because you most certainly can. In fact, a score of 500 or higher is considered an average score so your likelihood of securing a mortgage may rely on individual factors and the lender’s specific criteria but even those with lower scores may otherwise qualify.
To have a better understanding of credit scores click here.
Do you need more room?
If you’re currently in an apartment, the chances are good that you’d like or maybe even need more space. Apartments by their very nature are typically small and very cramped. Worse, they lack sufficient storage space.
Especially if you’re starting a family or hope to soon, dreams of a house may be swimming in your head. If so, you may be ready to become a homeowner.
Are you tired of paying your landlord’s mortgage payment?
Paying rent every week and watching that money go into someone else’s bank account gets old after a time. As mentioned earlier, one way to accumulate wealth is through putting that weekly payment in your own pocket by building equity through home ownership.
With current OCR being so low and in fact lowest its ever been the question we all need to be asking is – Is there ever likely to be a better time to secure a housing loan? With interest rates at an all-time low and with intense competition among the lending institutions it would be difficult to see a better environment from a borrower’s point of view. I would recommend that first-time borrowers, in particular, utilise the services of a mortgage broker for guidance and to ensure that they achieve the best deal possible.
Feel free to reach out to with any questions.