For many New Zealanders, this will be the biggest financial investment they will ever make.
There will be a lot to think about throughout the process, and you’ll be given plenty of tips from others. With such an information overload you may think: “Where do I start?”
From tweaks you can make to improve your ‘lendability’ to working out exactly how much you can afford to borrow, the overview below will give you everything you need to know for your first home loan – in five easy steps.
1) Finding a good home loan specialist
Just as you will look at dozens of places before finding the right first home to buy, it’s a good idea to be just as careful when choosing a home loan provider.
Banks often provide home loan specialists to support navigating the journey while providing help and guidance. They are often experts in home lending and can be useful to engage with right at the beginning of a first home buying experience.
Westpac Mobile Mortgage Managers are located across New Zealand and have extensive local knowledge. They can come to you at a time and place that suits you – at a coffee shop, your home, before work or after work! They can even schedule a virtual meeting online.
A good home loan provider like Westpac knows how daunting it can be to buy your first home and will walk you through every step. Have a read of their downloadable free First Home buyers Guide with lots of information to get your started.
2) Knowing how much you have
Before you apply for a loan you will need to work out how much money you can pull together for a deposit – which will ideally be 20 per cent or more of the value of the property you want to buy.
Your deposit can come from several sources that might include your personal savings, gifts or loans from family and your KiwiSaver savings.
If you have less than 20 per cent deposit, contact your preferred loan provider as they may have some options to suit you. Options include shared equity, first home loan or family springboard. Some eligibility criteria may apply so get in touch with a Westpac Mobile Mortgage Manager to find out more
Saving for a deposit can take a while but there are a number of things you can do to grow your deposit faster – try these top tips from Westpac to help you save.
3) Making yourself more lendable
The biggest factor in how much you can borrow will be your income minus your outgoings but there are other tweaks you can make that could improve your ‘lendability’ or how likely your loan is to be approved.
These could include showing that you can save regularly each pay period, getting rid of debt like hire purchases or rent-to-buy items and avoiding Buy Now Pay Later services.
Consider what type of debts you have. ‘Good’ debt is money you’ve borrowed to buy an asset, like a home, or for something that is necessary for you to grow your career, like a qualification. ‘Bad debt’ is money you’ve borrowed to consume, like electronics, whiteware, clothes or holidays.
Bad debt has a significant negative impact on your ability to borrow for a first home, so repay it first.
4) Gathering what you need to apply
Make friends with budgeting tools, manilla folders and Excel sheets because you will need to provide details of your income, proof of your deposit, the amount you want to borrow, your expenses (for example childcare) and the details of the property you want to buy, if you have them.
If you are a salary or wage earner, you will need to provide three months of statements or three consecutive payslips. If you are self-employed, you’ll need your latest financial statements prepared by your accountant or your most recent IR3 summary.
For any other debt, like student loans, hire purchases, Buy Now Pay Later or credit cards, you will need statements from the finance company or provider. If you don’t usually bank with your potential lender, you will need three months of bank statements from your main transaction account(s) and if you pay for most things with a credit card you will need those statements too.
5) Securing the loan
Once you’ve got your deposit sorted the next step is securing a home loan.
Because everyone’s circumstances are different, lenders like Westpac will look at how you earn and spend your money.
The lender will weigh up factors like if you have any high-interest consumer debts and any other debts, how many dependents you have, how responsible you are with money and if there will be any changes to your income or expenses in the next 12 months.
Find out how much you can afford to borrow and keep your house hunt focused and realistic with the Westpac Affordability Calculator and then work out how much your home loan repayments on a property may be with Westpac’s mortgage repayment calculator.
Are you keen to buy your first home? Thinking about it but don’t know where to start? Head over to www.westpac.co.nz for everything you need to know – from choosing the right Westpac KiwiSaver Scheme fund to help you with your deposit, to what you need to apply for a loan, right through to the actual buying process.
And no matter where you are in your home buying journey, remember that you can always get in touch with a home loan specialist to talk about securing your first home loan.
Westpac’s home loan lending criteria, terms and conditions apply. An establishment fee may apply. A low equity margin may apply.
BT Funds Management (NZ) Limited is the scheme provider and Westpac New Zealand Limited is the distributor of the Westpac KiwiSaver Scheme (Scheme).
The information above is subject to changes to government policy and law, and changes to the Westpac KiwiSaver Scheme from time to time.
Investments made in the Westpac KiwiSaver Scheme do not represent bank deposits or other liabilities of Westpac Banking Corporation ABN 33 007 457 141, Westpac New Zealand Limited or other members of the Westpac group of companies. They are subject to investment and other risks, including possible delays in payment of withdrawal amounts in some circumstances, and loss of investment value, including principal invested. None of BT Funds Management (NZ) Limited (as manager), any member of the Westpac group of companies, The New Zealand Guardian Trust Company Limited, or any director or nominee of any of those entities, or any other person guarantees the Westpac KiwiSaver Scheme’s performance, returns or repayment of capital.