With tightening lending criteria, increasing interest rates, and sky-high prices, the property market is a minefield for the seasoned pro, so how do you get your head around it as a first-home buyer?
We’ve pulled together the top 6 things first-home buyers can do right now to lock in a home loan with less than 20% deposit! Spoiler alert, it can be done!
- Expert advice
The first thing to do is talk to us! Lots of people will look to their bank as being the first stop for a home loan and, while the bank might have said yes in the past, the reality now is that with recent changes, they can no longer lend less than 10% of their available finance to those who have less than a 20% deposit.
Where once the bank might have had $100m to lend to those with less than a 20% deposit in the month of January, now they might only have $50m to lend for that same period.
As a mortgage broker, we have access to all lenders, so we’re able to stretch our net wider to be able to get your finance over the line.
- Clean up your accounts!
It’s now more important than ever before to ensure you have no unarranged overdrafts, no outgoing payments related to gambling, no payments going overseas, and that you can demonstrate consistent savings.
Whereas previously you weren’t judged on your spending habits, now there’s a magnifying glass directed at your accounts and the 20 times you’ve ordered UberEats in the past month may now mean the difference between being able to secure a home loan and not being able to.
- Quash any short-term debt
Getting approval is still achievable… if you have no credit cards, vehicle loans, store cards, Afterpay or Oxipay! Every single one of these short-term debts lowers your affordability rating when it comes to securing a home loan.
As a finance specialist, we might be able to help you consolidate your lending into one simple loan which may increase your chance of approval. Just another reason to make a mortgage broker the first port of call when it comes to getting finance approval!
- Proof of genuine savings
Now more than ever, banks want to see the deposit in your account and that your deposit is made up of at least 5% in genuine savings (or Kiwisaver, which is included as genuine savings).
So, if you’re looking at a $700,000 property and you’re getting a $70,000 gift from family, chances are you’re not going to be able to secure the loan yourself. If you’re getting a gift towards your first home, that’s when you need to talk to us. We know what needs to be done to get your finance across the line.
- Different property = different chances
The number one question the banks want to know is are you looking to build or buy. In fact, even the type of property will factor into their decision.
Whether you’re looking to build on the outskirts of the city, you’re looking to purchase a cross lease townhouse in the central city or you’re hoping to pick up a piece of rural land in Leeston, the banks’ appetite to finance you too will be different.
The type of land, the unit title, monolithic cladding, as-is-where-is properties… all these factors form part of the decision to finance, so if you make us your first point of contact in the property journey, we can talk you through what can and can’t be done, then help you get where you want to be.
- Understanding the cost of buying
Finally, it’s important to understand the costs involved in buying a home. While you’ve got your initial costs, which might include legal fees, building inspections, and loan establishment fees, it’s critical that you understand the ongoing costs of owning a home, which can vary between properties (such as body corporate fees). Ongoing costs include rates, house insurance, and life cover (not mandatory).
We can help first-home buyers get their head around these costs, including which ones are a must-have and which ones are a nice-to-have, to really understand what their affordability really is.
At Loan Market Paramount, we’re fully committed to helping first-home buyers on their property journey, utilising our skills and experience to support their goals and plans. So don’t hesitate to come and see us as your first point of call.