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Saving for a deposit to buy your first home is potentially one of the toughest, and longest, roads on your journey to home ownership. But once you’ve saved for it, what do you do next?
Buying a home is a big investment, so you’ll likely want to be clear on all the stages that go into it.
Picking where you want to buy
While you may have had an ideal location in mind when you started saving your deposit, things may have changed, either in your life, the housing market, or the area you originally thought of buying in.
So, now that you have your deposit, it’s time to decide where you’re actually going to look. There are several factors to keep in mind when deciding this. It can help to talk to friends and family about the areas they live in, look for suburbs that are affordable for you, and knowing which facilities you want or need close by, like schools, transport, supermarkets, shops, etc.
The first thing to focus on is location. Deciding on which property you’re interested in comes later. Once you’ve chosen an area, it may affect how much of a deposit you need, increasing or decreasing it.
Applying for a home loan
Home loan applications are big, with banks asking a lot of questions about your financial situation.
The key information to have ready to share with your bank are a proven track record of saving (which should be covered by your history of saving your deposit), evidence of your income, a good understanding of your expenses, and proof of your deposit. Any debts you already have can affect the amount you may be able to borrow, so paying off what you can, or being able to show steady progress on paying down existing debts, can help make the process smoother.
With those things in order, and a reasonable budget in place, it should be pretty straightforward to fill out a loan application.
Getting conditional approval
Once you’ve got conditional approval on your home loan, you’ll know how much you have to buy your first home. You’ll need to check this against where you’re looking to buy to make sure it’s within your budget.
Your conditional approval will usually say how long the approval lasts for. If, for some reason, your application was declined, you should be able to talk with the bank or mortgage advisor on why it was declined. They should then be able to help you find a way to re-apply and get an approval.
Choosing a home
Here’s where it gets complex, as finding or building the property that suits your needs is an incredibly personal thing. Luckily, there are a lot of tools at your disposal these days to help you make that choice. You can browse homes online in areas you’re interested in, be walked through 3D renders of potential plans, or visit show homes to get an idea of what you like.
You can also talk to local real estate agents in the area you’re interested in, as they may know of properties that haven’t been listed yet, ones that need to be sold quickly, developments under construction, or plots of land to build on.
You’ll also need to decide whether you want a new-build property or to buy off-plan. If you’re looking at an older home, are you happy to renovate and bring it up to par or do you want something that’s already been refurbished? Or, will you be building your property from scratch?
Each option comes with its own pros and cons, so it’s important to try and explore these early and decide what path you want to take.
Attend one of BNZ’s First Home Buyer Seminars
There’s a lot to take in and decide when you’re buying your first home, and there are plenty of complex tasks you need to perform and get right to ensure you get the outcome you want.
Luckily, BNZ has pulled together a free, comprehensive seminar we’re hosting across the country, answering all the questions and providing all the tools you need to buy your first home.
These seminars also have local solicitors and/or real estate agents on hand to answer questions and provide insight into the local housing market. So, if you’re thinking about buying your first home, and have questions you’d like answered or insights into the world of properties and mortgages, sign up for our free seminar.
Lisa McShane
Lisa McShane is the Head of Home Loan Partners and Specialists at Bank of New Zealand (BNZ). With over 29 years in the banking sector, Lisa has honed her skills in customer engagement, team leadership, and financial advising.
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