Broker shares his easy-to-use checklist
An Auckland mortgage adviser has compiled a list of helpful hints for New Zealanders wanting to buy a home in 2023.
Jarrod Kirkland (pictured above), national manager mortgages of Auckland brokerage The Mortgage Lab, told stuff.co.nz “if you have decided to make the exciting leap into the property market this year, you may be unsure where to start.”
Make a budget
Kirkland said people should start by reviewing their budget to get an idea of where their money is being spent.
“Sit down and print out six months of previous bank statements and go through it line by line,” Kirkland said. “People are usually pretty surprised or horrified in some cases about where their money is going. Until they write it down, they don’t realise they spend so much on coffees and it’s a bit of an eye-opener.”
Kirkland said people can look at where there is leakage in their current budget and tidy it up quickly.
“Banks tend to want three months’ worth of statements and would go through them in the same way to assess a borrower’s spending habits,” he said. “You only have one chance to make a first impression with a lender, we want to present it in the best light.”
Sort your debt
Kirkland said people should focus on getting rid of their short-term or high-interest debt.
“The banks will allow you to borrow money if you have short-term debt but the less you have, the better your chances. If they could not wait until they were debt-free, potential borrowers would be better to consolidate small debts into one loan. It’s much cleaner to go to the bank with one loan rather than lots of little ones.”
Check your deposit
Kirkland said borrowers can use online calculators to work out roughly how much they might be able to borrow and from there, they can determine whether they have enough deposit to proceed.
“In general, people should have a 20% deposit but it is possible, albeit harder, to get loans with smaller deposits,” he said.
“A borrower who does not have a sufficient deposit would need to work out a plan to save it. From their budgets, they would know what surplus they had in their income – you want to commit as much of that surplus as possible to a savings plan.”
Research
Kirkland said it was a good idea to research potential areas and understand the full costs involved in owning a home.
“If you are purchasing with a friend or new partner, make sure you have a relationship property agreement or property sharing agreement. That way, if something happens in the future, it is clear what needs to happen if they want to get out of the property.
“It could also be worth considering mortgage protection insurance when the time came to buy and buyers should have a will in place.”
ILG Mortgages adviser and self-confessed “Smarter Mortgage Lady” Rachael Thompson has created a checklist that she uses when working with first home buyer clients, which include saving the biggest deposit you can.
“Whether that’s for buying now or in the future, putting aside as much savings as you can will help with buying a home,” Thompson said. “Some first home buyers are using their Kiwisaver or help from the ‘bank of mum and dad’.”
On January 6, CoreLogic NZ revealed New Zealand’s property market downturn worsened in December, bringing the total national decline for the 2022 calendar year to -5%. This news has been welcomed by home buyers who are actively trying to get into the market.
CoreLogic NZ head of research Nick Goodall said it was a significant turnaround after the market grew by 27.6% in 2021.
“New Zealand’s property market peaked in March (2022) with the first monthly fall in prices recorded in April,” Goodall said.
“Since then, we’ve seen the rate of decline accelerate as the official cash rate climbed higher and affordability constraints kicked in. However, during the last quarter of 2022, there were some signs of light at the end of the tunnel as expectation of further interest rate increases diminished.”
