I've Got My First Home Deposit Sorted, What Should I Do Next?
You‘ve done the hard yards, you’ve scrimped and saved, and you cautiously think you’re ready to move to the next stage of buying your first home! High Fives by the way, you have just achieved the most difficult milestone of the journey, and you’ve stayed the distance. We know how hard you’ve worked and now the fun part begins! But where to from here?
There is no right answer but we’d like to share some thoughts on aspects to consider which can make the process less stressful, reduce heartache and ultimately save you money.
First things First...
Whilst it's really tempting to jump into the fun piece - house hunting, we recommend you hold off on your search until you have at least an indication of how much your budget will be. Taking this approach will save you a lot of heartache and stress. There is nothing more heartbreaking than falling in love with a property and then finding out you can't afford it. So, save yourself the pain and get some preapproved finance or at the very least a good indication from either a bank or reputable mortgage adviser of how much you can afford to borrow.
“Get the right advice from the right people”
There are a lot of moving parts in this next part of your journey and whilst this can be daunting, it needn't be if you have the right team of people working with you to guide you through the process. Family and friends will often have lots of advice to offer and whilst that’s great, it can also sometimes be out-of-date advice or simply wrong information, so we recommend engaging with a bank or mortgage adviser sooner rather than later.
Mortgage Adviser or Bank?
This brings us to the first decision you need to make. Should you go directly to your bank, or should you approach a mortgage adviser? Before deciding what option is best for you there are a few things to be mindful of as follows;
“Not all Banks are equal”
Aside from government requirements, all banks have their own lending criteria and policies. Whilst you may not meet one bank's criteria, there may be another whose criteria you do fit. This means you may need to approach multiple banks.
“Research can save you thousands”
Get informed about pricing and deals on offer from the various banks, that way you can encourage your bank to match or better a current offer in the market. Interest.co.nz is a great resource for this.
“Banks need encouragement to sharpen their pencils”
We can all agree that banks provide a variety of great products and services but let's not forget they are a business whose purpose is to deliver profits for their shareholders. Banks work on margins and base their pricing according to the risk and, more importantly from your perspective, competitor pricing in the market.
“Never assume you are getting the best deal “
Always ask your bank if they can give you a better deal both in terms of price and lump sums for contributions towards costs. Whilst all banks have their advertised rates, they can often offer further discounts if they want your business and are competing!
“Not all Mortgage Advisers are equal either”
Mortgage advisers can save you a lot of time and get you a competitive deal, but mortgage advisers, like people, come in all shapes and sizes. Do your research and go with a recommended adviser with a track record. A great adviser will guide and support you through the whole process and will proactively work to get you the best price and package. It's worth asking your adviser too what banks they are affiliated with as this can vary from Adviser to Adviser. It is also a good idea to understand why your adviser has selected a particular bank for your application to ensure that your best interests are being looked after. Your adviser should also be transparent about how they are being remunerated for their work.
“Mortgage Advisers can help you prep”
One of the great aspects of using a mortgage adviser is that they can assist you with getting your accounts in order. Banks review applications carefully to ensure applicants meet their credit criteria including things such as credit ratings and account conduct. If any of these areas fall short your application could be declined. This sometimes can hinder future applications with that bank. A good Mortgage Adviser will work with you to address any shortcomings before an application is submitted, and give your application the very best chance of being approved the first time.
In our next blog, we'll talk about the fun part … house hunting but in the meantime, if you're nervously wondering if you're ready to take the next step but not sure, why not take our home readiness quiz or book a 15 min no obligation chat with Dustin our first home buyer adviser!
