How to buy your first home - tips from the professionals | Protection Solutions

How to buy your first home – tips from the professionals

How to buy your first home – tips from the professionals

November 19th, 2020

You want every advantage that you can get when you’re buying your first home. So how do you make sure that you get the best house and the best deal when you’re buying in a seller’s market? We reached out to our professional mortgage advisers; Amber Bannister,  Nicky West and Jason Hurdle for their top tips and advice.

How to buy in a sellers’ market:

The common thing is the hope that you will get a bargain. It often takes a couple of offers before people realise they actually need to put their best foot forward. Pre-approvals and the Valuation requirements are important. It is also important to eliminate short term debt as much as possible. KiwiSaver, HomeStart Grants and doing your due diligence up front will help you get ahead.

First home buyers need to be pre-approved for mortgage finance before they start putting offers in on Properties, even being pre-approved does not mean you can put in a cash offer on a property. We need to make sure that a bank is happy to take a security over a potential purchase property prior to putting in a cash offer, your property due diligence also needs to be done prior and full house insurance with no exclusions also needs to be confirmed prior to submitting a cash offer, once a cash offer is accepted it is full and final.

Advice for buying a home of the plans, (a new build):

Demand for these is huge currently as they’re building multiple, but cheaper properties on sections. These properties are compact but often well laid out. Restrictions on these buildings such as grounds, noise, parking and construction delays always occur. Timeframe is long, while banks will only approve for a max of 12 months.

Buying a newly built property or a “”Turn key “”property off the plans can come with its unique lending requirements, some banks will not provide a pre-approval until a build scenario is less than 3 months out from completion however most build scenarios or turn keys can take up to 12 months to complete. Some purchasers are committing to these purchases 12 months out from completion without pre-approved finance.

Should I use the bank of Mum and Dad?

If this is an option, absolutely. There are lots of different options that can help such as parental equity loans, gifting, Deed of Debts, guarantors. Having a 20% deposit gives huge benefits.

The bank of Mum and Dad can come in different forms, normally parents can gift funds which is the most common, Gifted funds can’t be a loan as such as the funds are gifted for the purpose of purchasing property and the funds are non-repayable. Parents can sign deeds of acknowledgements which confirm the gifted funds can be paid back in the future and depending on this arrangement a bank may treat this as a loan not a gift. Parents can also provide limited guarantees using security over their existing property (the parents are not joint borrowers)  this helps provide the deposit /equity a first home buyer may be lacking which can improve the mortgage offer for them but they still need to meet the banks servicing requirements. Parents can also help out by becoming joint borrower and owners, this is more complicated as all parties to the loan will also need to on the ownership of the property.

Finally..

Buying a home in a seller’s market doesn’t have to be a super stressful experience. Follow the tips above to put yourself in the most ideal position possible and help increase your chances of getting exactly what you want. Contact us today to discuss all your insurance needs before buying your first home, we can also get you in touch with some excellent mortgage advisers that can help you with the process.