Property – Getting on the property ladder

A quick glance at the statistics show home ownership rates have been steadily declining for the past 15 years and have declined more so in the past five years. In 1986 at the peak, 73.5 per cent of us owned our own home. This dropped to 53.2 per cent in 2006 and in the most recent census  in 2013, this dropped to 49.8 per cent. As some commentators like to regularly quip “we are creating a generation of renters”.

So how hard is it to get on the property ladder? Well, it is certainly has become harder, but not impossible. Like the major life decision to ‘get married’ requires some planning, so does the decision to buy a house. It requires some well thought out planning, some budgeting, some saving and some good financial advice to ensure you are on the right path. Over the past 27 years I have helped hundreds of couples achieve their goal of home ownership, but some don’t  make it and give up on the dream far too early. The recent rises in our property market, the reserve bank rules requiring 20 per cent deposit, and the changes to the responsible lending code have made it more difficult than it’s ever been, but it still can be done. Getting a mortgage approved has become harder as the banks now look at your spending habits more closely than ever; you need to get your finances in shape before you apply!

This is where a good financial advisor can help. We know what the banks look for and what they want to see.  A local real estate agent tells me the average sale price for Warkworth in the last three months is $705,000. So to start with you would need a whopping $141,000 deposit to buy in our town! How long would it take to save this – years right! And you still have to pay rent while you save. The good news is that there are a number of ways you can reach home ownership sooner, it just requires some planning now, some creativity and perseverance. So if you want to get on the property ladder, here are the things you need to do. Sit down with a financial advisor and go over where you are now, what you want to achieve and set a path to get there. This will include things such as setting some savings goals, joining Kiwi Saver, paying off debt, reducing expenses, exploring if family can help with the deposit, be a guarantor or provide security for the loan (sometimes you can borrow 100 per cent with other security). Review your spending habits, conduct a bank account audit (find out where does your money go?), learn to operate without the overdraft or credit card and live within your means. If you regularly go overdrawn without an arrangement, miss loan or credit card payments, the bank will decline your mortgage for poor account conduct, so let’s get you in shape so they can’t say no!So what will it be, lifetime renter or homeowner?