There is no doubt whatsoever that it has become very difficult for first home buyers to get onto the wider Auckland property ladder. The rate of house price inflation over the past five years, coupled with a very tight lending market with much tighter lending criteria, has left those who fall outside the box with few or no options our local market. Census results show home ownership rates are dropping, with data showing just 49.8 per cent of people owning or partly owning the house they live in. In the first home buyer range (aged 30 to 40) it’s even less, with just 43 per cent owning a home. Banks have tightened up lending criteria to the point where it has become a real challenge for most applicants to get their mortgage applications approved. These days, you really need to ready yourself and get your finances in order before making any loan application to ensure that you are putting your best foot forward and have
I have compiled the following tips for those aspiring to home ownership to ensure you get yourself ready to apply:
1. Keep your bank statements in a safe place and keep them all in numbered sequence – normally the last six months is required
2. Keep all your credit card and other loan statements handy (the bank wants to see you have been paying bills on time)
3. Keep all KiwiSaver statements. A savings history is generally required to be shown over a 12 to 24-month period. Ability to save is looked at closely. Any big deposits may need to be explained, for example, have you sold an asset or got a loan from someone?
4. Watch your spending habits: four or five transactions a week at a pub, wholesaler or casino will ring alarm bells
5. Withdraw $100 or $200 in cash for your spending; fewer transactions equals less scrutiny, and lower bank fees
6. Pay your bills on time. Bad credit is hard to fix and stays on your file for up to seven years
7. Repair your credit as quickly as possible, and don’t take no for an answer – if you have paid a bill, get adverse credit removed
8. Don’t go overdrawn without an approved overdraft limit. Lenders will decline a mortgage on this basis. Poor account conduct result in declined mortgages
9. Do disclose everything – they check your statements with a fine-tooth comb
10. Keep all payslips, tax returns and employment contracts
11. Set a budget and stick to it. Showing proof of this might get the tick
12. Don’t give up. If at first you don’t succeed, follow these steps and you’ll get there next time round
13. If not in KiwiSaver, JOIN NOW! It’s a no-brainer
Most of all, don’t despair. Everyone’s situation is different, but with some good advice you, too, can get on the home ownership ladder. In fact, I guarantee that if you follow my steps and take advice on what you need to do that, I can get you into your first home. It might not be now, but in six,12 or 24 months, if you follow my advice, you can become a home owner. You just need to follow the plan.