Cracking the first home code

Buying your first home doesn’t have to be confusing. Brooke Reynolds from Rapson Loans and Finance says there are more loan options available than most people realise. With the right advice, you can find a solution that fits your budget, deposit size, and property goals.

If you're a first-home buyer, you might be surprised by how many loan options are actually available to you. It’s not just one-size-fits-all.

Here are three main types of loans to consider, along with how each one works:

1. First Home Loan (via Kāinga Ora)

Some banks offer First Home Loans in partnership with Kāinga Ora. The bank handles the initial assessment using its own lending policies, and then Kāinga Ora gives final approval for both the loan and the property you're looking to buy.

It’s important to note that just because Kāinga Ora gives the green light doesn’t mean the terms, such as how much you can borrow or the interest rate, will be the same across all banks. These can vary depending on the lender.

The minimum deposit is five percent, and the deposit can come from personal savings, a gift, or proceeds from selling an asset. Not that you’ll need to meet Kāinga Ora’s eligibility criteria, which can be found at kaingaora.govt.nz

2. 10% Deposit Home Loans

These are widely available through all major banks. While banks may pause pre-approvals based on application volumes, you can still proceed by making an offer on a property. Once your offer is accepted, the application becomes a live deal and can be assessed. Some lenders still offer pre-approvals for auction purchases. The minimum deposit is 10 percent, and at least five percent must be from genuine savings (e.g. KiwiSaver, cash savings, investment funds, or sale of an asset).

The remaining five percent can come from a gift or a deed of debt from family. Bank rates vary between lenders, however the rate will be higher than a 20 percent deposit loan. Some banks may offer a $5,000 cash-back for first-home buyers.

3. 5% Deposit Loan (Non–Kāinga Ora)

There’s at least one bank offering five percent deposit loans for borrowers who don’t meet Kāinga Ora’s criteria. This loan requires genuine savings for the full five percent deposit. Pre-approvals are not offered, but live deals (including auction purchases) will be assessed. Availability is subject to bank capacity – some may pause new applications from customers not already with the bank.

Important to note for all loan types

A professional property valuation is required for all three loan types. Make sure your offer includes enough time for both the assessment and valuation. These loans are not available on interest-only terms – you’ll need to make principal and interest repayments from the start. Navigating your first home loan can feel overwhelming, but a trusted mortgage adviser can guide you through the process. Ideally, choose one with access to all lenders, as borrowing limits and interest rates vary significantly between banks.

RAPSON.CO.NZ

Master your mortgage

Brooke Rapson of Rapson Loans explores the many benefits of working with a mortgage adviser.

photo JAHL MARSHALL

Buying a home is one of the most significant financial decisions a person can make. With the variety of banks and mortgage options available, navigating the process can be overwhelming, especially for first-time buyers.

A mortgage adviser plays a crucial role in simplifying this journey, offering expert advice and access to a wide range of mortgage products. Here are some key benefits of working with a mortgage adviser.

1. Access to a wider range of mortgage deals

One of the biggest advantages of using a mortgage adviser is the ability to apply to multiple banks and other financial institutions. This is something most people would never have time to do on their own. Unlike going to a bank directly, a good adviser knows all the banks and the products they offer and can target your application to the most suitable institutions. This means they can find deals that best suit your financial situation, potentially saving you thousands over the life of your loan.

2. Expert guidance and market knowledge

Mortgage advisers have extensive knowledge of the mortgage market, interest rates, and lending criteria. They stay updated with changes in regulations, policies, and economic conditions that can impact mortgage approvals. Their expertise helps borrowers understand complex terms and conditions, ensuring they make informed decisions that align with their financial goals.

3. Tailored advice based on your financial situation

Every borrower has unique financial circumstances, from income levels and credit history to employment type and debt obligations. Mortgage advisers assess these factors and recommend mortgage options that match individual needs. Whether you’re a first-time buyer, self-employed, or looking to refinance, an adviser can find solutions tailored to your situation, increasing your chances of approval.

4. Time-saving and hassle-free process

Applying for a mortgage involves extensive paperwork, applications, and negotiations with lenders. A mortgage adviser streamlines this process by handling much of the administrative work, from gathering necessary documents to submitting applications on your behalf. This not only saves time but also reduces stress, allowing you to focus on other aspects of buying a home.

5. Support throughout the mortgage process

A mortgage adviser provides ongoing support beyond the initial mortgage application. They help with negotiations, liaise with solicitors and estate agents, and ensure a smooth transaction from start to finish. Even after securing a mortgage, they can advise on refinancing options or future financial planning. In conclusion, working with a mortgage adviser can save time, money, and stress while providing expert guidance tailored to your financial situation. Their access to exclusive deals, in-depth market knowledge, and ability to navigate complex processes make them an invaluable resource for homebuyers.

RAPSON.CO.NZ