Becoming a homeowner is a significant milestone. However, with the current high interest rates and banks’ stringent lending criteria, buying a first home can seem a bit like a distant dream for some. But it needn’t be so intimidating. We asked Aseem Agarwal, Head of Mortgages at Global Finance if he had any tips on how to successfully secure a mortgage and make that homeownership dream a reality. Here is what he had to say.
Step 1: A Discussion with Our Mortgage Advisor
The first and most important step for any first-home buyer is to have a discussion with one of our mortgage advisors. They will fully assess your financial situation and take time to examine your income, expenses, existing liabilities, and the amount you can put down as a deposit. Our loan affordability calculators, or LAC, uses the same criteria as the major banks, so we can see which banks may be willing to lend to you and we can identify the schemes for which you may qualify. For example, you may be eligible for loans through Kianga Ora which provides loans for low-deposit (5% of purchase price) first-home buyers if your combined gross income is not more than $150K per year. Other terms and conditions also apply.
“At Global Finance, our job is to make sure that every potential homebuyer has a full understanding of all their options and eligibility,” explained Aseem.
Step 2: Understanding the Repayments and Lending Process
Once you have a clear picture of your eligibility and various banks’ lending criteria, Aseem said his team will work closely with you so that you fully understand your obligations and potential loan repayments. They will walk you through all the important details so you are prepared and can confidently move forward to the next steps.
Step 3: Do Your Homework and Shortlist Potential Properties
Next, it’s time to do some homework. Aseem advised starting by shortlisting the areas where you’d like to buy your home. Then, you should define the criteria you’re looking for in a house, such as size, location, and amenities, and determine the price range you can afford. This will be based on your loan eligibility and how much deposit you’ll have.
While making your shortlist, you’ll encounter terms like LIM (Land Information Memorandum), sale and purchase agreement, conditional offer, unconditional offer, sale and purchase agreement building inspection report, and valuation report. You’ll need to familiarise yourself with these concepts.
“We want you to feel confident and well-prepared, so we suggest you attend auctions, open homes, and engage in discussions with real estate agents and legal experts to familiarise yourself with the terminology.”
Step 4: Seek Pre-Approval for Confidence and Flexibility
With your potential properties and locations identified, it’s time to seek pre-approval. Aseem said it’s a good time to again engage with a mortgage advisor.
A pre-approval from a bank means the bank is willing to lend to you and that the houses you are looking at are suitable or acceptable to them. A pre-approval also means you can bid at auctions, and it allows you to negotiate with sellers more effectively.
Banks provide pre-approvals for a limited period, typically two to three months. Pre-approvals become contractual, obligating the bank to reserve a significant amount of money for a specific time. Therefore, they are more willing to reserve funds for borrowers whom they see as being genuinely serious about purchasing a property and who has the ability to settle. If a bank feels you are ‘shopping around’ various lenders and not yet serious about buying, lender and sometimes mortgage broker both may be unwilling to pre-approve your loan.
Step 5: Getting the financing you need
Aseem explained that because his team is constantly in touch with banks directly, as opposed to getting information through the media, so they know what the banks’ lending criteria are. By using their expertise, you won’t waste time applying for pre-approval from banks whose criteria you don’t meet. The Global Finance mortgage advisors will make sure you understand whether you qualify for pre-approval and will be there to present your case in the best possible light to the most appropriate lender.
“Having a pre-approval in hand places you in a position to seize the right opportunity. Our experienced advisors will guide you, so you are best placed to get pre-approval from a bank and can then buy when and where you want.” However, many lenders prefer and give priority to approve your home loan once you have signed a conditional sale and purchase agreement subject to finance approval of sufficient loan amount to buy your home.
Step 6: We’re in the business of helping our clients achieve their dreams of homeownership
“Your dream of homeownership can be within your reach, and we are here to make it a reality”, says Aseem. There is no denying that as a first-home buyer, acquiring a mortgage and becoming a homeowner comes with its challenges. However, the right support and guidance make the process so much easier.
The team of expert mortgage advisors at Global Finance is always available to answer your questions, provide support, and offer practical advice on your house-hunting journey. But as Aseem reminds us, their financial services don’t just stop with securing a great loan.
Step 7: Mortgage Genius Plan to save interest on your home loan so that you become mortgage free sooner:
The additional benefit to you through Global finance that we offer you our Mortgage Genius Plan which help you to pay off your home loan faster than you’d ever thought possible and save your interest and time both that too as per your capacity and without increasing loan instalment.
Contact Global Finance today on 09 255 55 00 or info@globalfinance.co.nz and see how they can help you to achieve your goal to have own house in New Zealand.
The information and articles published are true to the best of the Global Finance Services Ltd knowledge. Since the information provided in this blog is of general nature and is not intended to be personalized financial advice. We encourage you to seek Financial advice which is personalized depending on your needs, goals, and circumstances before making any financial decision. No person or persons who rely directly or indirectly upon information contained in this article may hold Global Financial Services Ltd or its employees liable.