Make 2023 the year you buy a house!
The new year is a time when lots of us start thinking about making resolutions. If one of yours is to buy a house in 2023, you might be wondering what you need to do to make it happen.
So, is this going to be your first-home year? Here are some practical steps you can take.
Pay off debt
One of the most important steps is probably going to be to clear any consumer debt you have, as it’s something that lenders consider when assessing your mortgage application.
High-interest debt in particular can be a drag on your home deposit-saving efforts, but any debt you are servicing is a commitment that will reduce the income you have available to service a mortgage. So, make sure you focus your efforts on shaking off your debt as soon as you can.
Do you have a student loan? If so, depending on the level of deposit you have saved, it can make sense to pay off that loan faster than the minimum required, if you want to boost your eventual borrowing power. Although it is interest-free, the existence of a student loan reduces the amount of money you have coming in each month, which can mean you are not able to borrow as much.
Start getting your bank history in order
The lender will require you to present a three-month bank transaction history, as part of the mortgage application. So, now can be a good time to cut down on unnecessary spending where you can and try to get your accounts in order – with no unarranged overdrafts and no bills going unpaid. Work on getting your accounts into a state where you’re happy to share them in your application.
Check your credit score
Have you checked your credit score lately? It’s free to find out and this can be a good opportunity to make sure all the information held about you is correct. If there’s anything on your credit history that shouldn’t be there, take the opportunity to challenge it.
Check your KiwiSaver balance
Are you planning to use your KiwiSaver plan for a first-home deposit? Have a look at your KiwiSaver fund to work out how much is available to you, and what could be there when you come to withdraw it. Your KiwiSaver provider can tell you how much you’ll be eligible to withdraw if you meet the criteria.
What’s more, depending on your income level and the price of houses you’re looking at, you may qualify for a First Home Grant. The amount you qualify for is dependent on how long you have been contributing to the scheme, and whether you are buying a new or older house. Make sure you contact Kainga Ora to get more information about the First Home Grant.
Seeking professional advice
Even if you’re not yet ready to make a home loan application, there is value in making an appointment with a mortgage adviser. We can help you to understand what you need to do to get home loan-ready, and what you might be able to afford in your current circumstances. Sometimes people are pleasantly surprised that a first home might be closer than they expect – or they value having clear guidance about what they need to focus on.
Like to talk?
We want to see you buy a first home this year, too. Get in touch with us today to start putting your plan in place to get there.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.