Express speaks to ASB’s head of home lending Vince Clark for some advice on dealing with the bank when buying your first home.
What should you consider as a first homebuyer before coming in to ASB and having a chat?
Borrowing a large amount of money to buy a house can be daunting and stressful. But the bank is here to guide you through the process and provide you with all the options.
If you are looking to take out a mortgage, here are some things to consider:
The Reserve Bank’s current loan-to-value ratio (LVR) restrictions mean many borrowers need to have a deposit of at least 20 per cent, but banks do have some capacity to lend to those with smaller deposits so it pays to talk to your bank. The Reserve Bank has also signalled some changes to their LVR restrictions later in the year so talking to your bank early about your plans is important.
If you don’t have a deposit, it’s still good to start building a relationship with your bank. Talk to your banker about what you are trying to achieve and see if they can help you with your savings goals.
Be upfront about your financial position from the outset.
Be prepared before you meet with the bank by knowing what products you have from your bank and what you pay for them.
Competition between banks in the home loan market means there are some great deals on offer to first home buyers at the moment. Banks are often flexible with their offers and will consider factors such as how much equity you have in the property and how much other business you have with the bank.
Broadly speaking, what are the finance options available?
Getting a mortgage remains the most common finance option people use to buy a home. Loans come in all shapes and sizes. You’ll need to make decisions on fixed or floating rates (or a combination of both), or whether you will make interest-only repayments or take out a specialised insurance plan.
Once you’ve decided on the type of loan you want, ask the bank for a pre-approval, which will outline how much you can borrow. This is particularly useful when you want to go to auctions and put a bid on properties.
KiwiSaver can be used to help you into your first home. If you’ve been in KiwiSaver for more than three years, you might be able to withdraw some of the funds to put towards your deposit. Depending on your income and how much you spend on a house, you might also be eligible for a KiwiSaver deposit subsidy. We recommend you explore whether the KiwiSaver subsidy and withdrawals are options for you
Does the current current economic climate make now a good time to be looking at getting a loan?
Property ownership has been, and is likely to remain, a key goal for most New Zealanders. Interest rates are currently falling, which means there are some great deals to be had as far as home loan interest rates are concerned. Interest rates are of course subject to change, so it is best to talk to your bank about your property goals so they can tailor a solution that meets your needs.
The bank takes a range of factors into account in making lending decisions. These include understanding your credit history and ability to service the loan repayment, based on your left-over income after expenses.
Why consider ASB?
There are plenty of good reasons why you should take a good look at an ASB home loan. We have competitive interest rates, great product options and expert staff to help you every step of the way.
Visit www.asb.co.nz for more information about banking with ASB.
Article | Levi Joule.