Are you ready for your first home loan?

It can be daunting applying for a home loan for the first time, and there are several things you can do to increase your chances of an approval.

Start to get your deposit ready by budgeting and setting a savings plan. A realistic amount saved regularly, is better than putting too much in your savings account only to have to take it out again. You need to show the bank you can manage money well. Tailoring your spending to what it will be once you move into your first home is a good idea, to work out how much you could save now toward your deposit, and show the bank you can afford that home loan.

A good resource to help you set a budget, repay debt, and work out what a home loan may cost you, can be found on www.sorted.org.

Banks generally require a 20% deposit. First home buyers may be able to purchase a mortgage with as little as a 5% deposit through the government agency Kainga Ora.

Their website has lots of information on how they can help first home buyers, or talk to a mortgage broker. You may also be able to access funds in your Kiwi Saver to fund your deposit as well as your savings.

Banks will look at your account conduct, so make sure you don’t miss payments and overdraw your account. As incurring dishonour fees and late payments may mean waiting to get your accounts in order before getting a home loan.

Not accumulating, and paying back short-term debt before you apply for your loan will look favourable on your application. It will also increase the amount you can borrow as short-term debt can be costly.

If you do need to clear short-term debt including After Pay, you can either start by clearing the smallest debt first or the high interest rate debt first.

I’m available for a no obligation chat about how you can achieve buying your first home and all other residential lending advice.

Janet Bramham