Our Top Tips For First Home Buyers In Tauranga
A few extra tips to get yourself prepared to own your own home.
The key to saving is knowing what you are spending. Looking at your bank statements can be scary but is a fright most of you may need. We like what's called the traffic light method. Take your last two months bank statements, and have a. red, orange and green highlighter. Highlight in green your necessities – Rent, power, food. That's it. Secondly your musts, in orange. Fuel, phone, internet, insurance goes here. Then your wants in red. So debts, entertainment, takeaways, chocolate, gym, for example. Now total all these categories up. Once you’re over the shock, start at the red, and see what can go, then what you can trim in orange. You will be surprised what a few tweaks can change. We don't want your life to end with a loan, so not all the red goes, but even cutting back half may surprise you to how much you can save in a month.
A mock run of your mortgage is a great way of figuring out your budget. Say your repayments on your home loan would be $350 pw. Plus $75 for insurance, rates and water. So, $425 per week. Then take your rent, say for example you’re paying $350, you have a difference of $75. Put that $75 a week away each week for a month, without missing. If its a bit tight, and your struggling week on week, then it's time to review the budget. As soon as you buy your home, that extra $75 per week will be coming out of your account, whether you like it or not. Understanding your budget is imperative.
A debt consolidation loan can be a good thing, both to tidy up multiple loans, but also to help with repayments, and interest rates, so definitely worth considering. But Understanding your debts, and how they work can go a long way. Remember to focus on the debts with the highest interest rates first, then work your way down. Don't be afraid if you have some debt, but just make sure you're not missing payments.
Buying With A Friend
Buying on one income can be difficult with today’s house prices. If you are struggling to buy by yourself, have a look into buying with a friend. It's a great way to get into your first home, having twice the income, and twice the deposit, and a great opportunity for both of you to get on the housing ladder. Make sure you plan well though, and both have an agreement on things like time of ownership, when/how to sell, and are both protected well, talk to your lawyer first.
We can't stress enough how important it is to have a good lawyer and agent with your through this process. Finding and agent you can trust is the difference between this being enjoyable, or a nightmare. There will be a lot of new information come to you in buying your first home, so having a lawyer you can talk to, and worry about the finer points makes it a whole lot easier.
Don't overthink it. You will get a lot of opinions on what you should do when you decide to look at buying your first home. We would say the number one bit of advice, is don't overthink it. Let the process be exciting, if you're ready to own your home, and have budgeted, don't pay attention to your friend that knows someone that says the market will drop or rise. The best time to buy your own home is when you feel ready.
Investment Property Opportunity In Tauranga
The positive Tauranga property market captures the ideal opportunity for those enjoying solid equity in their existing owner-occupied homes to consider utilising that equity to assist in the purchase of an investment property. Considerations of bank lending criteria, investment return on capital employed, rental income, and loan repayments are all important elements that can be discussed with our experienced team of mortgage advisers. The right loan structure of existing borrowing early, is paramount to ensuring that repayments are affordable, both within household budget, but are also in meeting bank affordability assessment calculations. It is prudent to set repayments at the highest possible level of affordability, which will enable a greater reduction of the principle balance and reduce the overall cost of interest paid. This in turn, increases the level of equity in the property, coupled with any inflationary appreciation of the property’s value, can present some positive leverage capacity to borrow additional funds to assist with the purchase of an investment property. It then becomes a process of determining overall borrowing capacity within current bank lending “speed limits”, known as LVR (Loan to Value Ratio) rules. These limits can vary between owner occupied property and investment property, and become a key indicator to determining the ability to proceed with an investment property.
Discussions with other professional advisers is critical also, to confirm any tax implications, and to determine the impact of any potential capital gains tax should a property need to be sold, and perhaps ownership entity. Consideration also needs to be made of the costs of owning an investment property, rates and insurance costs, together with repair and maintenance allowances. Budgets need to include the cost of borrowing, from which it can then be determined if there is a surplus or deficit of rent after costs. Any deficit may need to be funded from personal incomes, and the impact of that should be considered on the household budget accordingly.
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