First home buyers navigating the dynamic New Zealand property market often face a plethora of myths and misconception. In a property market where factors such as location, demand and economic conditions play a crucial role, it’s essential to debunk these myths and help home buyers make informed decisions about home ownership. Read on as we set the record straight, by busting these 8 common myths surrounding home buying in New Zealand.
Myth 1: You Need a 20% Deposit
Reality: While a 20% deposit is considered ideal, it's not always an absolute requirement. There are options available for home buyers with smaller deposits, such as Government-backed schemes and specialised mortgage products, and it's crucial to explore these alternatives to find a solution that suits your financial situation.
Myth 2: You Should Only Buy a House You Plan to Live In
Reality: Your first home needn’t be your forever home, but it could be an important first step onto the property ladder.. Buying a property as an investment could provide rental income and potential capital gains with the option to sell later and buy your preferred property.
Myth 3: It's Cheaper to Rent Than to Own
Reality: When comparing renting vs. owning, it's crucial to consider the long-term financial benefits of home ownership. Over time, it’s possible to build equity in your home through home loan repayments and improvements in property value, which could provide you with a valuable asset for the future.
Myth 4: You Can't Get a Home Loan If You Have Other Debt
Reality: Having other debt doesn’t necessarily disqualify you from securing a home loan, as lenders will assess your overall financial picture, including income, expenses, and debt-to-income ratio. Even if you have other debt, managing your debt responsibly and maintaining a stable financial history can improve your chances of mortgage success.
Myth 5: Now is a Bad Time to Buy
Reality: Trying to predict the ideal time to buy property can be counterproductive. While property values may have dipped in some regions, historically, property values in New Zealand have shown long-term appreciation. Focus on your financial readiness and consult with experts to make well-informed decisions regardless of short-term market fluctuations.
Myth 6: You Need an Excellent Credit Score to Get a Mortgage
Reality: While a good credit score is certainly important, it's not the only factor determining mortgage approval. Lenders consider various factors, including income, employment history, and overall financial stability. So, even if your credit score is less than perfect, you may still qualify for a mortgage.
Myth 7: All Lenders Offer the Same Deals
Reality: Lenders vary in their offerings, interest rates, and terms, which is why shopping around for a mortgage ensures you get the most suitable option. A mortgage adviser can help you compare home loan options and negotiate with lenders to find the most suitable mortgage for your needs.
Myth 8: It's Better to Apply Directly with Your Everyday Bank
Reality: It may seem convenient to approach your everyday bank for a mortgage, or you may believe that loyalty to your current bank will be rewarded with favourable terms. However, that’s not always true. Different lenders have different strengths, and the bank you've been with for years may not necessarily provide the most competitive mortgage options.
A broad spectrum of possibilities
Working with a mortgage adviser can open up a broader spectrum of possibilities. Mortgage Express branded mortgage advisers have access to a variety of lenders, including those lenders that may not be as well-known but still offer highly competitive rates and terms.
To explore a range of mortgage options tailored to your unique financial situation, that could potentially save you money over the life of your loan, talk to a Mortgage Express branded mortgage adviser today.
