Top tips from first-home buyers

Want to buy a house in the future but don’t know where to start? First-home buyers around New Zealand share the money-saving secrets that helped them get into their first home.

Sort your finances

Too many people think buying a house is a good idea without organising the most important ingredient first – their finances, says first-home-buyer Blair.

“Speak to a mortgage broker, they will negotiate the best finance deal available at the time of purchase,” Blair says.

“They will also be able to help you contact banks to obtain pre-approval and an indication of what deposit amount you will need to save.

“Window shopping for houses isn’t as fun as owning the keys to the front door.”

For Rachel and her partner, having a financial planning session with their bank paid off. That way they knew how much they needed as a deposit and how much they could borrow.

“Knowing what we were working towards and having a timeframe in place helped big time.”

Reduce your debt

Once you’ve bought your house, “put as much money on your mortgage as possible,” says Christchurch-based Nadene.

“We were in the fortunate position of having dual incomes and, along with lifestyle changes, allocated the majority of one wage to the mortgage.

“Having a lot of the mortgage in a floating/revolving account meant we weren't penalised for putting more money on it, and if you have less debt you pay less interest.”

Rachel and her partner also lived off one income while the other paid the mortgage. Money for the mortgage went straight into an account where it couldn’t be accessed to spend.

How KiwiSaver can help

Some people we spoke to used their KiwiSaver money to help with their deposit. KiwiSaver is a great way to help with your first home deposit, as you can get money from the government and your employer too. There’s also a way to get even more money from the government – that’s called the First Home Grant.

Make necessary lifestyle changes

All first-home buyers we spoke to, agreed reducing your lifestyle spending was essential.

“Suck it up and live less expensively!” one said.

“Write a menu plan, shop weekly, drink less expensive wine, make coffee at home. Organise your lifestyle priorities,” Nadene says.

Your first home might not be your dream home. Be prepared to make sacrifices, Blair says.

“To buy your first home will most likely mean moving further away from the city and associated amenities. Your commute time will go up and new lifestyle choices will need to be made.”

For Stephanie and her partner, that sacrifice was moving in with her parents for about six weeks.

“We banked every penny for our deposit, along with selling Michael’s beloved spare car, the Holden.”

Get savvy with your spend

You can still go out for dinner, says first-home buyer Rachel, but think outside the box.

“Use the Entertainment Book or or sites with good deals like GrabOne, TreatMe, Groupon etc,” she says.

“Giving up daily coffees was a challenge… this became a Friday treat.”

Be prepared for your priorities to change, says Stephanie.

“It’s no longer about brunching every weekend with the girls, because those household renovations could suck you dry. Managing your income and planning budgets for renos is key to ensuring you still have the best of both worlds.”

Think outside the box!

For Aucklanders Kate and Willem, a solution to their home owning woes was to build a tiny house.

“We knew we couldn’t afford to buy a ‘normal’ house in Auckland so we looked into alternatives,” Kate says.

“Buying with family? Container homes? Tiny homes? Van life? Caravan? Do whatever you can to get out of the rent trap. This way you can start saving the money which would otherwise be helping to pay off someone else’s mortgage.”

Do your research

If the house has been on the market for a while, there could be something wrong with it, Nadene says.

“It could be hard to renovate, or have building consent issues,” she says.

Do your research, get all the building reports you need, so it doesn't cost you lots later! Facts are always on your side, says Stephanie.

Research the market too, Blair says.

“Look online, speak to real estate agents, attend auctions to get a feel for where prices are in the market, what type of buyers are looking. These same people will be who you are up against when it is time to buy.”

Don’t muck around

Once all your ducks are in a row, Blair says when you see a property you like, move fast to put in an offer.

“Not all properties are sold at auction so you might find something you can put under contract, subject to due diligence,” Blair says.

Blair says, as a real estate agent, it’s common to see people miss out on properties simply because someone else got themselves more organised and moved faster.

“Due diligence then helps you to do more homework on the property to ensure it checks out before determining whether it is time to hand over the money.”

Published November 2018

Pie Funds Management Limited is the issuer of the JUNO KiwiSaver Scheme. You can read our Product Disclosure Statement here.  This article is general in nature only and has not taken into account any particular person’s objectives or circumstances. Before relying on it, we recommend you speak with a financial adviser. All content is correct at time of publication date.