There’s no question that it may feel difficult to buy a house in New Zealand with interest rates so high.
But there are still ways for home buyers (and even first home buyers) to navigate a tricky property market.
Here’s a few pieces of advice, from our team to you, that will hopefully help elevate some of the worry you might be under when it comes to securing a mortgage to buy a house.
Set a budget, but keep it flexible
One of the best ways to understand how much you could afford in weekly or fortnightly mortgage payments is to set a budget to stick to for the next month or two.
Cut out as much discretionary spending as possible from the outset, but make sure to reassess every week or two, so you can see what worked and what didn’t. You may find that you make changes to where you money goes, once you know what you’re comfortable with.
Lenders are also looking very closely at the spending habits of those applying for loans, so it’s important to keep your bank statements in good shape.
Determine your buying power
Once you’ve captured a fairly accurate picture of your regular spending next to your income, you should have an idea what would be a comfortable mortgage repayment for your household. This will help you decide on your buying power and allow you to begin your search for properties within your budget.
But what’s key here, particularly as interest rates have the potential to continue rising throughout 2023, is that you allow yourself a buffer. If rates go up, what extra income would you have to provide for that increase?
Make a plan with your broker
It’s absolutely crucial to secure a great partnership with a mortgage broker right now. Find someone you trust and who can give you the various scenarios you face with lending, fixing and floating rates.
While you make the final choice as to which option you choose, they should be able to advise you on what would work best for your income and household situation - from how much you can borrow to how to spread your mortgage repayments over the years and which rates you should lock in. They should also be able to negotiate with a variety of lenders to find you the best rate possible.
Keep an open mind about potential properties
When spending a significant amount of money on a property, of course you want it to be something you love. And as the market has cooled, so has the prices and expectations of vendors. Which means two things.
While interest rates are high, you may be able to buy a house for quite a lot less than you would have a year ago. Which is beneficial to you and your budget.
But, as it’s still uncertain as to how far interest rates will go up, it may be a good idea to lower your expectations on the type of property you will purchase. Consider your ‘must-haves’ list and see whether there are any negotiables when it comes to what you hope your new house will have.
It may be better to buy at the lower end of the market, providing a cushion for your mortgage repayments by not already paying the maximum amount possible. See the potential in a house that may have good bones and could benefit from some DIY decorating - like a fresh coat of paint. By keeping more money in your pocket, you can slowly tick off these jobs over time, when it works for your budget, rather than buying the ‘perfect’ house outright.
We only want the best for those we partner with, so if you’re keen to find a property to fall in love with, get in touch with your local PGG Wrightson Real Estate office. From there we can show you our listings, and talk through your options for buying (and selling?) a home.