Straight Talk about First Home Loans in New Zealand

For average working New Zealand, the largest financial transaction of their lives will most likely be a home loan. Home ownership is one of the major components of what we call "the American dream," but as experience has shown, simply dreaming won't get you there. It takes a little planning, a good dose of discipline and a lot of hard work.

There are probably as many ways to handle (and mishandle) personal finances as there are people in the world, as it is a very individualized thing. Some people just seem to grow up as savers, socking away every extra quarter from the Tooth Fairy from an early age. They save their money, get married, make a down payment on a home, get their first home loan and, on average, trade up to bigger houses two or three times as the family grows.

On the other hand, some people are late bloomers. They stay single, try a few different career paths and don't settle down into a middle-class existence until later in life. Once they get established, they realize that they need to catch up quickly in savings and credit rating if they hope to get a home loan and make the transition to the "American dream" lifestyle.

It takes all kinds

Fortunately, we live in a free country where second chances are part of the cultural identity. Lenders understand this better than ever now, and there is more flexibility and creativity in the first home loan nz market than ever before. No matter how you grew up or when you started saving your money, it is never too late to position yourself for home ownership.

One of the main considerations for any lender, especially ones that are going to invest a few hundred thousand dollars in a 15- or 30-year home loan, is the ability of the borrower to make their payments. The focus is also primarily on the future, since many more borrowers would qualify if down payment amount or total income were the only considerations.

The fact is, your employment status, your financial habits and budget, your record of discharging your debts in a timely fashion - these are key points for any home loan lender. Those of you who have been good stewards of your finances since grade school have a sizable down payment and earn a sufficient salary will have fewer problems than the late bloomers.

What's your plan?

In another article on our site, entitled "Home Loans," you will find a discussion of interest rates, market conditions, loan terminology and the rest. This article, on the other hand, is about attitude, mindset and personal habits. All of these topics, in both articles, are important to your understanding of real estate, and its place in your overall financial plan (and life), but your character is also part of the home loan equation.

Even if you have a shorter history of debt repayment, a good record can help you a lot. If you have made a turnaround in life, bouncing back from financial adversity without having to declare bankruptcy, a good credit history of several years' length will show that you have established a different set of financial habits. This always works to your advantage in negotiating a home loan. Those of you who have solid, long-term credit histories won't face the same set of obstacles, but you still need to keep your wits about you to get the best deal.

Finally, whatever kind of borrower you are - established with a great credit score, or rebuilding - be careful not to act or appear desperate. Do not grab at the first home loan opportunity, but shop around and take your time. Regardless if it comes easily or takes a lot of time and troubleshooting, buying a home is a big responsibility. If you are honest with yourself (and everyone else) about your finances, your career prospects and your overall plan, you may just be surprised at how many home loan options there really are for you.