Compared to many places in New Zealand the house values make it difficult for West Auckland first home buyers, but there are a number of key things to think about.
Why Do People Want To Live In West Auckland?
You speak to many people from outside of West Auckland and they cannot understand why people would want to live in the West. For those that live in Auckland many like the idea of living at the beach or in the country; however the reality is they will not shift while they are still working and then most will stay in Auckland to remain close to family.
Auckland is New Zealand’s largest city for a good reason – it is a great city to live and work in, and West Auckland is getting more popular too.
In the past people though of Henderson as being the heart of West Auckland, but in recent years there has been more focus on New Lynn and Westgate with the North West being one of the largest areas of development for both business and housing.
There are a lot of parks and public spaces and the iconic West Auckland beaches like Piha, Bethals and Muriwai plus the wine area of Kumeu.
Auckland also has job opportunities that are just not available in smaller towns. This is the key reason that many younger people flock to the city for, and once here find it difficult to leave.
Of course with a third of the country’s population in one city there are some issues with infrastructure and particularly transport, but after many years of under-investment we have a Government that is investing heavily in transport and things are looking brighter in this regard.
House Prices Are Higher Than Other Areas
With population in Auckland rising so quickly there has been pressure on housing and therefore on house prices.West Auckland is one of the fastest growing areas and house prices reflect the high demand too.
Compared to the rest of New Zealand the house prices are high; however many people shifting to live in Auckland are returning from other large international cities and in comparison the house prices here seem quite reasonable.
It really is a matter of perspective, but what is the major problem for many Kiwi’s is that there seems a real disconnect between incomes and house prices.
What House Deposit Is Required?
In October 2013 the Reserve Bank of New Zealand introduced restrictions on equity (the deposit) for the banks which restricts the amount of lending they can do where there is less than 20% equity; hence the common perception now is first home buyers need to have a 20% deposit.
That perception is not entirely true.
The banks are still able to do up to 10% of the new lending they do for people with less than a 20% deposit but non-bank lenders have none of these restrictions in place and can therefore continue to do low deposit home loans if it meets the other criteria.
There are also some exemptions to the rules;
- New builds are exempt
- Welcome Home Loans is a low deposit option designed to help first home buyers
Can You Get The Housing Grant?
If you have been contributing to KiwiSaver for 3-years you and buying your first home you are able to withdraw your contributions which goes towards your deposit, but you may also be eligible for the KiwiSaver HomeStart grant.
The KiwiSaver HomeStart grant is administered by Housing New Zealand and is a ‘grant’ (gift) to help first home buyers get started. The amount you would get is up to $5,000 per person ($10,000 per couple) or double this if building a new home.
There is certain criteria which includes having a household income of less than $120,000pa (per couple, or $80,000pa for a single) plus a few other restrictions – CLICK HERE to visit the website.
Plus I Can Afford The Repayments
Many of the banks websites have mortgage calculators and as mortgage brokers we hear that people have worked out that they can afford the mortgage repayments okay with the low mortgage interest rates and often that they are cheaper than what they are currently paying in rent.
The problem is that the banks and other lenders have a different method of working out the affordability.
We all understand that mortgage interest rates are very low at the moment, but none of us know what they will be in a few years’ time and for this reason the banks and other lenders will take a more conservative approach.
Each of the banks and lenders have different criteria around how they calculate what people can afford and therefore often one bank will say you cannot afford the mortgage while another bank will be quite happy that you can. Of course you could apply to each of the banks and see what the response is, or a more efficient way is to speak to a mortgage broker that has access to all of the banks and non-banks criteria.
First Home Buyers Need Good Advice
In life we all will need to seek advice at times.
This is especially prudent when you are doing something for the very first time or doing something that has a huge financial impact. Buying your first home is one of those important things where some good advice can make a huge difference and help you avoid costly mistakes.
Of course it makes sense for first home buyers to get good advice!
But who do you ask – where do you find that “good” advice?
Most first home buyers will have friends and family that they discuss things with and this can always provide some useful advice, but often these people are not aware of everything within the current environment.
A lot of first home buyers will also research on the internet which is always a good source of advice. On Facebook there is a group named Kiwi First Home Buyers Group which contains some good advise and feedback.
In the past people would often talk to their own bank which seems like a sensible place to go for advice; however with so many options available from the various banks and other non-bank lenders, the banks advice can be very limiting as they are not aware of the other lenders criteria or ability to offer low deposit home loans.
Today mortgage brokers are the professionals of choice for many first home buyers as a good mortgage broker has access to various banks and non-banks, knows the criteria that will fit your situation, can offer advice on the overall process and can answer all of your questions.
Good advice is available from West Auckland mortgage brokers at North West Mortgages, and most importunately this advice might save you thousands of dollars.
