Rent or buy a home?
For many, home ownership is a dream – and a fabulous goal to have! The most important thing to consider before you buy is affordability.
The good news is that because of the combination of low interest rates and relatively affordable property prices in our area, home affordability is currently at it’s best level in years.
Now is a good time to ask the question should I rent or buy a home?
If you’re buying your first home, you may also qualify for the Home Start Loan Grant. Also after 3 years of contributing to KiwiSaver, you may be entitled to a first home deposit subsidy. If you’ve owned a home before, in some circumstances you may still be eligible for the first home deposit subsidy.
A good place to start is to contact a mortgage broker.
When considering whether to buy, do your numbers carefully. You don’t want to move into a home only to find yourselves under financial pressure as time goes by. We can connect you with a reputable adviser who can assist you with this.
Here are some questions to ask when weighing up the affordability of a home:
- How much deposit do you have?The bank expects you to prove your savings record, and show that you have saved some money as a deposit toward your home.
- Can you afford the repayments now?The bank will look at your employment record, your income and how well you are managing your expenses. Get your credit card and hire purchase under control.
- Can you afford repayments on 1 wage?If pregnancy is not a possibility, this is not such a vital consideration.
- Can you still afford the repayments if interest rates rose by 2 %?If you can’t, than don’t buy. Interest rates may rise next year, so allow for a 2% increase to be conservative.
If you can afford to buy, then go ahead.
Don’t wait for the ‘right time’. Start enjoying the benefits of home ownership now.
These benefits include long term capital gain; feeling safe and secure; building up your asset base; and getting on the path to prosperity.
Finally, start out with a modest home, then trade up when you’re ready. Always keep your home repayments at a (conservative) affordable level.
For other great advice about buying your home call Cox Partners Estate Agents on 835-4321
for our FREE booklet, “Buying Your Home”.
