Towards owning your own home - getting beyond the thinking stage

Ruapehu Bulletin, Volume 12, Issue 553, 13 September 1994, Page 8

Towards owning your own home - getting beyond the thinking stage

"For most people, buying a home means borrowing money from a bank or insurance company to assist with their purchase," says Andrew Harcourt, national Real Estate Institute councillor. "The interesting thing is that when they have worked out what the repayments will be for their new house, buyers often find they will be paying out less than they are currently paying in rent." While each financial institution will have its own rules and conditions under which it lends money to home buyers, there is a general guideline. Most will lend up to 80% of the value of the property, with the value often being determined by a registered valuer. "Thus, for every $1 of your own savings, you will probably be able to find a lender who will advance you a further $4," Andrew Harcourt notes. "This may not sound much but if you can find say $15,000 of yOur own money, you can look at borrowing a further $60,000 and therefore be able to buy a home for $75,000. Similarly, if you can raise $20,000 you would be looking at a home of $100,000. Some lenders will go up to 90% under special conditions. This means you need find only 10% and a home costing $90,000 could

be financed with personal savings of $9,000. Lenders also place an upper limit on the amount they will lend, based on the buyers' income, usually up to a third of their income on repayments. Forexampleif the borrowers had $300 a week coming in, the limit would be $100 on repayments. Work out what you can borrow against the money you've saved and you're then in a position to have a preliminary chat with a lending institution to see what sort of a price range you can look at. Remember that you will have some additional expenses such as legal fees, insurance, local body rates and possibly, service connection fees. Selecting an agent Dale Simkin and most of his colleagues in the industry, prefer buyers to be in a s position to say from the start

what the prospective property must have and what is the upper limit they can afford to pay. "Everyone has different needs and by defining the boundaries in a brief preliminary chat, the buyers can save themselves a lot of time by focusing their attention on the selection of homes they can afford and live with," he says. Everyone who sells real estate on commission for a property owner must act in accordance with the Real Estate Agents Act and be responsible to a member of the Real Estate Institute. All real estate firms must operate a trust account for client funds and have the account independently audited every three months. It is unusual for every home on an agency ' s books to be advertised every day and not all on the books display a sale sign outside. That's why, if you can be specific in your enquiry , the

agent will be able to help you spend more time on properties more likely to meet your needs. Knowing what you are looking for, the agent could well take you to homes you didn't know were on the market. And if you don't see anything that fits the bill, you are perfectly free to visit another agency and ask to see their selection. Look before you buy. The best approach in looking at houses is to start by making lists, say real estate agents. "At the top of the list there should be two words: 'wants and needs'. Everything you can think of will come under one or other of those headings," he says. Location will be a vital starting point. Do you need to be close to school, shops or public transport of can you manage by being a little bit further away? Having these amenities close

may increase the cost of buying so make sure they are really necessary. Other features to be considered as needs or wants are: the number of bedrooms, amount of outside living space, drapes and curtains, kitchen and laundry equipment and so on. "It would be nice to have a new home with an ensuite master bedroom, carpeting throughout the home and a landscaped section," Mr Brown notes. "Other 'wants' may include a dishwasher or room for one and fences if they have children or dogs. Some may decide they have to have a double garage, family room, or additional offstreet parking for boats. He says that many people choose to buy a property that may need work done on it. They may have skills in decorating or renovation which they use to bring the property up to scratch.