Preparation Tips for Home Buyers in 2024: Savings, KiwiSaver, and Debt Management Strategies

Date Published: 3 January 2024

Key Facts

• To prepare for a house purchase, establish a regular savings habit and leverage KiwiSaver contributions.
• Increasing your KiwiSaver contributions can help grow savings and demonstrate commitment to saving.
• Check the KiwiSaver fund and whether you meet all conditions for fund withdrawal or the First Home Grant.
• Pay off debts consistently and check your credit record for possible defaults before applying for a loan.
• Analyze recent expenses, as lenders will scrutinize your spending habits.
• Seek advice from a mortgage broker or bank expert even if you’re not yet ready to buy.
• Develop a budget to understand affordability, considering that banks use test rates much higher than actual rates.

Article Summary

Planning to buy a house in 2024? Even aside from the fundamental requirement of a deposit and proof of income, there are other steps to prepare which can help simplify the process. It’s adviseable to establish a regular savings habit. Banks appreciate this discipline and it can serve as proof of your ability to handle loan repayments. Automating this process can help reduce spending temptations.

Beyond savings, your KiwiSaver can also help prepare you for a house purchase. Adjust your contributions if you can afford to do so. Additionally, check the type of fund you’re invested in; if you’re planning to withdraw soon, shifting to cash can give more certainty on the amount available when needed. However, if there’s still time, taking more risk for better returns could be a smart move. Also, remember to check if you meet the requisite criteria for fund withdrawal or any other support you’re hoping for, such as the First Home Grant.

Paying off any outstanding debt is also critical. Doing this consistently and above minimum payments can significantly enhance your borrowing limits while helping secure a favourable credit score. Moreover, lenders will scrutinize your recent expenses as part of the loan approval process; conduct a pre-emptive analysis of your spending to identify any potential areas of contention. It may be worth reaching out to a mortgage expert or broker even if you aren’t ready to buy yet. Their advice can help understand what you need to do to become ‘bank-ready’.

Finally, create a budget to understand your financial capacity. Keep in mind that banks often utilize test rates that are much higher than actual rates to ensure you can handle potential future rate increases. Plan accordingly to ensure a secure and smooth house buying journey.

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