Budgets Archives - Mortgage Advisers - Mortgage Lab

Purchasing your first home can be confusing.  The key to being ready to buy is to be organised.  Here are 3 things that first home buyers can do today to get ready to apply for a mortgage.

Order their Credit Report

Ordering your own credit report is free.  You can a nice and simple indication from Credit Simple or you can get the whole report (I recommend this) from Equifax. This second option can take a couple of weeks (my latest one turned up in 4 days though).  This will allow you to see exactly what the bank is going to see about your history.  If anything isn’t correct, now is the time to address that.

Tidy up your spending

Look through your last 3 months of bank statements.  Are you spending more than you earn or going beyond the limit of your bank account?  This is called going into “unarranged overdraft”.  To a bank, these 2 words send up a big red flag.  Once is usually ok, but more than that and getting a mortgage is going to be difficult.

You can limit how often this happens by setting up a spending account with automatic payments going out.  You’ll know exactly how much is going to be spent and how much is in the account.

Key point: don’t have an eftpos account attached to this expenses account.  You’ll end up over spending and going into overdraft again.

You can download a copy of The Mortgage Lab’s Excel Budgeting Spreadsheet here.

Get proof of your income

The bank is going to want to see your income and it won’t usually be enough to show them the money going into your bank account.  Banks like to see payslips because they show how your income is made up (ie; is it a base salary or commission).  The bank will usually want to see the most recent 3 payslips so if your HR department is a little relaxed in this area, get them working on it now.

If you are self-employed, you will need to have this year’s most recent Financial Statements (between October and March).  You can see our blog on when you need to update your Accounts.  Since Accountants are often busy, these can sometimes take a while to source so talk to your Accountant early.

Bonus Tip

If you’re ready to apply for a mortgage, it’s also time to look at your Life and Health insurance.  You’re going to be signing a contract for a large amount of money and need to make sure you can pay for it.  Find an insurance adviser who you like and feel is looking after your best interests.  We believe the best advisers only advise on insurance which is why we don’t offer it in our company.  They should be comparing several different products and choosing the one that suits you the most.

Summary

You can start getting ready to buy today by:

 

We all enjoy saving a bit of money, especially if you’re looking to buy your first home or if you’ve just got your first mortgage.

There are all sorts of convoluted ways to save money.  Some of them are easy (eg; ditch the expensive TV subscription and get yourself Netflix, Lightbox or Neon) and some of them are disproportionately hard (eg; setting up a grey water system to water your plants to save on Water Rates).

My initial budgeting suggestion for new “budgeters” is, pick the low-hanging fruit first.  And the easiest of all is to find what you’re paying too much for and find a place that sells it for less.  Groceries are a good example of this.  The price between supermarkets is astronomical for essentially the same product.  Petrol is another.

The Great Gaspy

This is where Gaspy comes in.  Whenever you open Gaspy, it will find you the cheapest fuel nearby.  And the range in prices is amazing!  For Diesel, my local price ranged from $0.99 – $1.17 per litre.  That’s an 18% difference.  Or to put it another way, if I normally spent $100 per week on fuel, I could save $936 per year by knowing the cheaper petrol stations around.

Now it’s not worth driving 30 minutes to save yourself $18 (or maybe it is!) but if you get in the habit of opening up the app when you’re below half a tank, then you are sure to pass a cheap spot sooner or later.

And as an added extra, the app summaries where the cheapest and most expensive areas are in NZ and it’s not where I would have expected!  You can find the link to the pdf here or you can generate the list yourself on the app.

If you haven’t tried Gaspy yet, give it a go and let us know how you find it.