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First Time Buyer Home Loans

As a first time buyer home loans are a double-edged sword. On one hand they can help you finance your dream home. On the other hand, it can feel like they’ll leave you wallowing in debt. Read on to demystify your first home loan.

When signing up for a mortgage or refinancing, deciding between a fixed or floating interest rate may be a big battle. A floating rate is one that changes over time. It’s influenced by wider financial and housing markets and in turn influences your first home mortgage. As it lowers, it saves you money. As it increases it will cost you more.

A fixed rate is one where your mortgage is a constant rate, ranging from 6 months to 5 years.  This is unaffected by undulating floating interest rates.

As expected there are positives and negatives associated with both. Here are some things to consider with your first home buyers loan:

  • Your personal and financial circumstances. Are your income sources steady or fluctuating? Depending on if your repayments will be regular or irregular amounts, a fixed or floating rate for your loan may be more advantageous over the other.
  • If mortgage interest rates in New Zealand are predicted to rise, a fixed rate would protect you from rising rates. Alternatively, if they are predicted to fall, a floating rate would be better.
  • Fixed rates have high associated costs if you want to change your repayment amounts.

When setting your repayment amount, set it as high as you can afford to. This will save you paying high interest in the long run. On the flip side, don’t over commit to amounts you can’t afford and get bogged down in fines. Borrowing only what you need in the first place helps strike this balance.

Investigating bank mortgage rates will be a top priority when considering loans for first home buyers. Banks all have their own loan options and differing plans to suit your circumstances. Research and compare mortgage rates to help decide which ones will suit your financial situation and purchase type best.

Mortgage rates may have hidden costs associated with them. An industry standard to help home owners compare the ‘true cost’ associated with a loan is the comparison rate. It combines the interest rate as well as charges and fees associated with the loan. Lenders must include the comparison rate when advertising interest rates so pay attention to these.

A Home loan specialist can offer you professional insight into a loan that best suits you. Mortgage brokers can save you time when shopping for lenders as they deal with many. 

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