Mortgage finance tips.

Your mind probably jumps straight into deposits and percentages when thinking of mortgages. But there are a few other things to consider along the way, which add to the final offer you'll make on the house — things like your KiwiSaver and your credit score.

Tip 1: Pay lots, borrow little.

Deposits are worked out by calculating the percentage of a house's value.
You'll need to put down at least a 5% deposit (so, if the house is worth $300,000, that's $15,000).
At that rate, you'll be paying higher than average fees until you can make a 20% deposit.
The more you can put down upfront, the less interest you'll pay.
Consider other ways to cough up the money if you find it tricky. Maybe your family or friends could help?

Tip 2: Use a KiwiSaver.

KiwiSaver allows you to set aside money for just this type of occasion.
You can contribute 3, 4, 6, 8 or 10%.
Consider contributing more if you're eyeing up a house right now.
Take advantage of things like the First Home Grant or subsidies ($1,000 for every year you contribute to KiwiSaver).
Don't rely on subsidies, though — many schemes have caps on things like income, house prices and current debt.
Still, it's free money if you qualify! But find out if you're eligible first before you add it into your final budget.

Tip 3: Make a budget.

Consider all your options — KiwiSaver, savings, weekly income, possible grants, subsidies, etc.
Shop around for homes and pay close attention to interest rates.
Use an online mortgage calculator if you're unsure what your deposit could get you.

Tip 4: Talk to banks.

It's free, so why not?
When you do, they'll want to know things like:
- Proof of regular income (like payslips).
- Any extra income you receive (like child support).
- Your monthly expenses (like rent and groceries).
- Any debts (like store cards, loans and credit cards).
- Assets (like your car or novelty hat collection).

Tip 5: Don't stick to a lender because it's convenient.

Lenders are all different and will advertise different rates.
These rates change after the first year, so be aware of tempting first offers.
Your bank has all your info, so it's easier for them to check up on you. That doesn't mean they have the best offer for rates, though.
On the other hand, banks might see you as a safe bet if you've been with them a long time.

Tip 6: Get a credit score check.

Lenders will look at a thing called a ‘credit score’ to assess your risk.
The higher the credit score number, the better lenders rate you for paying back bills on time and in full.
Get your credit score checked before you begin applying for homes. If it's a low number, maybe consider raising it first to get a better loan offer.
To raise your credit score, you can:
- Pay bills back on time.
- Close open credit accounts.
- Clear up bad debt.
- Limit credit enquires.

Need help managing your money? Yonda's here for you.

Yonda’s all about making your dreams of homeownership come true. That's why we've built a new app that will let you check out your credit score anytime, anywhere, so you can secure a better foundation for your financial future.

Sound good? Head to our homepage to download the app and find out more.

Disclaimer.

Info and tools on the Yonda website are used as a guide only and do not constitute financial advice. Use Yonda as a starting point and then seek professional advice.