Jeff and Philippa's home buying story

"While we had an idea of what we may be able to borrow from the home loan calculator, our Mobile Mortgage Manager was able to explain it all – how the home loan would work and how we could manage it"

Jeff and Philippa (not their real names) wanted to stop paying rent, but weren’t sure if they could afford to buy a home.  With no previous knowledge of the home buying process, they started looking at real estate websites to get a feel for the market.  They also checked out an online home loan calculator to get a feel for the financial implications. 

At this stage they decided they needed a more definite understanding of what they could borrow and how much the repayments would be.  Based on recommendations from friends they approached a National Bank Mobile Mortgage Manager who worked with the couple to review their finances, work out their borrowing limits and give them a pre-approval so they had an indication of what they could spend and could start looking with confidence.  Just three months later, they had the keys to their own home.

Finance
Understanding the financial side, and in particular what their savings and income would allow, was the first step.  They had saved $30,000 for a deposit and didn’t know whether that would be enough to buy a home.

After a session with their Mobile Mortgage Manager they had a solid base to start from.  According to Philippa, they were surprised at the amount they could afford to borrow while managing the repayments.

“While we had an idea of what we may be able to borrow from the home loan calculator, our Mobile Mortgage Manager was able to explain it all – how the home loan would work and how we could manage it,” says Philippa.  “He also gave us a pre-approval, which meant we knew how much we could afford.  That meant we could start looking.”

Using their deposit of $30,000, Jeff and Philippa eventually bought a home for $302,000, borrowing $272,000 for the purchase.  They put the entire home loan on a three year fixed interest period.

“The reason we chose to put it all on a three year fixed rate was because Jeff is doing an apprenticeship that ends in three years’ time,” says Philippa.  “Our income will be pretty constant for that period so it was important to us to know exactly what the repayments would be, and budget accordingly.”

When the three year fixed rate period is up Jeff and Philippa expect their income to increase.  Then, depending on their exact income and interest rates at the time, they’ll make a decision on what to do next – for example, they may look at ways to try and repay their loan faster by putting a portion on a floating rate, or perhaps increasing their repayments.

Finding a home
Once they had a clear budget, Jeff and Philippa made a list of the things that were most important to them in their new home.  They included:

• A garage
• Minimum of two bedrooms
• Sun
• Close to public transport (for Philippa’s work).

They discussed their requirements with a real estate agent they knew and trusted through a family connection, and started their search.  After visiting around 10 homes over a four week period, they found the one they eventually bought.

“The funny thing is we almost didn’t look at it,” says Philippa.  “It was by a busy road and that put us off.  But as it turned out that wasn’t a problem at all, and when we did look at it, it had everything we wanted.  It was the first offer we had made – and as it turned out, the only one.”

Making an offer
The property was for sale with a price indication.  Jeff and Philippa made an initial offer slightly under their budget limit of $300,000, based on advice from their agent.  The seller made a counter offer of $302,000, which the couple felt was close enough to their limit given that it had everything they wanted, and the deal was done.  They were surprised that the search had not taken longer, but it was made easier by the agent only showing them homes that had fit their wish list. 

Fortunately for Jeff and Philippa the seller was able to provide them with relatively recent valuation and building reports, since they had only purchased the house a couple of years earlier.  That gave them reassurance that their offer was in the right ballpark and that the house was fundamentally sound.  They had a builder friend look at it to give them an updated opinion and confirm the original builder’s report.

“The hardest thing about it was actually after making the offer, wondering whether we’d made the right decision,” says Philippa.  “You only see the house once or twice so you forget some of the details about it.  We actually asked our agent to go through it again so we could be sure of the place.”

Settlement and moving
Both settlement and moving went well.  They got the keys early and moved themselves in.

A final word
Having gone through the process, both Jeff and Philippa say they’re surprised that their home loan repayments are not really much more than they were paying in rent.  “It is sometimes a bit sobering when you look at your accounts and see that you owe quite a lot of money, but it’s turned out to be quite manageable for us,” says Philippa.  “You get used to it, and the difference is that we’re now paying ourselves rent!”

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