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Buying a first home? Family home? Upsizing or downsizing? Whatever the case, buying a home is a big deal and could be one of the biggest financial decisions you make. We've pulled together the top tips and information on every aspect of buying a house in NZ so you can easily navigate through the home buying maze.
Whether you’re a rookie home buyer or a seasoned pro, it’s always a good idea to ask the right questions and do your research before you commit to such a large purchase. Within this guide we’ll outline some of the key steps to guide you through your home buying journey to ensure you get the house of your dreams.
First and foremost, be sure to take a look at your situation and determine if buying is for you. Purchasing a home is one of the biggest financial decisions you will make in your life. Before buying a home, it’s important to consider how such a commitment will affect your finances and your lifestyle. It makes sense to review all of the advantages and disadvantages of becoming a homeowner before making the big step.
There are of course, many awesome reasons to own your own home and there’s no denying that being a homeowner remains a coveted goal for many Kiwis. Having a piece of land to call home comes with the inherent increase in freedom, security and stability. Some feel a sense of long-term wealth from buying their own home. There are many great reasons to own the roof over your head. There are however a few tradeoffs to think about as well. Before you decide to buy, carefully consider the pros and cons of homeownership.
When you're thinking of buying, there are a few things you can ask yourself to help decide if you should you buy a home. Is it the right time for you to buy? Are you ready? Is your income going to grow? Have you got enough money saved? Do you have other big things that I would rather be spending my savings on? The answers are going to depend on things like your lifestyle, job and income situation, family plans and long term goals, and these things must be considered before committing to buying a property.
Once you’ve made the decision that buying is best, it’s important that you understand your financial position and your borrowing capacity before you hop on that property ladder. It’s time to find out if you have the financial ability to buy a house. Lucky for you, there are some great online services and tools to help you with this. For help with your budget, take a look at Sorted.org.nz for some free tools and financial advice. A mortgage calculator is an excellent tool to see what repayments with different loan settings will look like and to work out what you can afford before you start looking at properties. If it’s your first home, it’s worth checking out what government help you may be entitled to as well. Find out more on the Housing New Zealand website.
Unless you are purchasing a home with ALL cash, you – like most home buyers – will be in need of financing, aka, getting a mortgage. The good news is that there are so many loan programs and lenders to assist home-buyers with their purchase! Some loan programs have more attractive benefits than others, and some have stricter qualification standards. Many are also separated by the type of purchase you are seeking finance for.
Our top tip is to get a pre-approved home loan. A home loan pre-approval is provided by a lender in writing, confirming that subject to certain specified conditions being met, that you may be able to borrow up to a specified sum. This is also known as a 'conditional offer' of finance.This puts you in a better negotiating position, helps speed up the mortgage documentation process and enables you to bid with confidence at auctions. Getting your finance pre-approved lets you focus on the most important things like buying the right house and for the right price.
Finally the fun part! Now you know the budget you are working with, it’s time to decide on what kind of house you are looking for and where you want to buy. You may like to prioritise your list of ‘wants’ to make finding a house that fits all or most of your criteria a little easier.
Look at the real estate publications and go to open homes, so that you can get a good idea of what’s on the market in your price range. You are welcome to attend one or two auctions too, just to get an idea of what they are like. Even with the plethora of services available to complete their own transactions recently, it’s a great time to get in touch with your local real estate agent too. You’ve heard this over and over but seriously, unless you’re a professional and experienced real estate investor, you’ll want to use a professional when it comes to buying a new home. After all, this is what they do every day. Buying a home is a major financial (and emotional) undertaking and flying solo could end up more costly than a realtor’s commission in the long run.
Now that you’re in house hunter gear, there are certainly some common claims that you can look out for. You’re all about viewing homes so pick your favourites then go take a look! When looking at a property check carefully things like the plumbing and water pipes, fence condition and boundary positioning, any previous renovation history, roofing and drainage and of course the one we are all aware of, leaky building signs. It’s worth taking some time to assess these things as it could save you a fair amount of time, hassle and money in the future.
It’s a good time to quiz your real estate agent on the house of your dreams too. Remember, agents are legally bound to tell you the truth, so you need to make sure you ask the right questions to find out what the real situation is.
These are just a few questions you can ask, you may also want to find out more about your neighbours, the guttering or even have a peek under the rugs!
Once you’ve found a house, seek a solicitor as getting good legal advice is essential when buying a house. Lawyer’s fees can vary, so it’s a good idea to ask around and get an estimate. Ask around friends and family for their recommendations too.
Before you purchase the house, it’s strongly recommended that you consider viewing or commissioning specialist reports, such as a Land Information Report (LIM), and professional builders and engineers reports. These can not only point out any ‘hidden’ surprises (think leaky plumbing, toxic asbestos or wayward wiring), they give you an idea of what the property is worth and where your offer sits with that. Get hold of Body Corporate meeting minutes if you’re looking at a unit or apartment.
Lawyer, tick. Reports and checks, tick. It’s time to buy, and there are three main ways to buy a house in New Zealand – offer and negotiation, tender, and auction.
The good news is that here in New Zealand it can take as little as three to four weeks to complete a house purchase once you’ve found the place you want. Once a bid is formally accepted, last minute offers can’t be considered, which makes buying here a lot less stressful than it is in some parts of the world.
Let’s take a look at your options…
This is where the home is advertised at a set price range. A buyer will make an offer in writing and negotiate with the seller until you agree on a price and conditions. This process gives you as a buyer a little time to think and set conditions that can let you do a few more checks before you’re committed to buying it.
In New Zealand this is the most common method of selling a home and is also called ‘sale by private treaty’.
Having your finances organised beforehand and a loan approval up your sleeve could give you the upper hand when you’re up against other offers. It also pays to do your research on what the house you’re interested in is worth so that your offer isn’t too low, this can halt further negotiations in a hot market. At the same time however, don’t put forward your best offer straight away, as negotiation is expected and the seller will usually expect you to be able to raise it.
No, we’re not talking about an online dating app. Buying or selling by tender is when prospective buyers prepare and submit confidential written offers (tenders) for a property to the agent for the seller’s consideration by a set date and time (the tender date – which is set by the vendor). There is no reserve price (the lowest price the seller is willing to accept) but there may be a price guide. Buyers can offer less than this. Your real estate agent will provide you with the documents you need and it’s recommended that you seek legal advice before submitting your Tender as they differ from standard Sale and Purchase Agreements. Having finance ready at the go can make your offer unconditional which can make your offer a lot more appealing to the seller. It’s important to do your homework before submitting a tender, we suggest you take a look at Property Toolbox for more information.
An auction is another common way of selling a house, particularly in larger cities. There’s no harm in attending a few auctions as an observer to give you a better understanding of the process. Be sure to ask your real estate agent for any advice and potentially bid on your behalf if you’re not as confident to do so.
At an auction, the property is sold at a specific time and place to the highest bidder. Most auctions require a person to get a bidder number or other identifying item prior to bidding.
If you’re buying at auction or making a pre-auction offer, you can only make an unconditional offer. You will need to have your deposit ready and settlement is usually 4-6 weeks after the auction unless negotiated with the agent beforehand.
Having your offer accepted feels great! You can relax – even celebrate, but what’s next? This can be a testing time to tough out before you have the keys to your new home in your hot little hands. In fact, you won’t get those keys until possession day which is likely to be the same day as settlement takes place. From there, how long you wait depends on what you and seller agreed in your sale and purchase agreement. In this time, your lawyer will take over in transferring the house legally into your name, the process is called conveyancing.
It’s a good time to consider your Insurance for your new home too. Your bank should be able to take care of all of this, and it’s ok to shop around! On top of house and contents, life insurance and mortgage repayment insurance is worth a look at too.
There are plenty of things to organize before you move into your new home. If you need to arrange for some help with packing or looking after family members while packing or moving, now is the time to do so. Most people will book a moving company to help with their shift. Take a look at MovingPros for a no-hassle solution to booking a trusted and reliable mover in your local area. Start collecting boxes, newspaper, bubblewrap etc. to help you with the packing.
You will also need to contact all of your service providers to notify them of your change of address. Think major utilities like electricity, gas, phone and internet provider, Sky or subscription services, these all will need to be transferred. Fast Connect is a free service that will arrange all major service transfers for you. Don’t forget schools, doctors, retail clubs and magazine and newspaper subscriptions too.
So close! By now your lawyer should have done all the work to make sure everything is settled, the property will have been transferred to your name and you’ve signed a few documents. They will be in charge of paying the money to the seller’s lawyer, and this amount will take into account the deposit you’ve already paid on the home to the real estate agent. The seller’s solicitor will notify your agent once the legal settlement has occurred.
Generally, settlement day is the date that you get possession of the property and the keys to your new home, woohoo!