For some New Zealanders buying a first home feels like climbing Everest, you're not sure if you will reach the top and anything can happen out there if you're not prepared.
Here's some important things to consider before you start joining the parade to the open homes.
Let's start with the small topic of deposits, I know you have probably done a big sigh but hear me out. Yes at the moment lenders have handed out a huge hit to the face and the 5% deposits are like finding candy at the dentist. They are available to those in a really strong financial position, however.
Then there is the 10% deposits which used to be thrown around like confetti at a wedding. While that is not quite the case there are still options for this and the majority of our clients meet this criteria.
Then you have the 20% deposits which open all the doors to Aladdin's cave and gives you the most lenders to choose from.
Deposits don't need to be all savings but often there is a requirement to have 5% of your overall deposit made up of genuine savings, there goes another sigh. Don't panic, this can include KiwiSaver so for most of our first home buyers this box is well and truly ticked.
Deposits can also be made up with gifting from a relative, the 'bank of mum and dad', it's a very simple process and it's involved in at least half of mortgage applications.
What does it cost to buy a house?
More often than not buyers are fixed on getting enough funds for their deposit without realising the extra costs involved in buying a home. Sharpen your pencils and get ready to take notes.
LIM (Land Information Memorandum)- this is a local council generated report showing all the information held about the property, like zoning, consents, planned developments, maybe a mall going up next door. These can be ordered online for around $340 and a lawyer can help you interpret what it contains.
Speaking of lawyers you will definitely need one of these. You may have heard of using conveyancers as they are cheaper, these are not lawyers, they can transfer the house into your name but if things get a bit tricky with your contract they will not be able to give you legal advice.
Most people find lawyers through word of mouth or we pass on referrals of lawyers that we have worked with in the past and found to be very efficient, professional and reasonably priced. Price is important to most people and you will find the general cost of a lawyer will start at the $1000 mark, some are all inclusive no matter what they do for you, others start with the base rate and have additional fees for each service they provide for you, such as kiwisaver withdrawal, First Home Grant, reading your LIM report, builders report.
Whatever the process you can ask for the expected costs up front so you know what you need to put aside, keeping in mind the lawyers get paid the day you move in.
Another common cost is builders reports. Over the years there has been a huge variance in costs and what you get for the money, the days of getting uncle bob to go run his eye over the place and give you the thumbs up is getting further from us. Banks are placing a little more attention on a written report by a qualified inspector. These can be 10 to 65 page reports, super thorough and for your protection, costs aside they are always recommended. There are hidden secrets in some houses that could save you from making the biggest mistake of your life when you have emotionally attached yourself to the house like a limpet on a rock.
Another common small cost is paying some rates on the day you move in, basically the person selling has paid rates in advance, you may have to pay a portion back. This is something your lawyer will explain to you when you meet with them. The amount required will depend on the place in time you are buying in the period the rates paid covers
Now I haven't said all this to scare you and make you think its just easier to rent because it absolutely isn't, knowledge is power!
We are specialists on the inside of the mortgage world and here to help you every step of the way.
Contact Us
Donna Davis
Business Development Manager
Phone: 0800 337 426
Email: [email protected]
