First things first, who are you purchasing the home with? If you are purchasing with a partner or family member, it's best to go through the home buying journey together, to ensure all members agree that the decision to buy was the right one!
Getting your team together
A support team is essential when buying a home. It's also advisable that you determine who your "team" members are at the start of your journey to ensure a more seamless experience for you. Your team should consist of:
A residential property lawyer or conveyancing practitioner:
There are several legal matters associated with purchasing a home, such as a sale and purchase agreement, reviewing the Council’s Land Information Memorandum and the property title and of course managing your mortgage documentation. It is therefore important to have a residential property lawyer or conveyancing practitioner review these documents and provide you with legal advice. Legal and conveyancing fees vary, so ask around and get an estimate before you engage someone.
A lender or mortgage broker:
Do some research to find the right bank or lending provider for you. You don’t have to get your mortgage through your current bank or lending provider. Instead shop around for the lowest-cost loan with a lender that suits everyone involved. Alternatively, you can seek advice from a mortgage broker on what lending options could be available for you. This is usually a free service, but make sure to check and confirm this with your mortgage broker before engaging them. Lenders and mortgage brokers can give you an idea of the overall budget you can work within, your deposit requirements and loan options, and explain what your repayments might look like.
For more information on lenders and brokers here
A registered property valuer:
Your lender may require that you provide them with a valuation of the property you are interested in buying before they approve your loan. A valuation allows your lender to get an impartial, independent expert opinion on what the property is worth and helps them determine how much they are prepared to lend you. Property valuations come at a cost, so its a good idea to ensure it's a property that you're really interested in before you engage someone. Your lender may specify which registered property valuer they want you to use. Confirm requirements with your lender before you organise your own valuation. If your lender doesn't specify a valuer, find a registered valuer that meets your needs and budget.
Find registered residential property valuers here
A qualified building surveyor/inspector:When buying a home it is wise to engage a qualified building surveyor/inspector to provide you with a building report, before you make an offer on the home. A building report will identify any existing or potential problems with the property that you should be aware of before you purchase. Your legal team will review this report, along with the other reports and contracts attached to the property, and will advise you on any conditions or issues that may exist. A building report will come at a cost so ask around and find a building surveyor/inspector that meets your needs and fits your budget.
Find a qualified building surveyor/inspector here
A home insurance provider or an insurance broker:
When you take out a mortgage, your lender will require you to have home insurance cover as a condition of your agreement. The sum insured will need to cover the home and other structures, such as decks, fences and your driveway, should they, need to be repaired or replaced. What is covered under your home insurance policy will vary from provider to provider. So do your research to find the right home insurance provider for you. Alternatively, you can seek advice from an insurance broker on what home insurance options could be available for you.
Find an insurance broker here
Compare insurance providers here
Family and friends:
Family and friends can help you throughout your home buying journey. They can provide honest feedback on potential properties and suggest lenders, lawyers and building surveyors/inspectors. They may even be able to support you financially with the purchase of your first home. Most importantly though, they will help you celebrate the purchase of your new home.
A deposit is the initial amount you'll need to save for your new home, before borrowing the remaining amount from a lender. Your deposit could be made up of personal savings, financial assistance from family and friends, a contribution from your KiwiSaver, and other government grants that may be available to you.
The first step to buying a new home is to start saving for a deposit.Top Tip: kick-start your saving by setting up a separate account and transferring a component of your pay, before you have a chance to spend it. Make sure your house deposit savings are in an account with low fees and the highest possible interest rate, and preferably an account that isn't too easy to access - should you be tempted. Be consistent with your saving, even a small amount each week will eventually add up over time.
For saving tips click here
KiwiSaver:If you have been contributing towards your KiwiSaver account for the last three years, you may be eligible to withdraw nearly all of your savings contributions made by you and your employer. However, you must leave a minimum of $1,000 in the account. These savings can then contribute towards the deposit on your first home.
KiwiSaver information and access requirements here
First Home Grant:
If you are a first home buyer and a member of KiwiSaver and have been contributing consistently for a minimum of 3 years, you may be eligible for a First Home Grant from Kainga Ora - Homes and Communities. This can be up to $10,000 for an individual or $20,000 for a couple. There are a number of conditions that determine your eligibility for this grant, so check out if you qualify.
First Home Grant information and eligibility requirements here
Lower equity loans:
Most lenders require 20% equity in your home. However, if you are buying a new build (a home which received its building Code Compliance Certificate fewer than six months prior to settlement) your lender may elect, at its discretion, to reduce this to 10% equity. If you're eligible for a First Home Loan you may be able to reduce this equity to 5%. Under the First Home Loan you could also qualify for a lower interest rate, as your loan will be underwritten by Kāinga Ora – Homes and Communities. Check out the Kāinga Ora – Homes and Communities link below to find out more about the eligibility criteria and what banks are offering the First Home Loan.
Find more information on the First Home Loans here
Getting help from family & friends:
If you have friends and/or family members who are willing to help you with the purchase of your home, there are a number of ways they can go about it. They can make an unconditional gift of money, lend you the money or act as a guarantor. Talk to your lender or mortgage broker to find out more about these options.You may also need to engage your lawyer to assist with any documentation involved with these options.
Buying and owning costs
The total cost of buying a home doesn't stop at the deposit and mortgage repayments. The cost of ownership extends to ongoing costs, so it's a good idea to have a plan and budget in place to ensure you have all these costs covered.
Buying costs – one off:
- Lawyer fees
- LIM reports
- Property files
- Building inspections
- Moving costs
- Utility setup and reconnecting services
(e.g. WiFi, Power, Water)
Owning costs - ongoing:
- Home Loan repayments
- Annual Council Rates
- House & Contents Insurance
- Utilities (e.g. Power, WiFi, water)
- Maintenance and repairs
- Body corporate fees (if buying a unit/apartment title)
Your lender or mortgage broker can help you compare these on-going costs to your current living costs and help you set a manageable budget.
For more information on these costs and helpful budgeting tools click here
Home loan pre-approval
A pre-approved home loan gives you an indication of what your lender is willing to lend you, subject to certain conditions, and therefore gives you an approximate price range to work with. It's a good idea to get pre-approved before you start looking.
To start the pre-approval process simply talk to your lender or mortgage broker. They will validate your identity and assess your financial position. You'll need to provide proof of address, a valid photo ID and proof of regular income. These can be provided through utility bills, a passport or New Zealand driver’s license, pay slips or three month’s worth of bank statements.
Once you're pre-approved, you can confidently start researching the market and looking for your first home.