You understand what home you are after and you've started looking around. Once you find the home for you, there are a few more things you need to tick off your checklist before it becomes yours.
Conditional versus unconditional offers
When making an offer on a property, you can either choose to make a conditional or an unconditional offer. It’s important to understand the difference between the two. Being a first home buyer, it’s more likely that you will make a conditional offer.
Conditional Offer: This is where you can specify different conditions that must be met before the sale and purchase agreement goes unconditional. This could include, but is not limited to, a building inspection, confirming your finance or a LIM Report. It is important to discuss any conditions you decide on with your lawyer. There will be a time frame attached to a conditional offer, so if the property doesn’t meet your needs, or your finance is not approved, you can withdraw your offer without financial penalties.
Unconditional Offer: Before making an unconditional offer (where there are no conditions attached), you should carry out all due diligence (i.e. LIM report, building inspection, confirm finance, etc) and have your lawyer check over your sale and purchase agreement. Note that once you make an unconditional offer, you will be legally bound to complete the purchase if your offer is accepted.
For more information on conditional and unconditional offers, speak to your lawyer and lender or mortgage broker.
Get your support team back together
When you find the home that you want to purchase, get your entire support team back together to help you finalise your decision.
Family and friends
Take your friends and family members, who have supported you throughout your home buying journey, to view the home. They can provide you with honest, objective feedback to consider before you put in an offer.
Your lender may require you to provide them with a property valuation, before you can finalise your loan. Make sure your property valuation is carried out by a registered property valuer.
Qualified Building Surveyor
A qualified building inspector inspects the house you are interested in buying to check whether it is structurally sound. They will then compile a building report, which will be analysed by your lawyer, along with the other reports and contracts attached to the property. Your lawyer can then advise you on any conditions or issues you need to consider before purchasing the home.
Residential property lawyer or conveyancer
Your lawyer or conveyancer will advise you of all due diligence that you need to complete before you purchase a home. They will also review the sale and purchase agreement and other reports and contracts attached to the home, such as the LIM report (Land Information Memorandum), property file, and the property title search, so that they can advise you of any conditions you should consider before purchasing the home. If you are using your KiwiSaver savings, they can also finalise the withdrawal forms and send them to your KiwiSaver scheme provider. Once you are successful with purchasing a home, your lawyer or conveyancing practitioner will be responsible for transferring the property to you, registering your mortgage and completing the transactions necessary for settlement.
Lender or Mortgage Broker
Depending on your lender or mortgage broker, you may be required to get a building inspection, LIM (Land Information Memorandum) report, property valuation and property file from the local council. As most of these reports and inspections come at a cost it's a good idea to be serious about the home before you request them. You will need to apply for a final loan approval from your lender, which differs to your pre-approval. If your loan application is approved you will be provided with a letter of offer, which confirms the amount your lender can commit to lending you. Once the home purchase goes ahead you will need to confirm your repayment structure with your lender and figure out how you intend to manage your mortgage.
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Make sure your home insurance has been arranged prior to settlement as this will be a requirement set out by your lender for you to receive your loan. You may also want to get contents insurance at the same time. Contents insurance covers damage to, or loss of, an individual’s personal possessions while they are located within your home. Some contents insurance policies also provide restricted cover for personal possessions temporarily taken away from the home by the policyholder. Talk with your insurance provider to find out more information about the different types of insurance products they have on offer.
The offer on your home is accepted and goes unconditional, but it’s not party time yet. Between unconditional and settlement, there are several tasks you still need to complete. Check with your lawyer and mortgage broker or lender to ensure that you have completed all your pre-settlement condition’s, and everything is on track for settlement. The time between unconditional and settlement will vary from sale to sale, but it is usually around 30 days.
What you need to get done pre-settlement:
Your lawyer will advise you of what documents you will need to sign. To sign these documents you will need to meet with your lawyer in person so that they can witness your signature.
KiwiSaver and First Home Grant:
You will need to submit your KiwiSaver First Home Withdrawal form and apply for your First Home Grant. Your KiwiSaver provider will require certain documents before approving these, so check what they require and make sure you provide these in a timely manner. Your lawyer can also assist with this.
On settlement day your bank needs to advance the required funds to your lawyer to enable you to settle the purchase. This will be the balance remaining after payment of your deposit and any other funds you have available to put towards your purchase that are not being borrowed from your bank. The bank will liaise directly with your lawyer over the mortgage documentation and the drawdown of the settlement funds. Your lawyer also needs to complete final checks and receive certain assurances from the vendor’s lawyer to ensure the title to the property can transfer over to you. The remaining funds owing, once received from the bank, and any additional funds required from you, can then be paid in accordance with the settlement statement. You will need to work closely with your lawyer to ensure that the settlement process goes smoothly.
Once you have organised your home insurance you will need to provide proof of this to your lawyer or conveyancer, as they will work with your lender to make sure all the paperwork and payments for purchasing are sorted.
If you're getting contents insurance it should be in place before you start moving all your things to the new house, as they could get damaged in transit.
Before settlement make sure you carry out a final inspection of the property, which can be arranged through the real estate agent or sales consultant. You want to ensure that any inclusions (chatels) in the sale and purchase agreement remain and that there has been no damage to the property since the sale and purchase agreement was signed by you and the seller.You will want to inform your lawyer of the outcome of the inspection.
For more on what to look for in your final inspection click here
Start packing and think about what you want to take with you and what you might want to sell or recycle before you move in. It can take more time than you think to box everything up and clean your current home.
If you're renting, you'll need to provide sufficient notice to you landlord before you move out. Move out date is likely to align to the settlement date of your new home. Although, be mindful that it can take more time for all the final settlement transfers to occur on settlement day. It can be a good idea to allow an extra day or so to ensure you're not waiting outside your new home with a truck load of your possessions, waiting to move in.
Settlement day is a big milestone. It’s when the title of the home is transferred into your name. It’s probably one of the most exciting parts of the process.
On settlement day, most of the work is completed behind the scenes by your lawyer. Here is an overview of what will happen:
- If applicable, your KiwiSaver Withdrawal and your First Home Grant will be paid by your KiwiSaver provider directly to your lawyer on or before settlement day.
- Your lawyer will notify the bank of the amount required to settle the purchase and will arrange for the money to be transferred to the seller. It is important to ensure that your funds have cleared by the agreed time on settlement day to avoid possible penalties.
- Your lawyer will also check that the rates have been paid by the seller and are up to date.
- Once your lawyer has received confirmation that the seller has received the money, he or she will register the property in your name, register any mortgage against the property and arrange for you to receive the keys.
- Once you collect the keys from the seller, it’s time to move in! And to start planning your house warming. The journey of buying your first home is officially over and you can now proudly call yourself a homeowner.