Steps For Buying Your First Home in New Zealand
Steps For Buying Your First Home in New Zealand
Whether you're a first-time buyer or looking to upgrade to a new property in New Zealand, this guide offers valuable insights, tips, and actionable advice to make your home buying experience easy. By following these steps, you'll be able to make wise investments, avoid common mistakes, and find the perfect place to call home.
Get ready to buy your first home:
Before diving into the home-buying process, ensuring financial readiness is important. You’ll need to assess your overall financial health, which includes evaluating your credit score, savings, and current debt obligations (aka that Afterpay or car loan). A good credit score not only opens the door to better mortgage rates but also influences the types of financing available to you.
In addition to credit, having a solid savings plan is essential. Owning a home comes with upfront costs, including the down payment, lawyer fees, and moving expenses, which we’ll be frank, aren’t cheap. Generally, we’d recommend saving at least 20% of the home’s purchase price, but only if that’s possible without putting extreme financial stress on yourself. For a lot of Kiwis 10% may be more realistic in the current world, however, the more you save, the better.
The ideal deposit is 20% of the purchase price, however, this is very rare amongst todays first home buyers and the most common deposit for first home buyers is between 5% and 15% - the more the better but don’t be put off if you have less than 20%.
Understanding the home buying process:
For first-time buyers, this part can seem overwhelming, but that’s where understanding the process can come in handy. It begins with researching the housing market, which can vary depending on location and economic conditions. Familiarise yourself with market trends and home prices. This knowledge helps you set realistic expectations and enables you to identify when it might be the best time to buy. Additionally, attending open houses and visiting neighborhoods can provide insights into what’s available and what suits your needs, or get a good team in your corner, like ours, and we’ll help steer you right.
The next step is to determine your home-buying goals. Are you looking for a forever home, or is this a stepping stone for future investments? Establishing your priorities helps narrow down your options. Create a list of must-haves versus nice-to-haves, considering factors such as size, layout, amenities, and location. This will help guide your search and help you stay focused during what can be an overwhelming process. Once you have a grasp on your financial readiness and your goals, it’s time to lock in a team of professionals to support you in this journey.
Finding a reliable real estate agent and a trustworthy mortgage broker can make all the difference. An experienced agent will guide you through the complexities of buying a home, from property showings to negotiations, while your mortgage broker will help you navigate through your financing options, helping determine which is the right option for you and assisting with refixing when your mortgage comes up for renewal. Both have access to valuable resources and market insights, which can help you make better decisions. Don’t forget about getting a lawyer too, and make it a good one, you’ll want them in your corner when it comes to closing the deal faster.
Choosing the right type of home:
When it comes to choosing the right type of house, several factors come into play. First, consider your lifestyle and how it may evolve. For instance, a single-family home may be ideal for those looking for space and privacy, while an apartment could be better suited for individuals seeking low-maintenance living. Additionally, think about the size of the property you need now and in the future. If you plan on starting a family, this could impact your choice significantly, so it’s important to consider it early. Another important aspect to consider is the home's layout. An open-concept design may be appealing for entertaining, while others may prefer defined spaces for added privacy. It’s essential to envision your life in the space and ensure it aligns with your personal tastes and needs.
Lastly, and very importantly, take into account the resale value of the home type you choose. Some property types will appreciate faster than others, which can be essential if you plan on selling in the near future. Research neighborhoods and the types of homes that tend to retain value over time. By looking at these factors, you can make an informed decision that not only meets your current needs but also serves as a smart investment in the long run, and before you know it you’ll be onto your second, third, and fourth property.
Finding the perfect location:
Finding the perfect location is one of the most important pieces of the puzzle when it comes to buying a home. The location you choose will significantly impact your lifestyle, commute, and overall satisfaction with your new home. Consider your daily routines, including work, school, and recreational activities. Proximity to these locations can save you time and enhance your quality of life. Additionally, look at the amenities available in the area, such as grocery stores, parks, restaurants, and healthcare facilities, does it cater to all of your needs?
Another crucial factor to consider is the safety and overall vibe of the location. Research the area, talk to the locals and engage within the neighborhood communities that you’re interested in. Visiting the area at different times of the day can also provide valuable insights into noise levels, traffic patterns, and the friendliness of the community.
Finally, think about the future growth prospects of the location. Are there plans for infrastructure improvements, new schools, or commercial developments? Areas that are on the rise may offer better investment opportunities and increased property values over time.
Building inspections and appraisals:
Building inspections and LIM reports are critical steps in the process that can’t be overlooked. A building inspection involves a thorough examination of the property by a qualified professional who assesses its condition and identifies any potential issues. This includes checking the roof, plumbing, electrical systems, and overall structural integrity. A LIM report can be obtained by your local council and will include information around zoning, natural hazards, services and rates. Understanding the results of the inspection and the LIM can help you decide whether the home is a worthy investment.
Securing financing and mortgage options:
Before you start looking at homes, it’s wise to get pre-approved for a mortgage. This involves providing your mortgage broker with your financial information, including income, expenses and your existing assets and debts. Your broker will then request pre-approval on your behalf from 1 or more chosen lenders. A pre-approval not only gives you a clear idea of how much you can afford but also shows sellers that you are a serious buyer, which can be an advantage in a competitive market. The pre-approval process usually involves a thorough review of your financial history, so having your documents organised for your broker can streamline this step for both of you.
Once pre-approved, you’ll need to explore the mortgage options available to you. There are several types of loans, each with its own set of benefits and eligibility requirements. Fixed-rate mortgages provide stability with consistent monthly payments, while floating mortgages may fluctuate over time. If you’ve got a good broker in your corner (aka, us), they’ll guide you to make the best decision based on your financial position and your goals.
After deciding on the type of mortgage, your broker will shop around for the best rate. Different lenders may offer varying rates and fees, often they offer a cash back incentive, so taking the time to compare can lead to significant savings over the lifespan of your loan.
Making an offer and negotiating:
Making an offer and negotiating on a home is an incredible moment in the buying process. Once you’ve found your new home, working closely with your real estate agent will help you to craft a competitive offer. Your agent can provide insights into recent sales and the current market conditions, which can inform your decision. It’s also important to consider the seller’s situation, as understanding their motivations can give you leverage during negotiations.
When making your offer, include any contingencies that may protect your interests, such as a home inspection or financing condition. These clauses allow you to back out of the deal if certain conditions aren’t met, providing peace of mind as you move forward. Your agent and lawyer can help guide you as to what you may need to add.
Once your offer is submitted, be prepared for a negotiation process. Sellers may accept your offer, counter it, or reject it outright. It’s essential to remain flexible and open to discussions. Your agent will guide you through this process and help you respond to any counteroffers. Ultimately, patience and persistence are key as you go through this critical stage in your home-buying journey. Just keep the maximum amount you can afford based on repayments in mind and don’t offer more than that.
Closing the deal and moving in:
Closing the deal is the final step where all the hard work has paid off in ownership of your new property. Before the settlement date, you’ll receive documents that outline all the details of your mortgage, including loan terms and repayments. Take the time to review this document carefully and ensure that all the information aligns with your expectations. If you have any questions or concerns, now is the time to address them with your broker and lawyer. If everything checks out, it’s time to start packing and wait to be handed over the keys on settlement day!
If you’re about to take on the journey of a lifetime and buy your first home (or maybe even your second, third, or fourth), and you’re looking for the right financial advice that will help guide your property ambitions, then reach out.We’re here to help!
