Buying your first home is a big step in life. When the time comes to get started, there is a lot to learn. Breaking down the steps makes the process easier. Here is OneRoof’s step-by-step checklist to starting your property journey.
Step 1: Do your research
Start by making a list of ‘must haves’ and ‘nice to haves’ in a property. That can be location, size, or the type of home you want to buy. How many bedrooms do you need? Do you need to be close to work, transport, or schools? Will you buy a brand-new home, or an existing one? Once you have short-listed location and other specifics then:
● Search for sold property to get an idea of prices
Start your property search
● Create a search for properties in the location and price range
● Pick local real estate agents’ brains for intel on the market.
Read more: How to find the right property
Step 2: Work out how much you can afford to pay
The amount you can borrow dictates the price of the house you can buy. It’s possible to get an indication of the sum you can borrow and how much fortnightly or monthly repayments will be by using banks’ online calculators. Then talk to an independent mortgage adviser (broker) or a bank mortgage manager about getting pre-approval, which tells you what the bank is willing to lend you after considering your deposit, income, and expenses. Be aware that pre-approval is an indication only. The property needs to be acceptable. Pre-approval usually lasts for three months before it lapses, but can be renewed. It may lapse if your circumstances or interest rates change.
Read more: How to set a budget for your first home and How to get a home loan
Step 3: Add up the other costs of home ownership
Pre-approval is calculated with affordability in mind. It means you should be able to afford the extra costs that you face as a homeowner. Nonetheless, it’s a good idea to add those costs into your budget so they don’t come as a shock. They include:
● Legal [conveyancing] fees
● Builders reports
● Moving-in costs
● Money for urgent repairs
● Ongoing maintenance costs
● Insurance premiums
● Council rates
Read more: What to buy for your first home
Step 4: Get KiwiSaver ready
If you have KiwiSaver and this is your first home, you can withdraw all your savings except $1000 to use as a deposit. You may qualify for a First Home Grant as well providing your income and the property are both less than the relevant cap. Make sure you lodge your KiwiSaver applications in plenty of time. You don’t want to miss out.
Read more: What grants do first home buyers get?
Step 5: Learn about the sale process
Homes in New Zealand are sold using a variety of methods. The main ones are:
● Auctions. At auction you bid against other buyers. Providing the reserve price is met, the highest bidder wins. In most cases auctions are “unconditional” meaning bidders must have their deposit ready and mortgage lined up and not need conditions such as ‘subject to building report’.
● Tenders and deadline sales (also called treaties). Buyers make written offers which might need to be by a certain date. The offer spells out the price they are willing to pay and any conditions. The seller then chooses the best offer. Buyers usually get one shot with tenders and deadline sales.
● Negotiation. Sales by negotiation involve buyers and sellers haggling over a price. Usually the buyer will offer a starting price and the seller will counter with a higher offer. The process continues until an agreement is reached between the parties. Properties sold by negotiation may have a listed price, call for offers over a certain figure, or not list a price at all.
Read more: How the house buying process works
- Finally, the more you can read and learn about the buying process the easier your journey will be. Check out OneRoof’s first-home buyer guide here.
