Embarking on your first home-buying journey is exciting but sometimes the logistics of where to start can be overwhelming. We’ve broken down the key steps you need to think about in your home-buying process.
Set goals
Get clear about your first-home goals — the ideal home is very specific to your personal situation and will be different for everyone. Think about where you want to live and whether you can afford to live there. How many bedrooms will you need and how long are you likely to stay in your first property? Think about your future family and career plans. Will you be prepared to travel to work? Is access to good schools and public transport important for you?
Do your homework
Once you’ve identified the areas you’d like to live in, do your homework on the property market there. What are houses selling for? How often are new properties coming on the market? You can find recent residential sales statistics online at www.qv.co.nz. This can be helpful in identifying average house sale prices, specific to the areas you are looking in.
Wellington Mortgage Brokers can also provide free online property reports on specific properties you are interested in, giving detailed information on the current market value based on recent sales and listings in the area.
Get pre-approved
Before you go open-home shopping it’s important you know what you are going to be able to afford. A mortgage broker can work out your borrowing power and help you get a mortgage pre-approval. Once you have pre-approved finance and know what your budget is you are well-positioned to make offers on properties you like.
Competition can be tough in the current property market. A mortgage broker can help you navigate the offer process and conditions to ensure you are putting your best foot forward.
Legal advice
We recommend researching lawyers before you start. You will need a lawyer or conveyancer to provide advice from a legal perspective. It’s a good idea to have a lawyer check over your offer before you submit it, to ensure you have covered what you need to in terms of conditions. Once your offer is accepted a lawyer will help with your Kiwisaver withdrawal, the sale and purchase agreement, and the transfer of funds on settlement day. Ask for recommendations from your friends, family and mortgage broker.
Deposit funds
Be clear on how much deposit you have and where you are sourcing it from. Banks generally require 20% of the house price as a deposit, but there are some exceptions. Your mortgage broker can help you with low-deposit options.
Kiwisaver can be used as a deposit on your first home. You may be able to withdraw some funds if you have been paying into Kiwisaver for at least three years. You’ll need to request a letter from your Kiwisaver provider confirming how much you are eligible to withdraw. You can find detailed information on eligibility criteria on the Kiwisaver website.
If you are a low-deposit first-home buyer you may also be eligible for the First Home Grant. More information about this can be found on the Kainga Ora website.
Mortgage planning
Work out what your mortgage repayments might be, based on your deposit and your mortgage pre-approval. We have an online mortgage repayment calculator that can help you work this out. Look at what your other home-ownership costs are likely to be — council rates, home and contents insurance, mortgage repayment protection? Using a budget planning tool like sorted.org.nz can be helpful in planning your home-ownership expenses.
We have a comprehensive free First Home Buyers’ Guide, which you can request from our website. Our helpful team are always available to answer any questions you may have and talk through your options. Call our experts today on 0800 000 518.