If you are planning to buy your very first New Zealand home, this article is for you.
Buying and owning a home is the dream of every New Zealander. In fact, it can be argued that home ownership is in our blood as Kiwis. But buying a house can be a complicated process, especially as there are different ways to home ownership, which is why it is important that you have all the relevant information you need as a first time buyer to make the right decisions.
It doesn’t matter if it is a small apartment in the city or a simple house in the suburbs, this article contains the essential guide to buying a house for the first time.
Determine your situation
For most people buying a house in New Zealand, the first step is determining how much you want to invest in buying a property, and this means taking a good look at your financial situation. For example, if you are buying a home with your partner, you may be able to afford a bigger property suitable for a family if you pool funds together.
The usual way is for the potential house buyer to make a down payment or deposit of about 20% the value of the house and taking out a house loan or mortgage to cover the balance. If you are following the route, the bigger your deposit, the faster you will be able to pay up your loan.
In addition to your financial situation, you should also put your current status into consideration. For example, if you are currently single or live alone but expect that status to change in the nearest future, you may want to consider buying a bigger house suitable to raising a family.
Work with a licensed property agent
In New Zealand, it is possible to do the whole property search and buying thing on your own, but this is not recommended for first time buyers as there is always the risk of making a mistake or getting scammed.
As a rule, most property buyers work with licensed property agents who are paid a commission by the seller. Property agents not only know where the best properties can be found at your budget, but they can also help you wade through the unfamiliar waters of property buying.
Of course, you can also find the house of your dreams by searching online listings and in special magazines and newspapers; you can then direct the property agent to do the legwork on your behalf if you don’t feel up to it.
In most cases, you will be required to make an offer by completing what is known as a sale and purchase agreement, a document that will contain the contract of property purchase, including how much you will pay, deposits, and other terms.
Be sure to first talk to a mortgage provider or bank lender about a house loan before you start looking for properties, so that you know where you money is coming from once you find the house you like.
Even though you are working with a licensed property agent, it is always a good idea to know a bit about the property market before venturing into property purchase. For example, it may be important to understand the difference between a private sale and a private treaty sale. Knowing the importance of a title search is also important.
The truth is that even though you will be getting lots of professional help from your lawyer and the property agent, buying a house as a first time buyer means that you will be bombarded with a lot of unfamiliar terms and legalese. It will help a lot if you are not struggling to make sense of what is being said.
To this end, it is important that you do the necessary research to prepare yourself so that you can understand and contribute in a knowledgeable manner. One place to get helpful information is Steve Slicker’s useful real estate links page. You can also find a lot of useful material all over the web.
Getting support from your government
If you are not sure how to get the deposit to fund your first home, there are lots of avenues to get help from the government, as long as you meet the criteria.
For example, if you have been saving in a KiwiSaver account for more than three years, you may be able to withdraw from this account to make your deposit; you may also be eligible for a KiwiSaver HomeStart grant.
There is also the Welcome Home Loan that allows you to get a home loan with 10% deposit rather than the usual 20%. However, the amount you can get depends on where in New Zealand you are and how much you can afford.
Finally, if you are Maori and a first time buyer, you can check to see if you are eligible for a Kāinga Whenua loan which allows to buy, build, or relocate a home to your ancestral land.