Buying Property in NZ: A Step By Step Guide

Your research should give you an idea of asking prices for homes in the area you’re looking at – now it’s time to work out what you need for a deposit.

Traditionally, in New Zealand, lenders will ask for a deposit of at least 20% of the house price, so this is what you’re aiming for. At times, lenders will accept a 10% deposit but this is less encouraged in the current tight lending market. For most homebuyers, you’ll draw up a budget, weighing up your income vs. your regular expenses, and working out what you can save towards your deposit each month.

Help for first home buyers

If you’re buying your first home, it’s essential you check out the help schemes that exist to get Kiwis onto the property ladder.

Look into:

• Using your KiwiSaver: you may be able to withdraw some of your funds and put the money towards your deposit.
• First Home Loans: some banks and lenders offer First Home Loans, which reduce the required deposit from 20% to 5%.

What is home loan pre-approval?

Getting pre-approved means you know how much you can borrow for a home loan. This is conditional on a number of factors – usually, a registered valuation of the property you’re looking at, as well as a copy of the signed Sale and Purchase agreement once your offer has been accepted.

How do I get pre-approved for a home loan?

A lender will want to see details around your budget, including:

• Your income: they’ll want to see recent payslips, or recent financial statements from your accountant if you’re self-employed,
• Your expenses: this is to gauge what could impact your ability to meet repayments on the loan.
• Your debt: this will include credit cards, overdraft, hire purchases, student loans and similar. They’ll want to know what you owe, and when you expect to remove these debts.
• Your deposit: you need to prove you have enough saved up for your deposit. This will likely involve bank statements, details around KiwiSaver (if this is your first home), and anything else contributing to the deposit sum.

A mortgage adviser can help with your home loan, acting as a middle person between you and the lenders they consult for you. They’ll assist with tasks like assessing your finances, determining the type of home loan that’s right for you, and advising how much you can borrow.

A property lawyer will help ensure that both you and your future seller, are meeting all the legal obligations at every stage of the housebuying process.

In addition, they’ll be able to thoroughly check vital legal documents involved in buying a property such as the Sale and Purchase agreement, titles and Land Information Memorandums (LIMs).

There are a number of ways you can find a lawyer to help with your house purchase:

• Ask your personal network.
• Ask your mortgage adviser or lender.
• Law societies such as the New Zealand Law Society.

Once you’ve ticked these steps off, start looking at homes around the area you want to buy in. Remember, you can use Trade Me Property’s Insights tool to get a feel for a property before even stepping out of your door. This can assist you in drawing up a priority list of homes to check out, and help avoid buyer’s fatigue.

When it comes to seeing a property in the flesh, you’ll generally either do this at an open home or by arranging a private viewing with the seller’s estate agent.

Here are a few things to look for when viewing a house:

• Cracks in the wall: this can hint at structural issues with the house, such as movement in the foundations.
• The floors: is there any sagging in the floors, especially near the bathroom? This can indicate plumbing problems. Peeling wall paint can be another sign of dampness.
• The plumbing: check the water pressure, and how long it takes hot water to come from the taps and shower.
• Fresh paint: if the whole house has recently been repainted, this probably isn’t cause for concern. If there’s a random splodge of fresh paint, however, this might be an attempt to hide something.
• The roof: check when the roof was installed, and if it’s been checked recently, Roof repairs can be very costly and time-consuming.

When viewing a property, don’t be afraid to ask as many questions as you want, and don’t shy away from looking into hidden areas like the attic or basement.

If you find a home you like, we strongly recommend getting a builder’s report on the property. This assessment will reveal:

• Any significant faults or defects in the property which require substantial repairs or urgent attention and rectification.
• Other minor issues that can be attended to during normal maintenance.
• Urgent and serious safety hazards which represent a current or immediate potential threat of injury or disease to people.

Once you’ve found a property you love, it’s time to make an offer. But not too fast, there are steps to follow here too, depending on whether your offer is conditional or not.

1. Conditional offers

This is when your offer depends on a number of criteria being met. Common examples of conditions include the completion of a satisfactory builder’s report or arranging finance.

If a conditional offer is accepted, all the conditions have to be met by the given due date. When this happens, the offer becomes unconditional.

2. Unconditional offers: here, you simply agree to the terms set out in the contract. If you’re buying property at auction, or a pre-auction offer, this is the only option available. Check with your lawyer if there are any concerns about going unconditional.

If your unconditional offer is accepted, this is final – neither party can back out. As the buyer, you must pay the outstanding amount on settlement day.

There are different ways to buy or make an offer on a house, the most common include:

• At an auction (or pre-auction agreement).
• Negotiating on an asking price.
• Through private negotiations with a private seller.
• Through tender.