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There are many different ways to buy property in New Zealand. At present, auctions are very common, because they usually command the best price for the vendor.
An auction is where multiple would-be buyers bid on a house. The winner is considered to have entered an unconditional purchase, so diligent homework is required beforehand. A Real Estate Agent should provide a copy of the sale and purchase agreement, title, and maybe the LIM report. A building inspection and evaluation may also be required, which may run up the cost if a would-be buyer continually bids at multiple auctions.
Auctions also require that would-be buyers register their interest before bidding day and to be able to front a 10% deposit after winning the auction.
The format for an auction is the following: Everyone interested in the property bids at the same time. The highest offer wins, as long as the seller's reserve is met. As mentioned above, bids are binding, so it is necessary that bidders are entirely certain about their decision and that they have all their finances in order.
The bidding format of an auction tends to drive up the price of homes significantly, given the competition involved. This is especially the case with upscale homes that provide high-end features like nice views or being in a respectable neighborhood. Another perk for the seller is that they set a specific selling date, which can significantly shorten the buying period. Partially for this reason, they are more common in larger cities, such as Auckland, so that sellers are not stuck with hefty, extra mortgages.
A tender is where a buyer puts in a written offer with a specified timeframe and the seller considers the offer alongside others. Conditions can be placed on the offer but may result in it becoming less appealing than others.
No price is set in a tender. Interested buyers submit an offer in writing, and the seller picks the offer that is most agreeable (which may not always be the highest offer). Sellers can either accept the offer, in which case it becomes legally binding, or they can negotiate with the bidder. The other offers are off limits to the winning bidder, giving the seller negotiating power.
Private sales are where the buyer negotiates directly with the seller. (Not sold through a Real Estate Agency) Once the buyer has negotiated with the seller and agreed on a purchase price, the buyer will then need to instruct their Solicitor to draw up the Sale and Purchase Agreement for the purchase. (It is imperative to discuss this contract with your Solicitor prior to signing any binding contracts).
Once signed this is then sent to the sellers Solicitor for the seller to accept and sign.
Private sales typically demand that the deposit is paid to the Solicitor once the contract is unconditional.
Lenders are more likely to require a registered valuation report to confirm that the buyer is not overpaying for the property and there is no deferred maintenance of concern.
There are many different ways to buy property in New Zealand. At present, auctions are very common, because they usually command the best price for the vendor. Click here to find out what options there are and how they can best work for you.
learn moreSecuring the funds for a deposit is sometimes the hardest part of buying your first home. Deposit requirements vary from lender to lender and are based on a variety of criteria that can change over time. Although 20% of the asking price is widely considered the best amount to use for your deposit, there are lenders who will lend to those who put down as low as 10%.
learn moreAre you going to sign on a Sale and Purchase agreement? Congratulations, you're just one step away from owning your dream property. However, as with any legal document, there are a few things you should consider before signing the agreement.
learn moreFirst home buyers who have been in KiwiSaver for at least 3 years may be eligible to withdraw funds from their Kiwisaver (excluding the $1,000 kickstart). Buyers may also be eligible to access a Kiwisaver Homestart Grant, which is provided by Housing New Zealand.
Another option is the use of a guarantor who offers security for the borrowed portion over 80% of the purchase price. Guarantors should be close family and in a strong financial position, and they should seek independent legal advice before making any binding commitments.
You must be able to show at least two years of steady income that meets requirements. This is where your tax situation can work against you if you failed in the past to declare all or most of your income. Your cash flow must reflect an ability to afford the loan, otherwise, you are at risk for being turned down. Generally, lenders will want your loan payments to not exceed 30-35% of your monthly income.
Each bank has its own lending criteria, and if you meet all their conditions, there's no reason why you shouldn't get a loan. We will assist you in shopping around for the best deal just like we did for thousands of our satisfied customers.
A deposit can consist of gifts from parents, home start grants, funds from the sale of assets, Kiwisaver, and equity in your parents' home (should they agree).
Each lender considers differently how to treat cases such as significant inheritances or the selling of assets to cover deposits.
In addition to the purchase price of your house, here are a few expenses that you should be prepared for.
|
Expense |
Amount |
|---|---|
|
Valuer |
$500 to $700 |
|
Pre-Purchase Building Inspection |
$450 to $1,000 |
|
LIM |
from $250 |
|
Legal fees |
from $1500 |
|
Share of rates already paid by the vendor |
Varies - can be as much as 25% or the annual rates bill. But is usually around $200 to $400. This is added to the Solicitor cost |
|
Low equity premium |
This depends on the size of your Mortgage and maybe able to be added to your mortgage |
|
Connecting gas, electricity, phone and Sky TV |
$300 to $1,000 |
|
House moving costs |
We have a complimentary Trailer for you |
At Own It Mortgages, we will work hard to ensure that the lender will provide a cash contribution to help you with these expenses.
It entirely depends on what the seller does. If he accepts your offer, then the contract is dated and you have a binding agreement. In the case where he isn't satisfied, he may suggest a counter offer with altered price, conditions or timeframes. Then, you'll have three choices - agreeing with the sellers counter offer, making a new counter offer yourself, or just walking away.
Buying your first home shouldn't be a financial burden, so know the full details of your repayments before you finalize the deal. Since owning a home has many other expenses such as home insurance, council rates, mortgage repayment insurance, body corporate fees and repair charges, it is important to carefully plan the size of each repayment.
Use our online calculator to get a fair idea about the weekly or monthly repayments you'll need to make.
A pre-approval, also called conditional offer of finance, is a written approval from a lender stating that you are eligible to borrow a certain sum, subject to some conditions. Once you receive your pre-approval, go through it carefully to make sure that you understand all the conditions mentioned in it. Some common conditions you'll find in the pre-approval are:
In order to get a strong pre-approval letter, you must provide all the documents (with full transparency) along with your application. The ideal pre-approvals are the ones with a minimum number of conditions.
Deciding the Conditions:
When you're purchasing by offer and negotiation, you have the chance to define the conditions before the sale actually happens. But, be careful not to set too many conditions as this may cause the deal to fail. If all of the conditions are satisfied within the specified time, your offer becomes unconditional meaning that you're bound by the law to purchase the house. On the other hand, if the conditions aren't met, you have a right to negotiate or withdraw your offer. For example, if you mentioned a clean LIM report as a condition, and the LIM has some problems, you have full powers to cancel the offer.
If the property needs some repair work, you may set a condition telling the seller to finish the repairs by a certain date. Failure to meet this condition may not stop the sale but can delay the settlement until they are met.
Every bank will expect you to pay any outstanding defaults before even considering your application. Most banks check your credit history, so people with a bad record have a poor chance receiving an approval for mortgage finance. Here's what banks will be looking for during credit checks:
'I really want to thank you so much for the advice and help you have given to both myself and my clients in the past. When I worked with you personally you were extremely professional and guided me through each step. You were honest and explained things so that there were no surprises and I truly thank you very much. As a result, I have referred your service on to numerous clients and have received nothing but praise. Often these clients are purchasing their first home and need reassurance and guidance. You are always friendly, helpful and act immediately, going the extra mile and looking outside the square for a result. I have no hesitation in passing your name on to anyone needing to secure a mortgage. Thanks for everything Lorna.'
Raelene Rangiawha
Professionals Real Estate
Work out how much you can afford to borrow.
Gather information & paperwork to obtain a pre-approval
Start looking for a home and make an offer conditional to finance. Think about any other conditions you may like to put on your Sale and Purchase Agreement such as builders report, Registered Valuation and a move in date
Finalise finance, arrange inspections and valuations as required
make sure you are happy with the above inspections and reports, if so, then you are ready to unconditionally purchase this property
Talk to us about the best ways to pay off your mortgage and chat about how risk insurance may benefit you
A key advantage of building your home is that you get to choose the features and final additions that suit your needs, style, and preference. Nevertheless, while the prospect of creating your dream home from scratch appears exciting, the challenge of finding the right financing solution cannot be overlooked. Are you a first time home builder confused about the building process and the various lending practices involved? Well, worry no more, as we are here to keep you informed and educated on all the latest trends on building a new home.
learn moreSo, you have owned your home for a while and thinking about purchasing another home? Perhaps a change of lifestyle? An upgrade to a larger home or the desire to live more minimalist - or maybe you are in a position to purchase that second home you've always dreamed of in that special vacation spot meant for you. No matter what your circumstances are, we are here to assist you Buy It!
learn moreRefinancing simply means paying off your original mortgage and replacing it with a new one. If you are a homeowner, refinancing your mortgage can be a real money-saving strategy. Most banks offer a range of cash incentives to entice customers to refinance. In some cases, these incentives will cover costs of breaking the current mortgage and legal fees with possible surplus cash for you. So you may end up with a better interest rate and a little more cash. Talk to us and see if there are savings to be made.
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