First Home

Let us get you into your first home

Few things are more exciting than purchasing your first home. There's pride and independence that one feels when there's a place to lay their head at night and it's all theirs. Say goodbye to all the rental money that disappears into the abyss and say hello towards payments that truly go toward your future investment-your home. There are a plethora of things you need to know before jumping into homeownership, and we at Own It Mortgages are here to assist you in any way we can. First, let's provide you with all the pertinent information you need to know about being a first-time buyer. 

 

Mortgages � What If I'm Self Employed? How much do I need for a deposit? Can I use my KiwiSaver? Where can my deposit come from?  Can I get a loan?

 

Purchasing a property � What are the ways of purchasing property? How do I make an offer? What does becoming 'Pre-Approved' mean? What are my costs? So I've made an offer, what's next? Are there any secrets for a 'Yes'? How do I decide on my repayments?

 

Mortgages

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What If I am self-employed?

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. 

 

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How much do I need for a deposit? 

Securing 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%.  

 

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Can I use myKiwiSaverr?

First 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. 

 

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What can my deposit comprise of?  

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. 

 

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Can I get a Loan? 

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. 

 

Purchasing a property

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What are the different ways to buy a property? 

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. 

• Auction 
  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 neighbourhood. 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.  

 

• Tender
  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 Sale (I HAVE CHANCED THIS PARAGRAPH)
  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. 

 

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How do I make an offer? 

Are 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. Firstly, ensure that you are completely aware of your legal obligations, and then, make sure to include some conditions (about the property you're buying) in order to satisfy the bank as well as yourself. 

So, once you've decided to make the purchase, do the following: 

1. Contact a Solicitor who's skilled in real estate deals. 
2. Get your loan preapproved by a mortgage provider (like us) to confirm you are financially strong enough to purchase the property. 
3. List the conditions of your offer. Some important conditions are Builder's Report, Finance REMOVE- Condition Report, the LIM (Land Information Memorandum) report, and a drug test.  

The Need for a Solicitor: 
Buying a property involves many legal procedures, so you need the help of an expert Solicitor to examine the contracts and check if the property's title is in order. The Solicitor's help is further needed while arranging the valuations and reports,    with transferring the property to your name (conveyancing) and registering your mortgage on the property title. He also helps you understand your rights and advises you on price negotiations and on the various ways you can own the property. (Such as a Trust or LTC Company)  Also, he can create a Power of Attorney and  Will, and the arrangements for your insurance and loan.  

Most banks need you to have all these things sorted out, as a condition of the mortgage.  

Finding a Solicitor: 
You may ask your friends or family to recommend a Solicitor specializing in conveyancing or property deals. You can also find a suitable Solicitor by searching online or in Yellow Pages. 

 

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What's meant by a Pre-Approval? 

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:  

1. A copy of the sale and purchase agreement being satisfactory to the bank. 
2. A copy of signed sale 
3. The Registered Valuation must me agreeable to the bank.  

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. 

 

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What are my costs? 

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  (if you borrow more than 80%)	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.

 

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So you've made an Offer, What's next?

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. 

 

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Are There Any Secrets For A "Yes"? 

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: 

1. Outstanding defaults  
2. Dishonour fees 
3. No. of enquiries for credit 
4. Paid defaults 
5. Names of the companies to which the applicant owes money 

 

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How to Decide On My Repayments? 

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.

 

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