First Home Buyers
You’ve thought about it long and hard, you’ve saved even longer and harder, and now its time to get serious about buying your first home! Some careful planning is necessary as the total cost of buying a home doesn’t just include your mortgage, but things like insurances, legal fees and moving or setup costs.
If you’re a KiwiSaver member, you may be able to use some of your savings towards your first home. Find out more on the Housing New Zealand website.
Choosing what to buy and where….
Your first home is probably not going to be your dream home. But it is the first step up on the ‘property ladder’. Don’t fall into the trap of buying more than you can comfortably afford, with high mortgage payments you can only just manage to repay.
Decide which property suits you best e.g townhouse, character villa, unit. Do your research to find out how much properties are worth in your area. It can be a good idea to visit open homes that appeal to you and see what your money will and wont buy you. Real Estate websites are also a good source of information. You might also want to think about how good you are at DIY – or how bad!
Consider things like:
- Is the house close to public transport routes?
- Are there shops within walking distance if you dont drive?
- What are the schools like in the area and which would you be zoned for?
- Is it a suburb with good resale potential?
- Are there family amenities close by i.e swimming pool? playground?
- What is the rental market like in that area should you want flatmates?
Getting a mortgage….
Your mortgage will probably be the biggest financial commitment you’ll ever make. On average you will pay back twice the amount borrowed so it’s a really good idea to pay more than you have to if you are able to afford it. Even foregoing your daily coffee from a café can result in saving thousands of dollars over the term of your mortgage. There are many types to choose from, each with its own interest rate, fees and flexibility. All these things affect how much the loan actually costs you and when it will be paid off. Don’t hesitate to call us or come in and talk about the options available to you when mortgaging your home through WBS.
Before signing any sale and purchase agreement you should get it looked over by a lawyer. You will also need a lawyer to handle the ‘conveyancing’ which means the necessary paperwork once you buy your house. Fees can vary so shop around, but on average you can expect to pay around $1000.
Builders’ reports, Valuations and LIMs
A builder’s report can identify any possible problems with the house you’re looking at buying and it may be required before your mortgage is approved. An experienced builder will see things that you may miss, which could ultimately save you thousands in repairs down the track.
A Valuation must be done by a registered valuer. They will inspect the property and compare it to others in the area, before giving you a written report on how much it is worth. It costs around $600 for a valuation and the cost can often be incorporated into your mortgage.
A Land Information Memorandum (LIM) identifies any issues such as drainage and landslip risks. You can obtain a LIM through your local council yourself, or request your lawyer do it for you.
You will need to keep some money aside for things like:
- Moving services – or truck hire if you’re doing it yourself.
- Any immediate decorating e.g putting up curtains for privacy.
- Setting up of your home you may need to do straight away such as buying a washing machine or fridge.
- Legal expenses, valuations, LIM’s and builder’s reports.
- Advertising for a flatmate.
Unfortunately your mortgage payments aren’t the only thing you’ll need to take into account as a homeowner. You need to budget for house and contents insurance, mortgage repayment insurance, water, rubbish collection, and your rates.
What are Rates?
When you buy a house you become a ratepayer.
Rates are charges set by local councils to cover the cost of things like roading, footpaths, street lighting, water supply, sewerage and amenities such as parks and local swimming pools. For example, a house valued at $350,000 could have an annual rates bill of approximately $3500 (depending on where you live). It’s a good idea to ask the Real Estate agent what a property’s rates are before you make an offer or you can search for a property’s rates on the local council website.
Applying for your mortgage
We will need to complete a credit check on you – this is standard practice with all financial institutions and we undertake this with your permission. We also require evidence of income, so a recent payslip for you (or both of you if this is a joint application and you are both working). We will also need personal identification for you such as a drivers licence and credit card or passport. Evidence supporting the value of the property you are looking at purchasing (e.g QV assessment) will help expedite your application.