Unless you’ve been living under a rock, you will no doubt have heard about the property boom in New Zealand and its effects on would-be first home buyers.
Low interest rates, a lack of housing supply, and a surge in New Zealanders returning home during the pandemic have all contributed to a booming housing market. Moreover, government policies (from both sides of the house) over the years haven’t helped cool the market either.
New rules were recently introduced with the goal of slowing property investors. If we see the intended effect of such policies, this will be good news for first home buyers.
Property conveyancing is an in-depth process
Whilst it may seem impossible to get onto the bottom rung of the property ladder, there’s still hope if you understand property conveyancing and how buying your first home is very different from purchasing an investment property.
When it comes to property law and conveyancing in NZ, there’s a lot more to consider than simply getting a mortgage and finding a house or section in which to settle down. It’s a process that could take several weeks or even months and our conveyancing lawyers in Hawke’s Bay can ensure you don’t fall prey to any conveyancing mistakes.
So fear not. Knowledge is power and preparation is the key to success. Our property lawyers and NZ conveyancing specialists are here to help you with tips to get on the property ladder.
When buying a house, how much can I afford?
First, you’ll need to crunch some numbers. The ideal deposit for any own-home purchase is 20% but typically, the minimum required is 10% for an existing property and in some rare cases 5% for a turn-key build or through the Kāinga Ora First Home Partner Scheme.
Looking at the Hawke’s Bay market, it is possible to buy a house for $250,000. A 20% deposit is $50,000, and 10% would be $25,000. In Auckland, your deposit would need to be between $100,000 and $200,000.
Bear in mind that with increasing inflation, mortgage interest rates will also increase. The best way to check affordability (based on your income) is to search “mortgage calculator” and enter your relevant figures. Then project ahead to anticipate higher interest rates and if you can still meet the repayments.
Our property lawyers recommend contacting your chosen bank or mortgage broker to apply for pre-approved finance before searching for your ideal home. If you are able to access your Kiwisaver scheme or the First Home Grant as part of your deposit, get those pre-approved as well.
You need a good credit rating and the ability to afford your repayments. At present many people are paying a third or more of their income on mortgage payments each month.
Other than the purchase price, what other expenses do I need to plan for?
When buying property, due diligence is really important. This could include a building report, LIM report, toxicology report or geotechnical reports. Our conveyancing specialists can give you an estimate of the costs for these reports.
How do I make an offer on a property?
If the property is marketed by a real estate agent, you’ll need to contact them and ask that they prepare you a written offer that you can sign, to be presented to the owners. This will include the due diligence conditions that you require (such as finance approval, or a building report), the timeframes for confirming those, and the settlement date. Our property lawyers can discuss this with you, to be sure you can meet the commitments you are making. If you’re buying from the home owner directly we can handle the paperwork for you.
What about going to an auction?
Auctions are popular with real estate agents. An auction bid is an unconditional offer to buy a property. So your due diligence, including your bank’s finance approval for that specific property, must be complete before the auction day.
If your due diligence includes professional reports, be aware that you may have to pay these costs without knowing your bid will be the highest on the day.
If you have any questions about purchasing property, you can meet our property law team and our conveyancing specialists. Alternatively, call us on 06 561 0838 or contact us online.
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