Buying property in New Zealand: a step by step guide
The common stages to buying a house in New Zealand.
There are few milestones in life like buying a house. However, this process tends to be a marathon, not a sprint – and people are often surprised by the number of steps involved in getting to settlement day.
We get it, the process can be quite overwhelming. So, if this is your first time buying, or if you need a refresher on what to expect – this article is for you. We’ll run you through the major steps of how to buy a home in New Zealand so you can map out your journey and get the ball rolling.
Buying property in New Zealand: the steps
1. Research, research, research
With home buying, knowledge is power. The more information you have at your fingertips, the better decisions you’ll be able to make. In particular we advise looking into:
- Listings in the area you’re looking to buy in: you’ll want to know the average house prices for the suburb or town, the average number of listings over a period of time and how long properties stay on the market. Our Property Insights tool is a great place to do this!
- News and insights around the property market: the world of real estate doesn’t stay still long, and big change can happen fast. Staying up to date with the latest developments is essential to your decision making.
- Advice around buying: with property, it’s best not to wing it. Whether you’re unsure about what to do at an open home or want to know more about home loans, online guides can answer many of your questions.
Our Property Insights tool can help you get the info you need about a home.
2. Nail down your finances
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 can spend on 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. However, a lot of lenders now accept a 10% deposit, but this will come with more conditions for approval.
For most, this will mean drawing up a budget. Here. you’ll need to weigh up your income vs. your regular expenses, and work 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.
- 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%.
3. Get home loan pre-approval
What is home loan pre-approval?
Getting pre-approved means you know exactly how much you can borrow for a home loan. They’re 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: three months of your most 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 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 broker can help with your home loan, acting as a middle person between you and the lender. 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.
Getting pre-approval means certainty over how much you can borrow for your home loan.
4. Find a property purchase solicitor
A property lawyer will help ensure that both you, and your future seller, are meeting all legal obligations at every stage of the 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 broker or lender.
- Law societies such as the New Zealand Law Society.
5. Start viewing homes
With your finances in mind, 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 damp.
- 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.
We also highly 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.
You'll get used to viewing homes, and knowing what to look out for.
6. Make an offer
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.
Firstly, it’s important to understand the difference between the types of offer you can make:
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 you have any concerns about going unconditional. They will alert you to any concerns.
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:
7. Complete the purchase
Settlement day usually comes four to six weeks after your office was accepted, depending on what you and the seller agreed. On settlement day, your lawyer will exchange the following with the seller’s lawyer:
- The remaining money.
- The necessary transfer documents.
- The keys to the property.
And voilà, you have a home - congratulations!
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