About buying

About Buying

Buying a home is great, but it's also a long term commitment

Purchasing a home is a significant decision and likely the largest investment for most people. Whether it's your first home or not, ensuring you make the right choice is crucial. Several factors come into play, but two of the most important are: what you need in a home and what you can afford.

When it comes to requirements, in addition to basics like the number of bedrooms, it’s essential to research the area, schools, and other aspects that may be important for your family before making a purchase.

Affordability is always a major consideration. If you have the cash to buy outright, that's great, but many people will need financial support. Before you start viewing properties, it’s wise to obtain a written pre-approval from a lender so you know your budget.

Having this pre-approval in hand can also be beneficial during negotiations, particularly in competitive situations. Avoid looking at homes outside your budget; it can lead to disappointment when you have to settle for more affordable options, and it might tempt you to stretch your finances too far—one of the biggest pitfalls buyers face!

REA Guidelines

The Real Estate Authority in New Zealand have excellent guides for those planning to buy.

Please find the buyer's journey guide here.

The REA guide for the sale and purchase can be found here.

Anti Money Laundering

The update to the Anti Money Laundering legislation in New Zealand requires your solicitor to perform Client Due Diligence on all clients.

Please find more information via the link: The Act

Buying your first home

First home buyers in New Zealand who meet the criteria set by the government, might be able to access their Kiwisaver or other forms of financial assistance.

Talk to your financial adviser as to what may be available to you.

Making an offer

When you make an offer on a property, you’ll be asked several questions, such as:

- Do you need financing?
- Would you like a builder's report?
- Would you like a Land Information Memorandum (LIM) or a toxicology report? Do you have Overseas Investment Act (OIA) approval?

If you're a first-time homebuyer, these questions may seem confusing. Below are brief explanations along with links to more information. Familiarising yourself with this terminology will help you understand the implications of your choices during the offer stage of the buying process.

Finance

Whether you can secure financing is a question that only your bank or mortgage broker can answer. There are some basic guidelines to consider, such as the need for a deposit - typically around 20% of the purchase price for residential properties.

You'll also need a stable income to cover your mortgage payments, and approval won’t solely depend on the lowest available interest rate. Usually, financial institutions assess your eligibility using a higher interest rate to ensure you can still manage your mortgage if rates rise—a common occurrence.

Most importantly, obtain your pre-approval in writing before you start searching for your ideal property. If you need to withdraw an offer and cite inability to secure financing as your reason, you'll be required to provide the seller with written proof from the financial institution confirming that your financing has been declined.

Builders Report

The builder's report will give you insights into the structure and condition of the property, but it won't confirm whether the property has a code of compliance from the local authority. That information can be found in the LIM and property file.

If you choose to obtain a builder's report, you'll need to hire a professional and cover their fees. They must provide a written report that meets the criteria outlined in the sale and purchase contract.

If you decide to withdraw your offer based on the findings in the builder's report, you must share that report with the vendor and specify which details led you to that decision. If you would like a friend who has building experience to take a look at the property and offer advice, keep in mind that this won't constitute an official builder's report. However, you can include a condition in the contract for this type of assessment.

Land Information Memorandum (LIM)

The Land Information Memorandum (LIM) is a document created by the local authority that oversees the area where the property is located.

It includes important information such as code of compliance, zoning, plans, and other details relevant to your purchasing decision.

You can request a LIM from your local council office, but please note that there will be a fee associated with this service.

Council Property File

Local authorities in New Zealand maintain a record of properties within their area. This record typically includes all building applications, codes of compliance issued, and various other documents that are important for prospective buyers to review. If you purchase a property with buildings that lack a code of compliance or certificate of acceptance, you may need to carry out remedial work to achieve compliance or remove the structure at your own expense after the purchase. You could also face a potential fine.

If the council has previously contacted the current owner about resource or building consent issues, they usually attach a copy of the "Notice to Fix" instructions to the property file. While it is legal to purchase a property with such issues, it’s crucial to understand the associated risks and consider the potential financial implications during negotiations with the seller. You can request the property file directly from the relevant local authority, which is typically sent to you via an emailed link. Although some local authorities still offer hard copy files, most do not.