Guide to buying a house

Money makes the world go around, and unfortunately, money can be one of the biggest considerations when buying a house. As with any large investment, the first step you should take is to figure out how much money you will need and where there’s potential wriggle room in your budget. It may be worth considering Kiwisaver and other potential financial help early on, especially if you’re buying your first home. Here are other aspects you could consider when managing finances.
 

• Assess your finances
  It can be really helpful to take stock of your current income and outgoing expenses. It may feel a little confronting, but this can be a vital step to figuring out how much you can afford to borrow. Making a budget can be a helpful place to start, and it may be a good idea to talk to an Independent Financial Adviser as they can help layout a unique budget for you and offer advice on your borrowing or insurance needs. Read our top tips for budgeting your finances for more insight.
   

• Set some goals
  Setting goals can give you tangible targets to work toward. These objectives can motivate you along your home buying journey. With house prices as high as they are, it may be helpful to set realistic expectations and identify the difference between a ‘must have’ and a ‘nice to have’ when picking a house. Some areas that you may be able to compromise include:
  
  
  • location
  • size
  • condition.
     

Setting realistic goals can be particularly important if you’re on the house hunt for the first time. Affordability is key.

Just like a team of superheroes from a blockbuster movie, teamwork can make the dream work. Buying a house can be complicated, so it may be helpful to assemble a support team that you can trust. Here are some team roles that could be helpful to fill:

• Insurer
  An Insurer can be a helpful ally to make sure your investment is protected. Especially if you’re going to be taking out a mortgage, an Insurer can help with Mortgage Repayment Cover and speaking with an Independent Insurance Adviser can be great to get advice on the Mortgage Repayment Cover and Home and Contents Insurance you may need.
• Lawyer
  There’s already enough jargon and fine print involved with buying a house. A lawyer can help you understand and support you to minimise risk when making home buying decisions. Before you sign on the dotted line, get your lawyer to cast his eye over the contract. It may be beneficial to quiz your lawyer to ensure they’re up to the task before committing to them. 
• Mortgage broker
  There can be a lot to consider when taking out a mortgage. A mortgage broker knows the lay of the land, including interest rates and the criteria to apply for different lenders. A mortgage broker may be great to have on your side when negotiating a mortgage. There are helpful online resources available to choose the right mortgage broker for your journey to buying a house.
• Bank
  We all know what a bank is, but it can be important to understand the role a bank has to play when buying a house. Often, a bank will be the one providing your home loan. Choosing the bank with the best deal can be vital, but a bank will also judge you before offering you a potential loan. To mitigate risk, a bank may consider:
  
  
  • Whether your income will be sufficient to cover monthly payments
  • Your credit history
  • Whether you can make a big enough deposit for your purchase.
• Property inspector
  Sure, when you view a property, you might spot obvious issues like a big crack in the wall. However, a property inspector can conduct a thorough building inspection to look for issues you may not be aware of. Although you don’t technically need a property inspector, it’s often seriously encouraged. Don’t just rely on your tradie mate.

A home loan pre-approval is the great enabler! A budget may help you understand your financial lay of the land, but a loan pre-approval can show you exactly how big (or small) an offer you can make based on how much the bank would loan you. Getting a home loan pre-approval can be a lengthy process with a lot of paperwork to sift through. The best place to start may be getting options from your Mortgage Broker or starting a conversation with your bank.

Top tip: It can be handy to arrange your insurance about the same time as getting your loan pre-approval. Talking with an Independent Insurance Adviser can help you consider potential Mortgage Repayment Cover and Home and Contents Insurance.

Now for the exciting part; the house hunt. There are smart ways to go about this so you can potentially filter the best options for your budget. No one wants to be aimlessly driving around suburbs all weekend.

• Do your research
  Research is the aim of the game when on the house hunt. Not just scrolling through real estate websites looking at pictures, but also researching jargon related to New Zealand houses. Understanding what terms like RV or a LIM Report mean may help you recognise red flags or hidden gems.
• Know what to look out for
  You may think that you have a pretty good sense for what makes a suitable property, but it’s worth jotting down a checklist to refer to when buying a house. Potential issues you can keep an eye out for include:
  
  
  • What the neighbours are like
  • Structural integrity
  • Whether the home is leaky
  • Signs of dampness
  • An upcoming developments in the area.
• Attend open homes
  Let's face it, buying a house can be an emotional process. When you find a place you like, you can feel it in your bones. Because of this, it can be beneficial to see a property in person before considering making an offer. Online photos of a property may sometimes be misleading with photography manipulation. Visiting in person can show you the reality of the property so that you’re not catfished. Attending an open home may also give you a more tangible idea of what you can afford with your budget.

While checking out a house yourself may help you spot any obvious red flags, a property inspection can be the final backstop you need. You should already have a Property Inspector in mind by this point, so now can be the time to let them work their magic. A property inspection is a complete check of a property that may include inspecting its:

• Foundation
• Electrics
• Plumbing
• Roof.
   

Getting a professional to carry out a property inspection can mean that there won’t be any unexpected or unwelcome surprises after you purchase it. While a property inspection can be an up-front cost, it may also prove vital.

The time has finally come to make an offer. Unfortunately, making an offer isn’t as simple as turning up to the property with a wad of cash (we wish). Although the Real Estate Agent for the property should explain the process of putting in an offer, it can be helpful to discuss how to go about it with your lawyer. There are several ways to put in an offer, including:

• An auction
  This is when you make an offer at a public sale. An auction is often fast-paced and can sometimes be stressful as a buyer.
• Tender
  A sale by tender requires you to make your offer before a specified deadline date. The seller can’t accept an offer until this date.
• Deadline sale
  A deadline sale is similar to a sale by tender. However, the seller can accept an offer before the deadline date.
• By negotiation
  Unlike a deadline sale or tender, buying by negotiation does not involve an end date for offers. You’re making an offer based on what you’re prepared to pay and when you’re ready.
• Multi-offerer process
  This is when more than one party makes a written offer on a property. The seller then considers all offers at the same time.
  
  There can be a lot to consider when making an offer but it can be helpful to understand the process to make sure you get the best possible deal.

You’ve had your offer accepted, now it’s time to sort out the settlement for your new property. The settlement period is between your offer being accepted and your takeover date. The vendor and the purchaser agree on the settlement period, and this time can be crucial to ensure the deal and ownership change run smoothly. Your bank, lawyer, and insurer will all be included to ensure nothing is missed. When it comes to your take over date, your lawyer will handle the transfer of money for the property on your behalf. You would have already signed off on all documentation and insured your property before this point. Your lawyer will let you know when to pick up the keys.