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5 things you need to know when buying a home

By Mike Henderson / February 7, 2018 / Share:

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If you’re new to the world of property, buying a house for the first time can be an exciting and an overwhelming prospect. From getting your finances in order, to making an offer and understanding your legal obligations; it’s a complex process with many aspects to consider.


Added to this is the wealth of information available. It can be hard to know who to listen to and who you can trust. By seeking out advice from experienced experts you’ll ensure you make the right choices and avoid mistakes that could turn your home ownership dream into a nightmare.


To get you started on the path to success, in this blog we debunk some common myths around buying a home. In it, we examine what you need to consider before you buy and help you understand the process.


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1. The house only becomes yours when you get the keys to it

 

Many buyers believe having an offer accepted means they have successfully bought the property. However, this is only the first step. Generally sales depend on finance so once your offer has been accepted, the deal isn’t confirmed until you’ve gone unconditional.

A seller may also add a ‘cash out’ clause to the sale and purchase agreement. This means until you sale goes unconditional another buyer can present a better offer. If this happens you’ll get a set amount of time to satisfy or waive the conditions and pay the deposit or you’ll lose the sale. On settlement day, you pay the balance of the purchase price and get the keys. Then the house is truly yours.

 

 

2. Buyers can have agents too

 

It’s a myth that real estate agents work for the buyer. They in fact work for the seller, who pays them a percentage of the sale price as part of an agreed terms in the contract between the the two parties.

However, as a buyer you can take the option of using a buyer’s agent. These agents work for on behalf of buyers to carry out several services including, searching for relevant properties, advising on and presenting offers and negotiating with the seller on your behalf. You pay them a pre-agreed amount for their work.

 

3. Don’t have a 20% deposit? Don’t worry.

 

Contrary to common belief, you don’t necessarily need a 20% deposit to buy a property. First home buyers accessing the Government's Welcome Home Scheme only need a 10% deposit. Alternatively, you might be eligible for a KiwiSaver first home buyer’s grant which tops up your savings to 20%.

Don’t forget, as well as the deposit you’ll also need to have money set aside to cover additional costs such as the building report, LIM, valuation, insurance, moving and set-up expenses.

 

4. Get the mortgage term that’s right for you

Many first home owners opt for a 30-year mortgage and if this works for you, great. However, you can also choose to fix your mortgage for a far shorter period than this and select from different loan types. It’s best to take advice from an experienced mortgage broker or lender who can look at your specific circumstances and help you choose the best home loan. This might be a table loan (principal and interest), flat loan (interest only), straight line loan (reducing balance) or a revolving credit loan.

 

5. Check, check and check again before you buy

If you think any problems arising with your new property are not your responsibility, you’re wrong.  As the saying goes, ‘buyer beware’. Once you’ve gone unconditional the house and any problems with it, are yours. So before making that commitment, it’s critical to carry out all of your checks and ask as many questions as possible to uncover potential problems.


Before settling on a property also make sure you do a pre-settlement inspection to check all of the chattels are there and the property is in the condition it should be.



Entering the housing market is an exciting and challenging time but you don’t have to do it alone. There’s help out there if you need it. Arming yourself with the right information will ensure success as you take your first steps onto the property ladder.

 

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Topics: nz real estate, First Home Buyers

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