I love helping people buy property – it is should be such an exciting time in someones life. However, the stress levels experienced when buying a home is up there with birth, death, divorce and marriage! My goal is to make sure this process is easy as possible for you (and even fun!).
Here is a brief summary of what you may expect when you are buying your first home:
The first step I recommend you take is to sort out your dollars and cents. There is no point in buying a home you cannot afford to live in. You can shop around for a mortgage from the major banks or use the services of a mortgage broker (these are usually free).
Your first mortgage will most likely be the biggest financial commitment you have made to date.
There are many types of mortgages, each with its own interest rate, fees and degree of flexibility. All these things affect how much the loan repayments are and when it will be paid off so it is important to consider these terms carefully.
You may be able to complete the First Home Withdrawal from your KiwiSaver and you may be eligible for a KiwiSaver HomeStart grant.
Also remember to factor in moving costs, building reports, LIM reports, legal fees and ongoing costs such as house, contents and mortgage insurance, rates, body corporate fees.
Once a budget is in place you can get on with the fun part - shopping for a house! Your first home may not be your dream home. But it could be an affordable first step on the property ladder.
Most people look at dozens of homes before finding the right home to buy. I recommend you prioritize buying a house based on its location rather than its appearance. Even if you don’t have kids school zones are very important!
Once you have found a property that ticks enough boxes, a sale and purchase agreement will be prepared, and the seller and buyers will need to agree on the price and terms.
If the agreement is prepared by an agent, please do not sign anything until I have reviewed the agreement. As the buyer alone is responsible for checking the quality and suitability of the property (this principle is known as caveat emptor or “Let the buyer beware”), it is very important the agreement includes appropriate clauses to allow you to undertake your due diligence (investigations) and that these clauses are worded appropriately.
If no agent is involved, I can draft the sale and purchase agreement for you.
I will always recommend any agreement is conditional upon your approval of:
- LIM (Land Information Memorandum) which is a report showing all the information the local council holds on the property.
- A satisfactory builders report;
- A satisfactory finance offer;
- My approval of the form and content of the agreement and record of title;
- together with any other conditions that are relevant and appropriate to the property.
Once the parties agree on the price, terms and conditions the agreement is signed. You will have certain time periods to complete your investigations. You will need to obtain a written approval of finance for the purchase of the property and organize a builder’s report.
I will provide you with a report on the agreement and the record of title and provide you with a written road map of the process. I will be in touch with you regularly to check in on progress with your investigations and to answer any of your questions. When I am able to, I will communicate with the seller’s lawyer regarding the conditions, if they are satisfied or otherwise.
Depending on the wording used in the agreement, you should be able to pull out of the deal if there is a major issue with the property so long as the clauses are drafted to favour the buyer, (e.g. there is a builders report condition and the property has a seriously leaky roof) – this is why I should check the agreement before you sign it! You don’t want to be locked into buy a property which has serious defects!
If the conditions are satisfied, the agreement goes “unconditional” (or “unco” for people in the industry) which is the point of no return – the property is yours and you cannot back out of the deal. At this stage, it is time to start packing and organize your house, contents and mortgage insurance.
Prior to the settlement date we will meet to advise you on the mortgage and settlement process. You have one right of pre-settlement inspection, to go back to the house and check the seller has to leave the property in the same condition as when you inspected it originally (subject to an exception for fair wear and tear).
In order to complete settlement all the money from you KiwiSaver, mortgage advance, cash contributions will come to my trust account, and when it is appropriate, I will pay the money to the sellers lawyer. A lot of ducks need to be in a row before we settle, and I will keep you closely informed of progress. There is nothing worse than being geared up to move into your new home but not being able to do so until 4pm!!!! I will do everything I can do at my end to ensure settlement goes through as soon as possible, however sometimes there can be delays which are out of my control. As soon as I’ve paid the money, the sellers lawyer will release the keys, and the house is yours and the fun process of moving can begin!
When you are a property owner you definitely need a will, which we should discuss and sign before the settlement date – this way you can move in and get on with any DIY and your life.
If you want a friendly expert to help you navigate the legal minefield when buying your first home, please do not hesitate to get in touch with Claire Gibson on 07 9497879 / 021 715325 or email claire@foundationlegal.co.nz
