For those who would like to own their own home and enjoy homeownership benefits
You may be at the point of your life where owning your own home has become a priority, and rent paying has become a part of life you want to leave behind. Now, you ask yourself, where do I begin?
It is okay to be anxious about this endeavor, as well as have numerous questions on what the entire process involves. Home buying is a large financial decision and as such, should be approached with as much knowledge and information as possible.
The key with home buying is to be wholly informed. A happy home buyer is an informed home buyer, and to this end, this guide is here to inform you, the potential New Zealand homebuyer, as completely as possible.
Making a decision on homeownership
For those suffering from indecision concerning purchasing a home, careful consideration should be paid to the matter. Homeownership is not for everyone and the decision to purchase one should be made with your future plans, job, family status and lifestyle in mind.
Buying or renting
Property renting is the option chosen by those without the financial wherewithal to outright purchase a home, whether due to credit unworthiness or lack of sufficient savings. Usually, renting involves less responsibilities to homeownership but also does not offer the opportunity to accumulate wealth.
Reasons to purchase a home
The benefits of homeownership exceed those of property rentals. Not only will you enjoy the happiness and pride associated with owning your home, but will also enjoy the accumulation of wealth that comes with it as well. Should you require to, you will be able to use your home as security when applying for financing of projects and purchases, affordably.
Getting married and purchasing a home
Lenders are more likely to look favorably on your mortgage application should you be married, and are a 2-income couple. This is because when it comes to having children, most couples elect to do this in their own home. This does not preclude single people from homeownership, as long as your finances can handle the purchase.
Managing your finances
Make sufficient financial preparations when you decide it is time to buy a home. To this end, a complete financial assessment will have to be undertaken, which includes comparison shopping of as many of the mortgage loan choices you have in New Zealand as you can.
Step 1: prepare your credit report
Request an advance copy of your credit report and go through it. Request corrections where there may be any errors. If any delinquencies appear, make efforts to deal with them. It will appear much better to prospective lenders if you have as little outstanding debt as possible.
Step 2: choose a home loan provider
Shop as widely as possible for lenders. Your main home loan comparison goals should be repayment schedule and structure, fees and interest rates. For those of you who have been loyal clients of a particular financial institution, that would be great starting point. Consider various mortgage brokers as well, who are adept at comparison shopping, lessening your workload and presenting you with the best offers they can find by utilizing their connections in the field.
Step 3: prepare to pay a deposit
A deposit is an agreed amount paid towards a property’s purchase price. The remaining balance is paid by the home loan. Typically, you have better chances of your home loan being approved if you can raise a larger amount of deposit. The mortgage loan will be priced lower as well because of a smaller principal amount. The loan’s interest rate has better chances of being lower as well.
Step 4: think of taking up the government on its offer to help
The Housing New Zealand Corporation offers a programme known as the Welcome Home Loan that you should consider. This homeownership programme requires a 10% deposit only where most other traditional mortgages require a 20% deposit. Should you elect to join a scheme known as KiwiSaver, you will be offered a savings or subsidy withdrawal for the deposit you pay.
Step 5: Acquire pre-approval
Should your mortgage loan be already pre-approved, the negotiations between the lender and yourself will be heavily tilted in your favor.
Step 6: seek professional assistance with home purchasing
It has never been easier to navigate through hundreds of online home listings in search of a suitable private sale. Real estate agents are usually used as professional brokers when looking to purchase a home, and is the recommended way to acquire your dream house in New Zealand. This is due to their vast knowledge of the home market, while being adept at document preparation and price negotiation.
Step 7: the reason for hiring an agent
An agent offers specialized assistance when looking to securing a deal that is amenable to you, while avoiding costly mistakes.
Step 8: Picking an agent
Ask around or perform an online search for agents around you who have a solid status, exceptional achievement record and possess considerable experience.
Step 9: interacting with an agent
Ascertain the service’s costs and calculate how well you can meet the expense of it. An agreement should be reached and a written one signed by both parties. Do not be afraid to ask any questions you may have pertaining to the home buying process, while contacting them often to keep abreast of what’s going on.
Avoidable mistakes when looking to make a home purchase
These are preventable mistakes that have been made by previous seekers of a home purchase in the past:
Over-reliance on print adverts – Printed advertisements in the newspapers have given way to online home listings, and as such, the internet is where you should do your comparative shopping. At your disposal will be search tools that are highly effective at locating the home you want, complete with accompanying information and pictures of prospective properties.
Making the search for a home lengthy and tedious – You do not need to visit every listing personally. Your agent can preview several houses depending on your wants and desires and arrange visitation, making your search less stressful.
Avoid changes that are made at the last minute – In preparation of making a big purchase such as a home, avoid any other large financial commitments, if possible. The deposit should be maintained until you pay, so as to not lose any of the savings you may have negotiated. Ensure the house you finally make an offer on is the one you want, in all its particulars.
Negotiating and presenting your offer
Most New Zealand homes exchange hands after a negotiation process, and an offer is made. Following your offer, you and the home’s current owner will negotiate and settle on a favorable price to both parties. Below you will find the best way to secure a deal that is satisfactory:
Personalize the offer – The practical facts should be thoroughly worked out, but a few details about you and your family should be sprinkled throughout. This will hand you an upper hand during the negotiations, as most home owners prefer their homes to end up with the right family.
Beat competitors – Competition between tender-sale participants is a process by which you will be required to out-bid your competitors. This can be achieved by waiving or shortening certain contingencies or placing a bigger deposit. Your chances can be improved further by presenting a home loan pre-approval letter.
Be involved in the negotiation – Educate yourself with information on the current state of affairs of the home market in your new home’s prospective area, among other market information. This will signal to the seller not only your knowledge in the matter but that you will be very well appraised about prices, amongst other issues concerning the home sale. Be prepared to be flexible in your negotiating, which will allow the seller to be, as well.
Ensure that the property you have set your heart on is in the best shape it can be. A property inspection is the best way of ensuring so.
What is involved? – Experienced and knowledgeable property inspectors have checklists that they use to determine a home’s worthiness. This leads to a consensus as to the house’s livability.
Do not forget material facts – These include property defects, which can impact property price and the decision to purchase the home. As the buyer, these type of defects must be disclosed to you, such as electrical, wiring or foundational issues.
A final run – Prior to signing off on the property purchase, make a final run of the home a day before, just in case you missed anything.
Finalizing the deal
In New Zealand, property sale transactions last about 2 to 3 months to finalize. Your plans should be in alignment with this timeline, making sure the movers are informed prior to your moving, to avoid last minute delays. Other items to handle include:
The purchase of home insurance – buy your new abode insurance cover immediately by comparing home cover quotes for the policy best suited to your needs. Ask your motor insurer if they offer home insurance, as this may lead to savings.
Consider buying title insurance – this will protect you where incorrect titles have been issued on your new home, and were missed during the property search.