Key Considerations for First-Time Home Buyers

Buying your first home is an exciting step, and with the right approach, it can be straightforward and rewarding. Here’s a simple guide to help you understand the key things to think about before you dive in.

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1. Check Your Finances First

Before you start house hunting, it’s helpful to understand your financial position. This doesn’t need to be complicated:

Know What You Can Afford – Before setting your sights on a home, work out what you can realistically afford. This includes: 

• The purchase price you can qualify for based on your deposit and borrowing power.
• The ongoing mortgage repayments and other homeownership costs. A good rule of thumb is to ensure your repayments fit comfortably within your budget, leaving room for other expenses.
• Online mortgage calculators can help estimate your repayments, but speaking with a mortgage adviser gives a clearer picture.

Review Your Credit History – Lenders look at your credit history to assess how well you’ve managed debt. If you have missed payments or defaults, it’s important to know about them so you can address any issues or explain them to lenders. You can check your credit report for free here: https://www.centrix.co.nz/my-credit-score/.

Save for Your Deposit: In New Zealand, you’ll typically need 10-20% of the purchase price for a deposit. If you contribute to KiwiSaver, you might already be close to this amount.

Set Aside a Lawyer & Due Diligence Fund – Buying a house comes with additional costs, such as legal fees, building reports, valuations, and other due diligence checks. Having funds set aside for these expenses is essential. You may not need to use all of it, but it’s better to have it ready just in case.

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2. Find the Right Mortgage Option

Getting a mortgage doesn’t have to be complicated. New Zealand has a good range of lenders and loan products on offer – There are two main options available to find the right mortgage options for you.

• Approach Lenders Directly: Most lenders in New Zealand will have a lending department that you can call on to get information about their loan products and eligibility criteria. Contact details can usually be found on their websites.
• Use the services of a mortgage broker or mortgage adviser: Using a broker or adviser service can help you avoid the need to contact each lender directly. Brokers and advisers will have the details of all the loan products and eligibility criteria for all the lenders they work with, this could save you considerable time and effort trying to find the right lender for you.

When approaching a lender directly or using a mortgage adviser, be prepared to discuss your financial situation, goals, so they can help find the best solution for your needs. Don’t be afraid to ask as many questions as you need to, it is important that you understand the benefits and risks associated with loan products

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3. Plan for Ongoing Homeownership Costs

It’s helpful to know what costs to expect beyond the home’s purchase price. Don’t worry—these costs can be easy to budget for with a little bit of information:

Rates and Insurance:

• Most councils now have online search tools that will allow you to look up the annual rates on any property you may be interested in.
• Rates are usually invoiced four times a year, but most councils allow you to set up smaller, regular payments to spread out the cost.
• You can approach an Insurance Company or Broker to get insurance quotes on any property you may be interested in.
• Home insurance can be paid in regular instalments (monthly, quarterly, etc.), but it’s usually cheaper to pay yearly in advance if you can.

Maintenance & Repairs:

• Maintenance tasks, like cleaning gutters, repainting, or servicing heating systems, can be planned in advance and are reasonably predictable. Keeping up with maintenance protects your home’s value.
• Repairs are unexpected issues, like a leaking roof or a broken water heater. Since these costs are harder to predict, setting aside a small amount regularly can help cover them when they arise.

By planning ahead, these expenses won’t catch you by surprise.

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4. Find a Property That Fits Your Budget and Skills

It’s important to choose a property that aligns with your financial situation and abilities. Not all homes are created equal, and some may require more work than others.

• Stick to Your Budget: Set a realistic budget and look for properties within that range. Make sure you’re not stretching yourself thin, leaving some room in your budget will give you flexibility for any surprise expenses after moving in.
• Consider the Condition of the Property: If you’re buying a home that needs work, make sure you have the time, skills, or budget to handle the work that is needed. A fixer-upper can be tempting, but the costs of renovations add up quickly, and they can become a burden.
• Think About Maintenance Requirements: Older homes or those with unique features may need more maintenance. Consider whether you’re prepared to manage the upkeep involved or if you’d prefer a property that requires less attention.

Choosing a property that suits your budget, and capabilities will help you control your finances and sustain the lifestyle you want, it will also protect your investment.

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5. Get a Property Inspection

A property inspection is a good idea to make sure there are no hidden surprises. Usually a property inspection will check the home’s structure, plumbing, and electrical systems, among other things.

• Identify Potential Repairs – The inspection report highlights all issues, big and small, that could lead to expensive fixes.
• Negotiate if Needed – If problems are found, you may be able to negotiate repairs or discounts with the seller.
• Walk away if needed – If an inspection reveals issues and you can’t negotiate an suitable solution with the vendor you may have the options to cancel the contract.

Your real estate agent can help you arrange the inspection, and it’s a quick way to gain confidence in your purchase and protect yourself.

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Final Thoughts

Buying a home is a rewarding journey, and having the right support makes it even easier. Your real estate agent, mortgage adviser, and property lawyer will each handle a part of the process to make sure everything goes smoothly. You don’t have to know every detail to get started—they’re there to answer your questions, and make sure you understand the process and you know what to do.

With a bit of planning and a trusted team by your side, you can approach home buying with confidence and excitement. Enjoy the journey to becoming a homeowner