As a rule of thumb, try to have 20% of what you will be purchasing for a deposit. If you don’t have this, don’t worry as some banks only require a minimum of 10% deposit however a Low Equity Premium fee is normally added to the mortgage.
First Home Loan: Finding the deposit for your first home can be a struggle, with most lenders currently requiring a minimum 20% deposit. But with a First Home Loan you only need a 5% deposit which means getting into your first home is that much easier.
First Home Loans are issued by selected banks and other lenders, and underwritten by Kāinga Ora. This allows the lender to provide loans that would otherwise sit outside their lending standards.
There is certain eligibility criteria that you will need to meet and you may also be eligible for the homestart grant! But Don’t worry Dixon Mortgages can go over this with you step by step and even put in a pre-approval application for your home start grant.
Info on the eligibility criteria can be found here:
2. Give us a Call / Book a Meeting
We’ll get an idea of your finances and the house you want. Next, we can give you an overview of what you will be able to borrow and help you apply for finance so you can start house hunting with confidence.
We’ll submit your application and get you pre-approval for your loan. This is an indication of how much you can afford and a purchase price range to work with. Remember, these are conditional so you AND the property you pick will have to fulfil all the bank’s requirements. Let’s keep checking in with each other so things run smoothly.
House hunting can be very exciting and challenging at the same time see below 5 Tips to house hunting;
- Make a bucket list of must haves and can live with outs, remember your first home especially may not tick every box but you may get closer than you realise. Things for your bucket list could include must have large wardrobes, must have public transport close, must have local shops, certain school zones may even be a must however a separate bathroom is optional.
- Get a buyers Agent, especially if this is your first home purchase a buyers agent may be the way to go in order to help make the process smoother they can come to open homes with you as well as help with the negotiation process. We can refer you to a buyers agent if you like.
- Take your time at open homes, turn up early and even go to the same house two or three times (you can ask the agent for private viewings). It pays to open and close cupboards to check storage space, look high and low, turn taps on and off to see pressure, lift and look under matts placed on the floor, open and close windows. Take photos of the house (check with the agent first) – these are handy to refer back to later especially if you go to a number of open homes in one day. Take measurements of furniture at home, bring the tape measure to the open home and check that your furniture fits to the potential new space. Check the property out at a few different times of the day, peak hour, day and night in order to see the local atmosphere is it busy/noisy are there people sitting outside?
- Ask plenty of questions regarding every property for example (how long has the property been on the market? What have nearby properties sold for? Is there any damage from Earthquakes or another natural disaster and have they been repaired (they should be able to provide documents if there is)? Is there any outstanding maintenance? IS there any non-consented work on the property? Are there any easements on the title (shared access/right of ways)? Are there any covenants for your area (terms and conditions in that area or subdivision for example your fence height may be restricted to 1.2 metres)?
- Most importantly ensure the property types you are shopping for are within the scope of your pre-approval for example there is often more deposit requirements for luxury properties or apartments give us a call or email any time and we can discuss this further.
5. Putting in an Offer / Going to Auction
There are a number of different ways to purchase a first home;
Tender (also known as multi offer – this is where the buyer accepts all offers on one day, they will choose the offer with the most appeal to them, decline all offers, or come back with a counter offer)
Negotiation (The most common type of property sales in the market, this is where you can negotiate directly with the sale until you agree on the sale price and conditions.
Private Sale (Similar to negotiation without the real estate agent involved, instead you will need to work closely with your lawyer to draw up an appropriate sale and purchase agreement.)
Auction (Before going to any auction all terms and conditions for the bank must be met, and your offer must be unconditional including having the lawyer confirm the property and LIM prior to auction day. Remember when you bid and win at auction the sale is final, you must pay the non-refundable deposit on the day.)
Knowing what price a property is worth can be difficult, hence why getting a registered valuation report done can be pricey but useful to help decide the value of the property. A buyers agent can be very useful in helping to provide you with information as a guide to understand what the property is worth in the market also.
First things first, the advertised price usually indicates the vendors expectations, whether or not these match the market.
Here’s some tips to help you when making an offer;
- Try talking to the agent they should be more than happy to discuss the sale price verbally.
- Do your market research for example: drive around the local area in the day and at night, check the local council’s website to find out what the rate-able value is.
- Request a transcript of local area sales from the agent it may help to show why its valued at that amount.
- Drive past the properties listed on the recent sales transcript, this can sometimes help to show differences between the houses as to location, street appeal, presentation and the type of building. The report also provides some basic information about the property including the floor area, age and number of bedrooms/bathrooms.
- co.nz often lists estimated values of properties in New Zealand, otherwise there are other options for example: making your written offer subject to a registered valuation (this may cost you anywhere between $600-$800, however its done by a registered valuer whom walks right through the property in order to write a report which determines and explains their reasoning behind the property’s value).
- Remember to take into account any outstanding maintenance or maintenance to be completed into your offer.
- If you believe the house is worth 20k less, tell the agent and your reasons behind it.
- Remember if you are using Kiwi Saver to allow at least 10 clear working days in order to compete finance conditions.
NOTE for KIWI Saver Purchasers: Ask for 12-15 clear working days to organise going unconditional if you are using Kiwi Saver and/or The home start grant.
You are now in 10 days due diligence (or alternative by negotiation) to confirm finance. At This stage you’ll need to:
- Get a signed copy of your sale and purchase agreement sent direct to your lawyer and Dixon Mortgages.
- Contact your lawyer they will start working through the process of getting a LIM report (this is a report of history of the property and land) on the property and checking the sale and purchase agreement is all ok. They will also start prepping the Memorandum of transfer in order to have the title of the land transferred into your name.
- All conditions for your bank pre-approval must be met, this includes getting the property signed off as acceptable to the bank, it may also include providing a registered valuers report and/or builders report it pays to get these booked in straight away – Before getting an application check with us as some banks have different criteria and valuation panels that need to be used – We can help organise this for you. Once everything is satisfied at the banks end we forward their email to your lawyer confirming finance.
- Kiwi Saver withdrawals and First Home Grants both have separate paper work that need to be completed and submitted ASAP as this can take up to 10 clear working days to confirm they are satisfied with the property.
- You will need to arrange deposit to be paid to the lawyers trust account this can either be paid through internet banking or by visiting a branch – note if an overdraft is being used to cover this until settlement date there will be monthly interest costs you will need to cover. Do not pay the deposit until you have met all the conditions
- Once all conditions are meet and deposit is paid the property becomes unconditional!
- Kiwi Saver
Really important to fill out and complete all the forms and discuss these with your lawyer as these need 10 clear days of settlement in order to process to ensure monies are advance to the lawyer for your deposit ready for settlement day.
It’s now time to sit down and work out how you would like to structure your lending, for fixed rates these can be confirmed and signed off up to 30 days prior to settlement.
- First payment date and frequency – let us know your preferred payment start date (usually within 1-3 weeks of mortgage) and frequency and we will request this on your behalf when sorting the lending.
- We are in the process of receiving the current rates for you and will forward them as soon as we hear, we can chat in person or over the phone or skype about structuring your lending.
- There will be forms to sign in order to lock any fixed rates – until these are signed and submitted the rates are subject to change.
- In the meantime Dixon Mortgages can give you an estimated monthly or fortnightly repayment amount.
Remember to phone through to organise a direct debit for this to come out of a nominated account.
A bill is automatically mailed from the council every 3 months, however you can set up a direct debit with the council over the phone or automatic payment at any time to have this paid on a regular basis if you prefer.
The bank will be in touch at some point to discuss opening new or sorting existing accounts in order to ensure they match your new requirements and setting up account mandates. If it is more convenient pop into your local branch and arrange an appointment to go through requirements, if you are new to this bank you will need to bring in two forms of I.D and confirmation of address.
Make an appointment with your lawyer prior to settlement and advise us the date of this appointment – this way we can ensure you have structured your lending and given time for the bank to process everything in order to send to your loan agreements to your lawyer prior to your appointment. Remember to organise a will whilst you are there!
- Phone / Internet
Pays to get the ball rolling and make contact with your preferred providers now as sometimes there can be a wait until they can set these up.
- Start packing!! Ready waiting for settlement!!
Your lawyer will be working through this with the bank involved to have the mortgage put in place and final payment made to purchase the property.
Note: it can often be after lunchtime that you receive a key to move in.
- Cash Back: If there is a cash back this will be paid to the nominated account after settlement.
- Deposit: If this was via a temporary overdraft this limit will drop off today, remember the interest for use of this overdraft will not be charged until the 1st of the month following.
Now everything has settled down and your all moved in, congratulations on owning your new home!
Couple of things that are good to know;
- Your mortgage repayments will be deducted automatically from your account.
- If you have not set up a direct debit for your rates, it would not hurt to give the council a call or wait for your first bill to arrive.
- From here Dixon Mortgage will be back in touch when your fixed rate is up for expiry.
Other then that we are here to help with any questions you have, do not hesitate to get in touch anytime.