9 steps to buying your first home

If you’re buying a house for the very first time, it’s not unusual to feel a little stressed or nervous. It is a huge commitment, not to be taken lightly. But the payoff is huge too – the joy of a place to call your own!

Our advice, if you are about to take that step onto the property ladder, is to do your homework and planning first, then move ahead with confidence. We’ve put together the following steps to help you on your way.

Step 1: Set your budget

The first thing you need to do is decide how much you have to spend on the property. This means examining your finances - looking at income vs. spending, and weighing it up against the deposit you’ve saved. Most banks require a minimum deposit of 20%, but through Kāinga Ora you may only need 5% (see link below).

As a first home buyer you should be able to access your KiwiSaver funds, so long as you’ve been contributing for at least three years. You may also be eligible for a First Home Grant of up to $10,000. You’ll find more information here Kāinga Ora - Homes and Communities.

Important to note - when you go to secure your mortgage, your bank/lender will want positive proof that you have a good solid savings record. They’ll also need to know that you can service the loan, so they will likely ask for three months’ bank statements to show:

Deposits from a regular income
A monthly surplus after expenses
No bounced payments
No insufficient funds fees

If you want some quick and easy budgeting help, check out sorted.org.nz or familyservices.govt.nz.

Other ways to strengthen your position with the bank include - ask a family member to go guarantor, co-buy with a sibling or friend, and get a flatmate in to help cover the mortgage.

Tips for first time home buyers

Step 2: Get pre-approved finance

It’s a good idea to have your finance in place before you start searching for your new home. That way you can look for properties in the right price range. Pre-approved finance also increases your negotiating power, speeds up the documentation process and allows you to bid at auctions. Talk to a mortgage broker or your bank/lender about this. The amount you will be able to borrow will depend on:

The value of the home you are looking to buy
The size of your deposit
Your income
Your ability to repay your home loan (after outgoings)

Step 3: Call in the professionals

People you’ll need to consult when buying a property include a lawyer or conveyancer, a qualified inspector or builder, possibly an engineer and a mortgage broker, and your insurer. You will have to pay for their services of course, but the cost of not getting the right advice can be significant if something goes wrong.

Need a lawyer? Ask people you know for recommendations or go to the Auckland District Law Society or the New Zealand Law Society. A list of property inspectors can be found here New Zealand Institute of Building Inspectors and professional surveyors here New Zealand Institute of Building Surveyors.

Step 4: Start your search

This is the exciting bit! Once you’ve set your price range, know what areas you’re interested in and have a good idea of the sort of property you want (doer-upper, new home, apartment etc), then you’re ready to launch in. And this is where we can help.

You can download the free Barfoot & Thompson app (through both Apple and Google Play) to search for properties near you, check out our website (we have thousands of properties for sale, with hundreds of new listings every month) or simply contact one of our salespeople.
They’ll show you what’s currently available, and also update you with important information such as recent sales in the area, market reports, rates and valuations.

Step 5: Do your due diligence

You’ve found the place you love, so the next step is to check it over. See our property inspection checklist for some practical tips on what to look for during that initial viewing or open home. Then, when you are ready to move forward, you’ll need to organise a builder’s report, get your lawyer to check out the Land Information Memorandum (LIM) and Certificate of Title, and perhaps arrange for an independent valuation.

What is a LIM?

Step 6: Make an offer

Again, you will need to involve your lawyer in this step. All offers must be made in writing using the correct documentation (typically a ‘Sale and Purchase Agreement’). There are two types of offers:

Conditional - when your offer to buy has conditions attached, such as arranging finance or being satisfied with a building report.
Unconditional – this is a straightforward offer to buy according to the terms set out in the contract. You’ll need to be unconditional if you’re buying at auction or making a pre-auction offer. Find out more by watching the quick video below.

What is an unconditional offer?

Step 7: If your offer is accepted

Oftentimes a Sale and Purchase document will go back and forth, until all parties are in agreement with the terms (including price, deposit and any specific conditions). Once everyone has signed this document, and all the conditions met, your offer becomes ‘unconditional’. At this point, neither you or the seller can change your mind, and it’s up to you to pay the balance of the purchase price on the settlement day.

Meantime, you will need to pay your deposit to the real estate agency, which is required by law to hold the money in an audited trust account, only releasing it to the seller when legally authorised to do so. This part of the process is handled between the agent and the solicitors, you don’t need to worry about a thing.

Buying at auction? Here's how it works

Step 8: Before settlement

Read our purchase to possession guide to find out more about what you need to do after you have signed the Sale and Purchase Agreement. Inspections, organising insurance, redirecting mail and utilities, planning the move - there’s lots to think about!

Step 9: Settlement day

Settlement day is the date on which you pay the balance for the property. Usually it is the same date that you get possession - the keys - but that is not always the case. The keys to your new property will be held at the Barfoot & Thompson office until the sellers’ solicitor advises us in writing, that the settlement has taken place.