Buying your First Home
Everyone deserves a place to call home and buying your first home gives you a sense of accomplishment and security to your life!
Getting started can be a little daunting - That’s where you need an experienced Mortgage Adviser by your side to make it easy to get your finance approved and take you through the steps to get the key to the door and continue to support for your next venture!
Let’s work through the following steps for a stress free and easy process:
Step 1 - Meet with Holly to get “Pre-Approved”
To get the best deal from the Bank we’ll get you pre-approved for your Mortgage – that way you have an understanding of how much you can spend so that you know you are looking at the right priced homes for your budget – it will also speed up the process once you have found the home that’s right for you.
Tips for approval:
-if you have a few loans i.e. hire purchase, store cards, visa, personal loan or hire purchase - consider consolidating to one loan - this not only makes it simpler manage, its also more favourable for your home loan approval
-a lower visa card limit helps, Banks need to take into account repayments on the full limit even if you repay the outstanding a amount in full each month
-keep your bank accounts within the approved limits or in credit, your Bank statements show a history of how well you spend within your means and regular unarranged overdrafts may effect the approval decision
You will need:
Confirmation of Income: The most recent 3 months payslips, or a copy of your employment contract, Financial accounts if you are self employed.
Bank Statements : 3 months Bank statements on your day-day account , if applicable 3 months bank statements on your credit card or personal loan
Deposit Confirmation: 6 months bank statements on your savings account (if your deposit or part of) is held in savings)
Identification: Your driver’s license or current Passport
Getting your deposit together can take time, you can use your own savings, Kiwisaver Government Grants (if eligible) gifting and family assistance.
Your own savings: Yes! Banks are offering home loans with a smaller deposit – if you have 20% that’s fantastic! But if you have a bit less there are options to suit , you will generally need to have a proven genuine savings.
Government Grants: Remember to use the Government Grants available to boost your deposit – not everyone is eligible so for all of these benefits so contact Holly Rogers to find out more.
Gifting & Family Assistance: Cash gifting is also an acceptable form of deposit, most banks will want to see evidence of genuine savings and this needs to show in your account and sometime at least 5% accrued savings – however if you have access to funds you haven’t saved – this could be from family or friends, we can chat about what lenders will accept “deposits” that aren’t non-genuine savings.
Tip: Savings x 2 adds up much faster – if you are planning on purchasing with a other person/ , get a savings plan underway and commit to a certain amount each pay week to put aside - keep adding to your kiwi saver and you will have a deposit in no time!
If you're a first home buyer and have been contributing to KiwiSaver for 3 years, you may be able to use some of these funds to purchase your first home - If you’re eligible, you may be able to withdraw some, or all of your KiwiSaver member contributions, employer contributions, returns on investments received or any member tax credits. However, you
can’t withdraw the $1000 government kickstart contribution.
Kiwisaver Home Start Grant
For the little bit extra to boost your deposit. If you’ve been contributing to Kiwisaver for 3 years and eligible within the Kiwisaver criteria you could receive up to $20,000 of additional grants.
To be eligible for a KiwiSaver HomeStart grant you must:
Have been contributing the required minimum amount to KiwiSaver for at least three years
Be 18 years of age or over
Be purchasing or building your first home
Have a household income (before tax) of less than $80,000 per year (for one person), or less than $120,000 per year (for two or more people)
Have a deposit that is 10% or more of the purchase price, including the addition of the grant
Plan to live in the house for at least 6 months following settlement or completion of the
Welcome Home Loan
To help get a bigger deposit, savings is better however there are additional initiatives designed to help. Welcome Home Loans are issued by selected banks, underwritten by Housing New Zealand, and allow the bank to lend on a lower deposit without any restrictions. For first home buyers it can mean getting on the property ladder sooner.
The criteria you need to qualify for a Welcome Home Loan is quite restrictive, so please read up on it before you apply.
Step 2 - Approval!
Once we gather your information your application is presented to various banks, on
approval, a pre-approval is issued – this could take up to 3-5 working days for each Bank and each pre-approval will have terms and conditions of the loan – it is important to read and understand the terms and conditions and get as many ticked off before you go shopping - we will work together to get what you need
Now you can go Home shopping! Make sure you stay within your approved amount so that there are no surprises!
Step 3 - Making an Offer
There are 4 common ways properties are sold:
Negotiation – most common and gives you the opportunity to negotiate the price. You already know a figure the seller is looking at so you need to make a decision as to how much you are willing to pay.
Auction – To be able to attend an auction you must have met all of the terms and conditions for your loan – this is called “unconditional”. If you bid at auction and are successful, you are required to pay a deposit on the day and it is expected that all due diligence on the property has been completed and accepted, this means insurance, EQC information, Registered Valuation (if required), Builders Report (if requested).
Tender or Multi Offer – A seller will accept all offers on one day and has the choice of the best offer that suits them, they can also decline or counter any offer.
Private Sale – Work directly with the seller to negotiate a price. A Solicitor is usually engaged to draw up an appropriate Sale and Purchase Agreement or to look over the Sale and Purchase Agreement provided by the seller.
Key Points on making an offer:
Get pre-approved so that you know the exact amount you can spend
Make enquires to understand the previous sales in the area so you can get an idea of how much you want to offer – talk to Holly Rogers to find out where to find this information
Get all information on the property up front, things like EQC information ie Scope of Works and/or Completion Certificate consent issues ie fireplace non-compliant, additional conservatory not council approved
Common conditions and checks to the Sale and Purchase agreement that you should include:
Subject to finance: usually 10 working days however if your terms and conditions require a Registered Valuation or Kiwisaver/Housing Grant approval then you should allow 15 days or more
Subject to Solicitor confirmation: Your Solicitor will check that the property is suitable, they will check LIM report, Certificate of Title and any other aspects of the property that is relevant.
Other: Builders Report, EQC information (Scope of Works or Completion Certificate is usual)
Step 4 - Offer Accepted – Congratulations !
Well done, your offer has been accepted by the seller and you now have 10 working days (or as agreed) to “Confirm Finance” – this means that all of your terms and conditions of your Mortgage must be met within this time – it’s a busy time so it’s best to get most of your conditions in early!
What happens during 10 Working Days (or as agreed) – We are all working for you!
You need to provide the signed Sale and Purchase Agreement to your solicitor to get the relevant legal checks underway. Let us know if you haven't got a Solicitor – we can help!
If you are using Kiwisaver and Housing Grant/Welcome Home Loans your solicitor will need to send applications – make sure your solicitor has all of the information to avoid delays
Your Mortgage Adviser:
You need to provide the signed Sale and Purchase Agreement to get the property approved by your selected bank
Provide any terms and conditions that are still outstanding, if a Registered Valuation is required we can help you get this underway
You need to provide a Certificate showing you have obtained House Insurance – this is called a Certificate of Currency and your insurance provider will issue this – if you have been referred to an insurance adviser we will work together to get this in place
Step 5 - Offer is Confirmed – what next?
Great, you have met all of the terms and conditions the Bank has requested, the property has been checked for any legal defect and you are now in the final phase!
Deposit is Due:
You now need to pay your Deposit as instructed in your Sale and Purchase agreement – this may be paid directly to your Solicitor or the Real Estate trust Account and is usually 10% of your deposit
Note – the Deposit needs to be received as “Cleared Funds” - this means by Same Day Transfer of deposited 2 working days before due date to ensure the funds will not be reversed. If you purchased at auction, your deposit is payable on the day so you need to make arrangements to have these available.
We need to schedule a meeting and confirm the best loan structure that suits your lifestyle (we will have discussed this at initial meeting), the best interest rate that suits you and any other benefits.
Here are things to consider when choosing a loan:
Term of Loan: maximum term 30 years
Fixed Interest Rate: range from 6 months – 5 years and is locked in for period chosen. This is where traditionally you find the lowest interest rates (depending on the current economic cycle) so you need to factor in future plans before committing, as there may be costs to opt out of the fixed term – that’s where Holly Rogers will ccustomise for you
Floating: variable interest rate and can move up and down depending on current economic cycle. These interest rates traditionally are higher than the fixed rate however you have the flexibility of changing the loan without incurring any costs. Often a mix between Fixed & Floating can be beneficial, depending on your lifestyle. Don’t worry we will customise the best mix for you.
Step 6 - Settlement Date – Moving Day!
This is the date that you agreed to on the Sale and Purchase Agreement. This is a busy day for YOU, YOUR Bank, and YOUR Solicitor…and here’s how it works:
Prior to settlement date YOU need to transfer your remaining deposit funds to your Solicitor, if using Kiwisaver and/or Housing Grant your Solicitor will be holding these funds.
On settlement date, The Bank transfers your loan funds to your solicitor – all loan conditions will have been met.
Your Solicitor pays for your property and takes care of the legal transfers, they would usually charge their fee at this time.
We then make contact and let you know you now have the keys to the door!
You Move In!
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