Purchasing your first home can count as one of the biggest financial decisions at times, just like any big new task, it will always seem daunting and challenging. We have summarised a general five step guide to help you with the journey.
Step one – Get your deposit ready
The banks normally require a *20% deposit as a clients own deposit. The deposit can be the combination of the following –
- Personal savings and investments (shares etc);
- Kiwisaver (3 years + as a Kiwisaver member and meet the eligibility criteria, we suggest you get in touch with your Kiwisaver provider to find out the full details.
- Family gifting etc. (The bank requires a gifting certificate to confirm the amount)
*Note that lenders might consider less than a 20% deposit, which has a set of criteria according to lender’s credit policy.
Step two – Get your pre-approval or conditional lending application
While you are getting your deposit ready, it is very important to find out how to get a pre-approval lending application, including a set of formal documents you might need to apply via lender(s). Typically clients get in touch with their trusted financial advisor and get advice with which lender best suits their current mortgage needs.
Step three – House hunting
Once pre-approval/conditional approval has been granted, the most fun yet challenging step will be finding a suitable house within the budget, which also ticks the boxes for most living requirements. It is always helpful to make a list of the essential things that your house must have, yet be realistic about those things that are nice to have. Highly recommended to engage with the following common professions;
- A trusted real estate agent that you feel comfortable with and help to sort out houses around those areas that you are interested in;
- Your solicitor who are able to help you with the property legal due diligence, especially in an auction situation;
- A qualified building inspector to check the house building structure quality and water tightness issue etc;
- Accountant if the purchaser(s) are self-employed and might need to think about how to best structure and tax implications.
Step four – Finalising full details before house settlement
After your house offer becomes unconditional or a successful bid is accepted via auction, you will need to pay deposit to the agent or your solicitor. At this stage, you will also need to discuss with your financial advisor about different options for how you would like to structure your home loans (such as fixed rate, floating rates, revolving credit facility or offsets etc), repayment amount and how to satisfy those lending conditions if any.
Step five – House settlement and move in
Once the lending structure confirmed and all relevant lending conditions are met, the lender will arrange the formal set of the mortgage legal agreement to be sent out to your solicitor. Then your solicitor will arrange for you to sign that agreement or any legal paperwork and complete the settlement on the scheduled date with the lender.
Now the most exciting part after settled the property will be getting your house keys from the agent and officially you/your family are ready to move in!
As always, we are help to help. You can use our home loan calculators to work out your home loan repayments.
Next month Blog –
Watching out those hidden cost beyond the house purchase price
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