How to Buy a First Home in NZ

How to Buy a First Home in NZ

Buying a home for the first time is one of the most exciting achievements in life. With the odds of the cost of living crisis against us, being able to overcome these challenges and purchase a home is a testament to your hard work and perseverance! But the home buying process, especially for first-timers, can be a tricky process with lots of steps.. With all the jargon and advice swirling around, it can be easy to feel overwhelmed and even confused. 

To help get you started, we have put together a guide for first home buyers

Save your Deposit

To buy a home, you will need to put down a deposit. Your lender will pay the rest, and this will be your loan that you will repay over the course of your mortgage. A deposit is, generally, 20% of the property’s value. There are various ways you can save your deposit. 

Have a look at your budget, and see where in your life you can cut down on expenses. Can you reduce your shopping habits? What about your takeaways? Can you change your weekly takeaway night to a monthly treat? What about your takeaway coffee? Can you reduce how often you grab your cup? You will save hundreds of dollars over a year just by making a few small changes to your habits, which can go towards your deposit. 

Consider increasing your Kiwisaver contribution. Remember, your employer will match your contribution so this is a great way to boost your investment fund and get it in a great position for when you make a withdrawal for your deposit.

Apply for the First Home Grant

The first home grant is an awesome perk for individuals buying their first home. If eligible, you can receive up to $10,000 towards your first home purchase. The amount you will receive however depends on your income and the type of home you want to purchase. You can apply before you have found the property, or after an offer has been accepted, but it is typically recommended that you apply for pre-approval first. 

Check First Home Grant Eligibility

Compare Home Loan Providers

Comparing home loan providers and interest rates is the most powerful way to make a fully informed decision about who you decide to take a loan out with. Banks and non-bank lenders will each offer different interest rates and loan packages. You will want to compare them all together side-by-side with Money Compare, to find the best value for your hand-earned money and get the best deal out there for your unique home buying needs. 

What is a loan made up of? 

Your loan will include the principle – the amount of money you are borrowing from the lender, and the interest – which is the amount of money the lender will change you for to borrow from them.

Compare Home Loan Interest Rates

Apply for Pre-Approval

A conditional approval, or a pre-approval, provides you with the ballpark figure amount that you can borrow. A mortgage advisor can really help with this process.  This is helpful as it means that when you start the house hunting process, you can seek and view homes that are within your budget. You will typically need to have information ready for your home loan specialist, such as your income, expenses and your ID. 

House Hunting Time!

Now that you have the pre-approval, you can hit the ground running with house hunting. How exciting! When you search for a home, be sure to keep your negotiables and non-negotiables in mind. Consider location! Is the home close to amenities such as grocery stores, public transport and schools? What you want to be near, will depend on your lifestyle and wishes. It’s also a great idea to consider the future you. Schools may not be important to you now, but they might be in the future!

Found a Home you Like? Visit Several Times

Visit the home that you like multiple times, including at different times of day and different days of the week to ensure that you have a picture of the traffic, light, and general noise of the property and its surroundings. You want to understand the atmosphere and vibe of the property as much as possible!

Make an Offer

You are ready to make an offer, or make your bid at the auction. Make sure you send the property details with your home loan specialist so that they can confirm how much you can offer, based on the loan pre-approval and the particular property. 

Almost There!

It’s the home stretch before settlement day. There are a few things to tick off before you can release the party poppers! Have a discussion with your home loan specialist about the different types of loan options. They can walk you through the different ways you can structure your loan and repayments, and recommend the best one for you and your unique circumstances. It is also now time to request a withdrawal with your Kiwisaver.

You will also need to sit down with your lawyer to sign your loan documents and they will make sure everything is laid out correctly.

You can also now book a pre-settlement inspection of the property to make sure the house is in a condition that you are satisfied with. This is also a good time to arrange your utilities such as power and broadband

Use Broadband Compare and Power Compare to compare all the different providers and plans available to you. Compare side-by-side to make the most fully informed choice about your power and broadband and find the best deals out there to get the most value for your money. Make it a habit to compare often when you move into your new home! 

Compare home insurance. Use Money Compare to compare home insurance to keep your property and wallet protected in the event of an unforeseen circumstance such as floods or a fire. 

Compare Home Insurance

Visit Broadband Compare

Visit Power Compare


Still feeling a little stuck?

Further Reading: 

Top 10 Tips for Buying a Home

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Wednesday, 14 February 2024