We make the Kiwi dream, a reality
Congratulations on taking your first steps towards owning your very own slice of paradise. There truly is no better feeling than coming home to a place to call your own. But before you can splash some paint around, replace those ghostly drapes and throw your first house-warming party, there’s a few things to consider and plan for first.
That’s where having our experience on your side can really help. Not only are we on your side, we’re also along your side to answer your silly and not so silly questions. We’re the property and finance eggheads that help you get the best deals on finance, find the right property liaise with real estate agents, solicitors and banks. We take the stress and fear out of the process and make it easier for you to get the into your first home.
How much can I borrow?
This is the big question, and one that can have several different answers depending on how much you earn, how much you spend, how big your deposit is and the property itself. Just like not all houses are the same, the same applies to lenders. As all lenders have different approaches to all of these factors, there truly is no one simple answer. That’s why it’s crucial to understand and pick the right lender specific to your needs. That’s where we come in. We know all the banks policies inside out. Meaning we can always crack the best deal for you. To give you an indication on what you could borrow, use our handy calculator below, or better yet, get in touch with one of advisers today.
How much deposit do I really need?
The bigger the deposit you have, the less interest you’ll pay and the more options you’ll have to choose from. As a general rule of thumb, most banks will lend up to 80% of a properties value. However, if you have less than a 20% deposit, the good news is many banks will still lend to you.
All banks have a certain amount of money they can lend to people with less than a 20% deposit. Whilst there are often a few more hoops to jump through, finding access to these funds at the right bank for you is where we can really help. We can get you looking your best and at the front of the queue.
Getting help from mum & dad
Ahhh…the good ol’ Bank of Mum and Dad. If you’re fortunate enough that your parents are in a position to help out, this can often be a good way to help you get a leg-up on the ladder. This can be done by two ways. Either by them acting as guarantor/co-borrower to your loan; or, by gifting money to go towards your purchase. To act as a guarantor/co-borrower, your parents will need to have available equity in their own home or investment property and the ability to repay the guaranteed amount if called upon. The amount they can guarantee is often limited to a maximum of 20% of your properties value.
Instead of, or in addition to, going guarantor/co-borrower your Mum and Dad can also more simply give you money towards your purchase in the form of an interest-free non-repayable gift. In any circumstance it’s best you, Mum and Dad chat with us to go through your available options together.
Using your Kiwisaver
If you’re buying your first home and have been contributing to Kiwisaver for more than three years, then the good news is you’ll be able to use a good chunk of your Kiwisaver to go towards your deposit. In fact, you can withdrawal all but your $1,000 government kickstart to get you going. The KiwiSaver HomeStart grant is another means to get you into your first home faster. If you’re purchasing an existing home then you could qualify for up to $5,000 for each member. If you’re building or purchasing a brand new home, or purchasing land to build a new home on, then you could qualify for $10,000 for each member. That’s up to $20,000 for a couple to get you into a shiny new property faster.
To qualify for the 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 $85,000 per year (for one person), or less than $130,000 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 property
When buying your first home, every little bit helps, so make sure you talk to us about all the potential options available to get you into your slice of paradise sooner!
The Mortgage Process
Buying a house could be one of the biggest financial decisions you make. The key steps below can guide you through your home buying journey.
1. Get pre-approved with Hatch.
Understand your financial position and borrowing capacity.
Calculate how much you could borrow based on basic information such as salary and financial commitments. Complete our online application and get pre-approved
What is a Pre-Approval?
A pre-approval is a written indication of how much you can borrow before you start looking for a new house.
What are the benefits of being Pre-Approved?
It puts you in a strong negotiating position when you are ready to make an offer on a property, because you already know that your finance has been pre-approved. It means you can move faster when the right house comes along, because you already know how much you can offer on the property.
How much should I get Pre-Approved for?
We usually arrange the pre-approval for the maximum amount you wish to borrow, so that you are covered for any properties up to that pre-approved limit. If you find a house for a lower price, that is fine because we don’t finalise your home loan until after your offer has been accepted.
Does a Pre-Approval have conditions?
Your pre-approval will be subject to certain conditions, such as: 1. Satisfactory Sales & Purchase Agreement for the property you are purchasing 2. Registered Valuation – sometimes required, sometimes not – depending on the amount of deposit you have, the type of dwelling it is, and whether the sale is through a licensed real estate agent or private sale. 3. The property being purchased being satisfactory to the lender just like you, the banks need to be comfortable with the property you are wanting to purchase. As a result, it’s always best to run details of the particular property past your us first so we can liase this approval with the banks.
How Long is a Pre-Approval valid for?
A pre-approval is valid for 2-4 months, depending on the bank. If you don’t find a suitable house in that time, we can easily renew your pre-approval on your behalf by providing some updated information to the bank.
2. Decide what kind of house you are looking for
Make a list of must-haves, nice-to-haves and not importants, which includes:
Size – what is the number of bedrooms and bathrooms suitable for you?
Location – what is the proximity to schools and work?
Are you prepared to renovate if necessary?
3. Once you’ve found a house:
Check out the house
How does it compare against your list of must-haves? Revisit the property at different times of the day. This can help you determine if its noisier at certain times and how much sun the property brings in.
Get a lawyer
We strongly recommend that you get your lawyer (or solicitor) involved as early as possible. They should check any agreements before you sign. They are also responsible for the conveyancing (i.e. the change of ownership paperwork).
Getting a valuation, builders report and LIM report are essential to understanding the value of the property, what comes with the property and identify any potential issues.
4. Making an offer:
You’ve found a home you’re interested in, now it’s time to make an offer. Here you can find out what may be involved and what you need to do.
Ways to buy a house
The three main ways to buy a home are:
1. Offer and negotiation
Offer and negotiation
The property may be advertised with a price or invitation for offers over a certain amount, or sometimes without any price indication at all. You simply contact the real estate agent or vendor and make an offer. They may accept your offer, or they may want to negotiate on the price or the conditions. The real estate agent acts as the go-between where you are not dealing directly with the vendor, trying to help you and the vendor reach an agreement. You should always have your lawyer check any offer documents or agreements before you make an offer. This can include adding conditions to the offer to protect yourself and provide a way out from the contract.
The prudent and wise thing to do is to have as few conditions in the agreement as possible, but make those conditions effective. They need to give you maximum possible protection so that if you find any rotten eggs you can walk away.
The clause we recommend is a clause called “due diligence”, an example of which is provided below.
Due diligence clause
This agreement is entirely conditional upon the Purchaser in its sole discretion being satisfied that the property is suitable for the Purchasers intended uses following the Purchaser carrying out due diligence investigations on the overall viability of the property and including but not limited to searching any and all easements, and of any requirements of the local authority or financier, this clause is for the sole benefit of the Purchaser and the Purchaser shall have until 4pm on 10th working day from the date of this contract to give to the Vendors solicitor notice that this clause is satisfied failing which the contract shall be at an end. This clause may be waived by the purchaser prior to the prescribed time at the sole discretion of the purchaser.
Unless you really want the property don’t make your best offer straight away and give yourself some room to move. When negotiating, don’t allow the agent or vendor to pressure you into a hasty decision. Buying a house is one of the biggest purchases you will ever make, so take the time you need – remember there’s always another house.
Buying a house by tender means everyone interested in the property submits a written offer (tender) by a certain date. Once the vendor has received all the tenders, they choose which, if any, offer to accept. If they don’t, they may choose to negotiate with one of the tenders.
If you’re interested in buying a house that’s being sold by tender, let the real estate agent know. This is called “registering your interest”and means the agent must let you know if any pre-tender offers are made. With the tender process you won’t know what the other tenderers are offering and as you may not get the chance to negotiate, you may want to put your best offer forward. Like the offer and negotiation method of buying a house, the fewer conditions you have the more attractive your tender offer will be but make sure you do your homework first. Remember to have your lawyer check any tender documents before you submit a tender.
An auction is where you bid against other people until only one bidder is successful. The vendor sets a reserve price that only they, the auctioneer and the real estate agent know. Once bidding reaches the reserve price, the property is “on the market” and must be sold to the highest bidder. If the reserve price isn’t met, the property is “passed in” and the vendor may choose to negotiate with the highest bidder. Remember that when you make a bid at auction your offer is unconditional, so if you win the auction you’re legally bound to buy the house. That means you need to do all your research (such as getting a LIM and builders report) before the auction. You also need to be sure you have the finance available before you bid at an auction.
If you’re interested in buying a house that is being sold by auction, register your interest with the real estate agent. They must then let you know if any pre-auction offers are made. An auction can be a high-pressure way to buy a house, so you may want to go to a few first to see how they work. Some things to consider:
It’s easy to get carried away. Make sure you are clear on your maximum price and don’t exceed it in the excitement.
To prevent you going over your limit, consider asking a friend, or family member to go with you (or have someone else represent you at the auction).
Prepare for the auction by thinking about price: a price you think would be a bargain for the property and/or the price you think the property might sell for and/or the maximum price you’re prepared to pay for the property.
Doing your homework
When you’re buying a house, being prepared can save you money. Before you make an offer make sure you do as much research as possible about both the local market and the property itself. That will give you a guide of the prices houses are selling for in that area.
Research the market
Location is a factor in the value of a home, so before you buy a house in a particular area get a feel for what’s happening in the local market. Find out what similar homes in the area have sold for recently, and how long they have taken to sell. Your real estate agent should be able to help, or you can buy a local sales report from QV website or check property details and price guide estimates from www.homes.co.nz. If you have your home loan conditionally pre-approved with us, you receive two free E-Valuer reports. An E-Valuer report provides you with an instant automated estimate of a propertys market value, plus recent comparable property sales in the area.
Research the property
Find out as much as you can about the property. Things to think about include:
– What condition the property is in
– Are there any obvious issues that could affect the price, or potentially deter you from buying the house?
– Is the home likely to need repairs or renovation in the near future? Once you’ve found a property you’re serious about, you should consider getting your own reports on the property, including:
– A Land Information Memorandum (LIM) from the local council, which contains all the information the council knows about the property including any special features you should be aware of such as flooding, sinking or possible contamination
– A valuation report, which provides an opinion from a registered valuer on the current market value of the property
– A building inspection report which provides an opinion on the condition of the property and any issues.
5. Once your offer has been accepted
Your offers been accepted, what next? There are a few more steps you might need to complete before you can move in:
Step 1: When your offer is accepted
At this stage, if your property offer is conditional on satisfying a few conditions, you may need to:
- Contact your lawyer if you haven’t already they will carry out all the necessary searches on the property and begin preparing all the documents required for buying a house.
- Contact us, we can help confirm acceptance of the property by the banks and satisfy and finance conditions. We can also arrange a great deal on home and contents insurance too.
- Arrange for any conditions to be met – for example if your offer was conditional on a satisfactory builders report, you’ll need to arrange for a registered builder to visit the property and write a report.
Step 2: When your offer goes unconditional
Once all outstanding conditions are met, including approval of your home loan, your offer becomes unconditional – which means you and the vendor have agreed to buying (or selling) the house. At this stage you’ll need to:
– Contact us to let us know or your lawyer may do this on your behalf. We’ll help you organise payment of the deposit, and draw up a home loan agreement and send it to your lawyer.
– We can also help you protect your home and your lifestyle with life, house and contents insurance options
– At this stage the structure of your loan can be finalised and fixed and floating rates confirmed by your Hatch adviser
– Your Hatch adviser will also help to make sure your repayments best suit your income and lifestyle
– Contact your lawyer; they will go over the home loan agreement with you, explain what it means your obligations and responsibilities, the lenders obligations and responsibilities, and answer any questions you may have. Remember you will also need to give your lawyer a copy of your house insurance certificate before settlement date.
Step 3: On settlement day
Settlement day is when the purchase price (less any deposit paid) is made to the vendor and the title transfers to you. It’s probably one of the most exciting parts of the process. Most of the work is carried out behind the scenes by the bank and your lawyer:
Your lawyer will check that the rates and any other utilities have been paid by the vendor and are up to date. Your lawyer will send a settlement statement to the banks, showing the amount required to settle the transaction. The bank will then arrange with your lawyer to draw down your loan and transfer the money to the vendors account.
Once the vendor confirms they have received the funds your lawyer will arrange for you to pick up the keys (or have them sent to you). They will then complete the registration of the property title into your name and provide you with a copy for your records.
All that remains is for you to move into your new home and celebrate!
Contact us to let us know or your lawyer may do this on your behalf. We’ll help you organise payment of the deposit, and draw up a home loan agreement and send it to your lawyer.
We can also help you protect your home and your lifestyle with life, house and contents insurance options
At this stage the structure of your loan can be finalised and fixed and floating rates confirmed by your Hatch adviser
Your Hatch adviser will also help to make sure your repayments best suit your income and lifestyle
Contact your lawyer; they will go over the home loan agreement with you, explain what it means your obligations and responsibilities, the lenders obligations and responsibilities, and answer any questions you may have. Remember you will also need to give your lawyer a copy of your house insurance certificate before settlement date.
6. Home sweet home!
Time to crack open the good stuff! Once you’ve moved into your new home, you’ll start making repayments towards your home loan inline with your agreed structure. We’ll also diarise to check-in with you every so often to make sure your home loan is still working for you.