You will be seeing lots of noise in the press lately about first home buyers. Whatever view you want to take, you can find some facts to back it up. Whether it’s the wrong time to buy, prices will drop further, and you’ll end up in negative equity. Or, it’s the right time to buy and best you buy now or you will forever be in danger of missing out.
The right time to buy is the time that is right for you. Personal circumstances are the main influence on your ability to enter the property market. Do you have good income? Do you have lots of debts? Do you have a deposit? Do you have someone to buy with? (do you need someone?). Do you have the desire to own a home? Lots of people are happy to be lifetime renters, they don’t want to mow lawns at weekends. Or they want the ability to pack up and move to Europe at the spur of the moment (fact is they hardly ever do, but they can if they want to!).
So there is no right or wrong time to buy your first home. It isn’t just an investment, it is a place to live, it is shelter, it is a place to raise a family, a place to be part of a community, a place to come home to at the end of each day.
So if now is the right time for you to buy a home – what do you do next? Where do you buy, what do you buy and how do you go about it? Everyone is great at giving advice over the BBQ on a summers evening, but who do you believe?
First thing to do is sit down and work out if you can afford to buy. There are lots of calculators on the internet, all the main banks have one. You pop in your income, your deposit, your expenses and out pops a magical figure – how exciting! This isn’t an offer of finance, and if you were to use all the main banks calculators and put the same figures in, you would get five different answers. So are you any more ahead? Only slightly.
The best option is to contact a mortgage broker. They are skilled at knowing the right solution for your position. PAYE income, contract income, business income, high deposit, low deposit, gifted deposit, student loans, outside debts, buying with a group of friends. Each of the banks have their own risk profiles for different scenarios, and rather than you having to find out what is the best fit for you, your mortgage broker will instinctively know and be able match you with the bank which is the best fit. It’s a bit like being Tinder for finance, it’s a match!
Through your broker, you will get your finance in place, you have your deposit, and you have a budget. What now? Where do I start to look? First things to think about are:
Where do I want to live? and Where can I afford to live?
Quite often, these are not the same places. Finding your first home in Herne Bay, Khandallah or Cashmere probably isn’t going to be in reach for you. What you need to think about are more practical things like, commute to work, school zones, safe neighbourhoods, proximity to friends and family (babysitters!). It might be that the perfect location isn’t one that you dreamed of living in, but it is a steppingstone on the property ladder.
If you are a fan of Location, Location, Location you will hear them talk about the 'C' word constantly. Compromise. It might be that you need to compromise on location, or on size, or even style of property. You might have sworn never to live in a townhouse or apartment but that they the best option for you, or you might have never considered living "over the bridge" but your budget works there for the home you want. Think outside of your areas of comfort and see what is possible.
Once you have location and a budget, head online and get onto realestate.co.nz, trademe.co.nz and oneroof.co.nz (even better download their apps onto your phone – you can even set up property alerts!). If the property isn’t on there, it isn’t for sale, you can’t sell a secret. Go to lots of open homes, badger agents, tell them your budget, what you want, get on their mailing lists. They know what's out there and what listings are coming up. Lots of houses are listed as Auction, Negotiation or Deadline Sale – it's hard to know what these will sell for, but talk to the agents and do your research. What are they worth? What are they worth to you? One Roof will quite often give you an indication of the selling range. Is it in your budget? Is it in move-in condition, or do you need more money to do it up? These are all things you need to consider when looking at houses. Just because you have an offer for finance from the bank, it doesn’t generally include a fund for renovations, so bear this in mind if you find an old bungalow that needs lots of work before it is habitable.
Once you have found the right place, talk to your solicitor (do you have one? Lots of first home buyers don’t!). Your mortgage broker can make recommendations, or you can ask around, ring a few and get a feel for them. Can you build a rapport with them, are they contactable, relatable, knowledgeable? Ensure that you run any Sale and Purchase agreement past them before signing it.
The Sale and Purchase Agreement… oh this can look scary and there are pages and pages of small print (and who reads these honestly!). This is where your solicitor and a good agent is important. You should not sign one without their advice, as you could be signing something that puts you in a huge amount of risk.
There are many conditions that you can put into an S&P – so make sure that you understand them, and do not sign it until your solicitor is happy. Get a draft to your solicitor and your broker, and once it is signed and dated the clock starts ticking. Normally you will have 5-10 working days to finalise the conditions, ensure you work through each clause so you can tick them off. Once you, the bank and your solicitor are satisfied – you can then go unconditional and pay your deposit.
Then the bank will send lots of paperwork (loan and mortgage documents) to your solicitor, you will go and sign your life away and come settlement date most of the work is done behind the scenes. The biggest thing you need to do is pick up the keys, and move in.
And just like that, you own your first home. Enjoy it!