FAQ’s
Not necessarily. Most people are accepted on the basis of the information they provide in their health declaration. Sometimes the insurer will write to your doctor for more detailed information (you give them permission to do this of course). It’s possible however that due to either your own health or the level of cover you’re applying for, a simple medical examination is needed. This is likely to only involve a visit to your home or work by a registered nurse who’ll collect blood and other samples, quiz you about health issues you may have mentioned in your application, and conduct a basic examination. If this service is required in your case, we’ll tell you, and in most cases, it’s free of charge. Think of it as a health warrant of fitness!
The size of your deposit may make a big difference to the interest rate and the other costs you could potentially pay on your home loan. The bigger your deposit, the more you can negotiate on interest rate and the less chance you’ll be charged a Low Equity Margin (LEM) or Lenders Mortgage Insurance (LIM).
Do you want to sit on the public health waiting lists or prefer to jump the queue? Medical cover gives you choice over where and when you receive treatment. It works with you, your family and your life.
Also, you can enjoy non-pharmic medications, otherwise excluded. This is currently a huge issue for some conditions and medical problems.
You’ll need to have a few ducks in a row before making an offer. This includes:
- pre-approval for a bank loan, KiwiSaver HomeStart grant, KiwiSaver first-home withdrawal or Welcome Home Loan
- ensuring you can afford the ongoing costs of owning a home, such as rates and insurance
- doing a second inspection of the house to make sure it’s what you really want
- deciding on your conditions, such as a satisfactory property inspection or finance approval
- getting a lawyer to look over the sale and purchase agreement.
You can make an offer without pre-approval on a home loan but one of the conditions of your offer could be ‘subject to approval of finance’. However, we recommend getting pre-approval for a home loan so that you can make your offer with full confidence. You’ll need to confirm the loan before your offer goes unconditional.
As well as a deposit, you’ll need to be able to cover the following costs:
- Solicitor Fees
These can vary from $700 up to $2000 depending on how complicated the sale and purchase process is. - Builder’s Report
Expect to pay between $500 and $1000. - LIM Report
Between $200 and $400 although some sellers may provide this information upfront to buyers. - Registered Valuation
If your lender requires a valuation to confirm your finance, expect to pay between $700 – $900. - Moving Costs
If you’ve contributed to KiwiSaver for three years or more, you can apply for the HomeStart grant or pre-approval for a HomeStart grant (valid for six months).
If you are purchasing an existing/older home, the HomeStart grant is $1,000 for each year of contribution to the scheme:
3 years of contributing = $3,000 (the minimum you can get)
4 years of contributing = $4,000
5 years of contributing = $5,000 (the maximum you can get).
If you are purchasing a new home, a property bought off the plans, or land to build a new home on, the HomeStart grant is $2,000 for each year of contribution to the scheme.
3 years of contributing = $6,000 (the minimum you can get)
4 years of contributing = $8,000
5 years of contributing = $10,000 (the maximum you can get)
A home which received its building code compliance certificate fewer than six months before Housing New Zealand receives a KiwiSaver HomeStart grant application is also considered a new home. You need to live in the house you buy for a minimum of six months from the settlement date.
You can also buy a property with other people who may or may not be KiwiSaver members. If they are members, they too may qualify for a KiwiSaver HomeStart grant. However, regardless of the number of eligible KiwiSaver members purchasing a home together, no more than $10,000 worth of grants will be paid for the purchase of an existing/older property and no more than $20,000 for a new home or for the purchase of land on which a home will be built.
House price and income caps apply so check your eligibility on the Housing New Zealand website.
We recommend that you make a professional property inspection a condition of your offer. If you find out you’ve got a lemon on your hands you can use the report’s findings to get out of the contract or negotiate a lower price.
How much does a property inspection report cost?
The cost of property inspection reports varies considerably. We suggest you ask around for recommendations and be sure to get a few quotes before deciding who to engage.
Does the seller have to fix everything listed on a property inspection report?
The seller has no obligation to fix anything. If the buyer isn’t satisfied with their independent report their options are to end the agreement or renegotiate if the seller is interested. The seller doesn’t have to negotiate.
A LIM is a report prepared by the local council at your request. It provides a summary of the current property information held by the different departments at the council on the day the LIM was produced. It does not provide all information on the property. For example, if the council hasn’t been notified of a weather tightness issue with the property, it won’t show on the LIM.
What does a LIM report tell you?
A LIM provides information about some or all of the following:
- Stormwater or sewage drains.
- Any Heritage New Zealand protection.
- Special land features such as erosion or flooding.
- Any rates owing on the land.
- Permits, building consents or requisitions, and other certificates previously issued by the local council or building consent authority.
- Zoning – how the land may be used and any conditions that apply.
- Any notices to the council by any statutory organisation that has the power to classify land or buildings for any purpose.
- Any notices to the council given by any network utility operator under the Building Act.
- Any other information that the council thinks is relevant.
How can I get a LIM?
Your lawyer or conveyancer can help you get a LIM or you can get it yourself from the local council. Ask them for an application form or apply via the council’s website. You will need to pay a fee, and the process may take several days. Your lawyer or conveyancer can help you understand the report.
How much does a LIM report cost?
Contact your local Council to find out how much they charge for a LIM report.
How long does a LIM report take?
Contact your local Council to find out how long they take to process a LIM report.
Checking the Council Property File
We suggest checking the Council property file also. This is separate to the LIM and provides the actual floor plans (which go with the building consent), so you can see if there have been any physical changes to the property.
If an event arises that you think will lead to a claim, please contact us immediately. We help you get this sorted!! A major benefit of having an adviser looking out for your best interests.
Depending on the nature of the claim, you may be required to supply some information to process it, including a completed claim form, a death certificate, your policy document, coroner’s reports, or other material as required by the insurer.
We will help you with all of this.
For health insurance claims, please contact us as soon as your doctor recommends a procedure to you, or you know you are proceeding with private treatment, as most of our insurers allow pre-approval of claims.
Your deposit can be made up of various funds including your own savings, KiwiSaver Withdrawal, HomeStart Grant, or a cash gift from family. Talk to your mortgage adviser if you need advice about saving a deposit.
In some circumstances you may qualify for a second chance home buyers exemption, allowing you to withdraw from your KiwiSaver for the purchase of your second home. You must no longer have any interest/share in previous properties and be in the same financial position as a first home buyer – meaning you do not have realisable assets totalling more than 20% of the house price cap in the area you are looking to purchase in. Kainga Ora considers the following to be realisable assets:
- Money in bank accounts (including fixed and term deposits)
- Shares, stocks and bonds
- Investments in banks or financial institutions
- Building society shares
- Any money paid to, or held by, the real estate agent or solicitor as a deposit on the property
- A boat or caravan (if the value is over $5,000)
- Additional vehicles (such as classic motorbikes or cars – not being used as your usual method of transport)
- Other individual assets valued over $5,000.
Saving a deposit is probably the biggest hurdle for most first home buyers. At the very least, you’ll need to have saved a 5% deposit with 20% or more being ideal. Loan to Value (LVR) is the percentage of lending you are taking over the property verses how much equity you have in it, either by cash injection or increased property values.
When determining how much you could potentially borrow, lenders will look at your income, credit history and employment history. Each lender has its own criteria when it comes to calculating your borrowing capacity so it’s worthwhile working with a mortgage adviser who can match you up with the right lender for your situation.
A multi-offer process happens when more than one buyer makes an offer in writing on a property. It’s intended to provide all interested buyers with a fair opportunity to submit their best offer for a property they wish to purchase. It’s important to put your best foot forward in this situation, as you might not get a chance to increase your offer. The seller can choose the offer that suits them best. This won’t necessarily be the one with the highest price.
People who smoke (even if it is just a few times a week or even a month, or if you quit less than a year ago) will have to pay a higher life insurance premium. If you successfully quit smoking for at least 12 months you are able to apply to have your premium reduced; simply contact us and we’ll provide you with the required forms.
If you feel your annual insurance premiums keep on rising and become too expensive, talk to us about Level Premiums. We will show you how it works and how you can set-up your payments, without annual increases.
Getting your finance pre-approved is the first step and the best way to know exactly what price range you will be looking to purchase at and what conditions you will need to include in your offer. Our mortgage advisers work on your behalf to secure pre-approval from the right lender, will negotiate on the interest rate and finance terms with the lender, and help you navigate the often complicated processes involved in securing finance right through to choosing the best insurance for your needs.
There are a few websites, such as Trade Me’s Property Insights and Homes.co.nz that will give you an estimate of what a property is worth, but paying a registered valuer will give you a more accurate view.
Visit the Property Valuation NZ website to find a registered property valuer near you.
Once you’ve been a member of KiwiSaver for 3 years, you can withdraw some of your KiwiSaver savings to help buy a first home. If you have a partner who has also been a member of KiwiSaver for at least 3 years, they can also withdraw their savings to put towards your first home.
You can withdraw as much as you choose, but you must leave a minimum balance of $1000 in your account. You can withdraw:
• your contributions
• your Member Tax Credits
• your employer’s contributions.
You must live in the house that you buy — it can’t be an investment property. To take advantage of the KiwiSaver Withdrawal scheme and to check whether you qualify, contact your KiwiSaver provider.
It definitely does not cost you anymore. In fact you are getting the best of both worlds! We do all the research and comparisons and much of the running around for you, based on your requirements. We then present you with the appropriate policies to compare/consider.
We recommend finding a lawyer or conveyancer to step you through the home buying process. They are a source of knowledge and advice, who can offer valuable support.
We often hear from lawyers that a client has phoned at the 11th hour, having already signed a sale and purchase agreement, and just needs someone to push the paperwork through. While some may choose to go down this road, we highly recommend you take full advantage of the years of industry experience your lawyer or conveyancer has to offer and ask questions that will help you make informed decisions when it comes to buying a home.
What do property lawyers do?
You can talk to your lawyer or conveyancer about your individual circumstances and what clauses should be included in your sale and purchase agreement, in order to best protect yourself. Talking about this early on will save you time when it comes to making an offer and the real estate agent or salesperson asks what clauses you’d like in the agreement. They can check over your sale and purchase agreement, explain the ins and outs of the LIM report, as well as finalise the contract paperwork.
Your lawyer or conveyancer will:
- give you advice on your Sale and Purchase agreement before you sign it
- give you advice regarding issues identified within the LIM report and certificate of title
- liaise between yourself and the vendor’s solicitor in the event of any issues
- confirm with the vendor’s solicitor when conditions have been met
- review mortgage documents
- witness signing of mortgage documents
- manage payment of funds on settlement day.
How do I find a property lawyer or conveyancer?
If you’re not sure where to find a lawyer, you can ask family or friends for recommendations or check out www.propertylawyers.org.nz (part of the New Zealand Law Society) to find one in your area. The New Zealand Society of Conveyancers provides contact details for its membership conveyancing firms.
How much are the legal fees?
Different lawyers and conveyancers have different fee structures, and pricing can vary dramatically. Shop around and ask those around you for recommendations. It pays to have a clear understanding of what they will charge you from the get-go, and when it will be due.
You don’t need a lawyer to make a conditional offer. However, we advise both buyers and sellers to seek legal advice before signing a sale and purchase agreement or any written document.
What is a sale and purchase agreement for property?
A sale and purchase agreement is a legally binding contract between you and the seller. It sets out all the details, terms and conditions of the sale. This includes things such as the price, any chattels being sold with the property, whether the buyer needs to sell another property first and the settlement date. You should fully understand all aspects of the agreement before you sign, so it’s important to get advice from your lawyer or conveyancer at this point.
What conditions can you include in the sale and purchase agreement?
You can include any conditions you like in the sale and purchase agreement but remember it’s up to the seller whether they’ll accept your conditions or not.
Common conditions include:
- Title search
- Finance
- Valuation report
- Land information memorandum (LIM)
- Satisfactory property inspection report
- Engineer’s or surveyor’s report
- Sale of another home.
What happens after you sign a sales and purchase agreement?
Signing the sale and purchase agreement commits you to buy the property, but it’s not the end of the purchase process. Both parties work through any conditions until the agreement is unconditional. You’ll then need to:
- Pay the deposit when you sign the agreement or when the agreement becomes unconditional – depending on what your agreement says.
- Pay the remaining amount on the day of settlement, usually through your lawyer or conveyancer.
What is a pre-settlement property inspection?
You should arrange to inspect the property at least two working days before the settlement date. This is known as the pre-settlement property inspection. This is the chance for you to check the property and chattels are in the same condition they were in when you signed the agreement to buy the property and that the seller has met any conditions listed in the agreement.
Do I need home insurance before settlement?
Full insurance is usually a condition of the property’s finance. You must arrange insurance before settlement day, so the property is insured from the day you take possession. Your lawyer or conveyancer will ask for proof that the property will be insured.
What happens on settlement day?
A number of things need to happen on settlement day. Your lawyer or conveyancer will manage most of them for you:
- Your lawyer or conveyancer will pay for the property (using the authority you signed a few days earlier). The money is paid to the seller via the seller’s lawyer or conveyancer who gives your lawyer or conveyancer a receipt for payment.
- When this is completed, your lawyer or conveyancer will tell you the sale has gone through and you can collect the keys from the seller’s lawyer or conveyancer or from the agent.
- The seller’s lawyer or conveyancer will release documents to your lawyer or conveyancer who will arrange for the transfer of ownership and to have your details and the details of your bank or lending company recorded on the record of title.
How long does settlement take?
Most settlements run smoothly, and the buyer has a new property by the end of the day. However, things can go wrong. Your lawyer or conveyancer is the first person to call if there is an issue. They will be able to answer your questions and guide you. They can also help you negotiate with the seller to remedy any issues such as a newly broken window or missing keys. Your lawyer or conveyancer will work with the seller’s lawyer or conveyancer to try to reach a satisfactory solution.
Delays to the process or a seller who is not organised and hasn’t finished moving out can be stressful, especially if you are moving in on settlement day. We recommend planning to move into your new home at least a day later if that’s possible.
As you can see, there’s much to think about before you can move into your new home. However, by being in the know you’ll have a better chance of nailing that sale and purchase agreement and skipping your way to settlement in no time.
What is a conditional offer?
A conditional offer means you have conditions that you want to meet before you agree to buy the property. If you make a conditional offer, the real estate agent will negotiate on behalf of the seller. Conditions could include making your offer subject to a favourable building inspection or a valuation, confirming your financial arrangements or selling your own property. The seller can also attach conditions to the sale, for example, changing the settlement date or specifying the details of the chattels that come with the house. Conditions will be subject to time-frames set out in the agreement. If the purchaser is unable to satisfy their conditions within the set time-frame, the agreement may be ended.
What is an unconditional offer?
An unconditional offer means you do not require any conditions to be met before buying the property. This is sometimes known as a cash offer and can be appealing to sellers. Be sure to complete a thorough inspection of the property you’re keen on first though – and make sure your finances are sorted!
How do I do a title search on a property?
We recommend you get your lawyer or conveyancer to search the record of title, which is often referred to as a title search. The title will be specific to the property you are buying and has a record of things that can have an impact on what you can do with the property and any access you need to provide to others.
You do not have a legally binding contract until your offer is accepted by the seller. That means you can revoke your offer at any time prior to the contract being signed by the seller.
We recommend you withdraw your offer in writing to the real estate agent and have the agent confirm they’ve received your withdrawal before making an offer on another property. You are not obliged to give any reason for revoking your offer
In some cases, a seller may add a ‘cash out’ or escape clause to the sale and purchase agreement. This means that they can give notice to the current buyer that they have accepted another offer, and the current buyer has a limited amount of time to fulfil their conditions. If the current buyer is not able to fulfil their conditions in time, you could well be the one receiving the keys to your new home!
If a property is listed as ‘for sale by negotiation’, or ‘offers over $X’ you can make any offer you like – but it pays not to be too cheeky! If your offer is too low, you risk missing out. Find out how long the house has been on the market – if it’s been listed for sale for ages the owners may be open to negotiating a lower price.
One of the conditions of your offer could be ‘subject to approval of finance’. However, we recommend getting pre-approval for a home loan so that you can make your offer with full confidence. You’ll need to confirm the loan before your offer goes unconditional.
You can make an offer on more than one property but don’t forget that once you make an offer on a property you’re committed to buying it, subject to any conditions you include in the offer. Given your offer becomes legally binding as soon as it’s accepted we’d advise against putting your eggs in too many baskets without professional legal advice!