Buying a house is one of biggest financial decisions you’ll make in your lifetime, and at times the process can seem overwhelming. In order to make your journey to home ownership as easy as possible, we’ve compiled a handy checklist that includes everything from LIM reports, to ensuring your Life Insurance policy has you properly covered.
Owning your own home has long been the Kiwi dream, but there’s a few things you should keep in mind to prevent your dream from becoming a nightmare.
Before you start actively looking for a home, learn more about your home loan options. This includes any help for which you may be eligible, such as a KiwiSaver HomeSmart grant or KiwiSaver first-home withdrawal. Knowing about your financial options before you find a home means you’ll make more informed choices, and you’ll leave sufficient time to apply for any grants.
After you’ve found your potential new house, you’ll need to learn more about the property in order to avoid nasty surprises. Researching the area, talking with neighbours and learning about any planned developments will help you in deciding if the area is right for you. Depending on where in New Zealand you’re looking to buy a home, you’ll also need to consider environmental factors. For example, wind exposure could pose problems for Wellington homes, especially if surrounded by large trees. If purchasing in Christchurch, you’ll need to be acquainted with a property’s Technical Category, and to make sure the home can be insured. If the house was part of an EQC claim, you’ll need to check the EQC scope of works to see what work was done, and get legal advice before you purchase.
Hiring an accredited property inspector means you’ll be made aware of any possible problems the house has or may have in a property inspection report. Ordering the property’s LIM report will give you an overview of all consents granted for work on the house. This is important as any unconsented work that was done on the property could cause major headaches for you down the track.
After researching your prospective property you should then confirm your finances and make an offer or bid on the home. If the offer or bid is accepted, you’ll then need to work out the sale and purchase agreement with the property’s seller. This is a legally binding contract in which the buyer can negotiate the conditions of purchase, and as such it’s important to seek legal advice and check the agreement with a lawyer before you sign it. And finally, after terms of sale have been agreed to and the settlement date decided, it’s time to kick back and enjoy your new home.
What type of home is the right fit for you and your family? Are you searching for a traditional, detached home, an apartment, or something else entirely? Setting your goals and narrowing your scope means you won’t be overwhelmed in your search.
Before you get swept up in the search for a home, know your financial options. What are the banks willing to lend you? Are you eligible for government help, such as a KiwiSaver HomeSmart grant?
When your search is underway remember to keep a discerning eye. Open homes are a great time to spot any potential problems, and will give you an idea of whether a house truly fits your needs.
After you’ve found a potential house, take your time to make sure it’s a good fit. Visit the neighbourhood more than once to see the home at different times of the day. Talk to the neighbours, check zoning and find out about any upcoming developments that could be a deal breaker.
Environmental factors should be taken into account in many areas of New Zealand. Remember to take into consideration sun and wind exposure, especially in places such as Wellington. If you’re buying in an area previous affected by earthquakes, learn the property’s Technical Category and seek legal advice if EQC works were carried out at any stage.
With such a big financial decision it’s best to hire professionals to make sure your choice is an informed one. An accredited property inspector will prepare a property inspection report informing you of any problems the home may have, and give you an idea of the property’s general health.
A land information memorandum, or LIM, can be obtained from the local council, and provides details that could make or break your decision. A LIM will show information such as any consents granted for work on the property, as well as the rates and whether the property is at risk of flooding.
After you’ve found a house, you’ll need to go back and get conditional pre-approval from your mortgage lender before making an offer or bid on the home. You’ll need to provide information on the property, and also show proof of insurance arrangements before you settle.
A sale and purchase agreement is when the buyer can specify your conditions of purchase. A lawyer can give advice during this process, and it’s important that they check the sale and purchase agreement before you sign.
Once you’ve signed the sale and purchase agreement you’ll need to get your insurances in order. Along with sorting out your House and Contents Insurance policy, it’s also the perfect time to arrange Life Insurance, which will provide mortgage cover in the event of an unplanned death.
With your research done, agreements signed and insurance confirmed you can now move into your home knowing you’ve ticked all the boxes to home ownership.
A great time to arrange Life Insurance can be as soon as you’ve signed the Sale and Purchase Agreement. This can also be a good time to sort out your House Insurance policy, it’s a great idea to arrange all your cover at once. Of course, you can take out a Life Insurance policy even if you’re not a homeowner, though if you do later decide to buy a home it will be in your best interests to reassess the level of cover you have as your needs may have changed.
Although having Life Insurance is not mandatory for homeowners, it does provide you and your family with financial protection should there be an unexpected death. Having Life Insurance to cover a mortgage means that even with the loss of one income, your family will still be able to make home repayments, and won’t face added financial strain at such a challenging time.
If you’re thinking about buying a home and want to know more about your insurance options, feel free to contact us, we’d be happy to help.