For many of us, buying a property is the single biggest purchase we will ever make, so it pays to make sure you have the expert help you need to do it properly. Here’s 6 things you should consider before you take the plunge…
Do your homework
Owning your own corner of the world can be so exciting that sometimes you think with your heart rather than your head… Don’t sign on the dotted line until you’ve done your homework. Do you know what the real value of the house is? Don’t rely on what the real estate agent tells you – check it out yourself. Either get a registered valuer to give you a report or do some thorough investigation personally, checking what other similar-sized and specced homes in the area have recently sold for. Don’t be afraid to walk away from a bad deal – there will be other houses, possibly even one better suited to you.
Can you afford it?
And what about if interest rates go up a few points in a few years – can you afford it then? There are a lot of costs involved with buying a home, over and above the main purchase price. Over the coming year you’ll be expected to stump up for rates, maintenance, insurance, water bills, possibly unexpected issues like a hot water cylinder bursting… What we’re saying is, don’t stretch yourself.
Can you use KiwiSaver to help you buy it?
If you’re in KiwiSaver and have been contributing for at least three years and this is your first home, you may be eligible for a HomeStart grant. This means you could get up to $5000 towards an older, existing home or up to $10,000 for a newly built home or section of land. You might also be able to withdraw almost all of the money you’ve got in your KiwiSaver account and put it towards your purchase.
Know the difference between conditional and unconditional
If you offer to go unconditional it means that once you sign the Sales & Purchase agreement you are bound to proceed with the deal – at the agreed price on the agreed date, no matter what. You’d need to have ensured that you were 100% confident about the property you were buying and that you had confirmed your required finance. Generally people make conditional offers – a deal hinging on certain things happening. This may be subject to finance or a builders’ report or the sale of another home. A conditional offer is no less binding – you still have to go ahead with the purchase once all your conditions are satisfied. Get a lawyer involved to come up with the wording for these and to also help you work through the conditions.
Get a lawyer involved
Before you sign the sale and purchase agreement, get a lawyer to check it out – they know what they are looking for. Get them to do the conveyancing – a fancy term to describe the legal work required to complete a property transaction. Tasks the lawyer will complete include checking your finance is suitable, a search and approval of the title, a receipt of the LIM (Land Information Memorandum) and checking all the small print of the agreement. The title records who owns the property and any restrictions around the property, such as covenants or easements. We have really great lawyers skilled in the area if you need help.
Make sure you check out the LIM or make your contract conditional on your lawyers’ approval and/or approval of the LIM.
A LIM is a report on the property provided by the local authority. It gives information from their records, such as the zoning of the property, any issues with the land the house is built on, issues like drainage and flood and landslip risks and whether alterations and additions have had proper building consents obtained. This is what you call crossing your t’s and dotting your i’s – and ensuring you don’t end up living on quicksand.