Purchasing your first home can feel like a minefield. There is so much to consider, before you even make an offer. But, please, do not sign a legally binding agreement until you have called us to ensure all of your needs are provided for.
Where do you start?
1. Apply for a HomeStart Grant.
If you meet the criteria for a HomeStart Grant, you may be able to get up to $5,000 for an existing house or $10,000 for a new build to put towards your purchase. That is not to be sneezed at.
The criteria for the HomeStart Grant may change from time to time, but includes things like:
- having been with KiwiSaver for at least three years;
- making the minimum contributions required per year;
- having household income below the threshold;
- having at least 10% of unborrowed funds to put towards the purchase (this can be made up of the HomeStart Grant and your KiwiSaver funds); and
- purchasing a property within the specified price range for your area.
The specific requirements and online application for the HomeStart Grant can be found at: https://kaingaora.govt.nz/home-ownership/first-home-grant/check-you-are-eligible-for-first-home-grant/.
If you will be relying on HomeStart Grant funds to complete the purchase, then you will need to obtain confirmation of approval and the amount you are entitled to receive, during your finance condition period.
Housing New Zealand may take up to 10 working days to confirm whether you are entitled to receive the Grant, and the amount you will be receiving. You can apply for pre-approval as early as you like, and it lasts for around 5 months.
If you do not have pre-approval, then you will need to allow at least 4 weeks from the date you apply for the Grant, until settlement date.
Even with pre-approval, there will need to be at least 10 working days from the date the Agreement becomes unconditional until settlement date.
2. Get confirmation of your available KiwiSaver funds.
If you are going to withdraw your KiwiSaver funds to help pay for your property, then you will need to know how much you have available. You can withdraw some or all of your funds, except for the initial $1,000 the Government contributed at the start. Keep in mind that, as an investment, your available funds may fluctuate before they are withdrawn.
Your KiwiSaver funds can be used to put towards the deposit payable under your Agreement (which is usually paid upon the Agreement becoming unconditional) or can be withdrawn for use at settlement.
Depending on which KiwiSaver provider you are with, there will need to be between 10-15 working days from the date the Agreement becomes unconditional until settlement date.
3. Get finance pre-approved from your mortgage broker or bank.
Getting pre-approval will give you a starting point when shopping for your new home. You will still need to make the agreement conditional on finance, as the pre-approval is likely to be conditional upon such things as the bank approving your signed Agreement for Sale and Purchase.
Using a mortgage broker can be a extremely handy as mortgage brokers deal with lots of different banks and do the running around for you. Because they deal with Banks all the time, they know where you are likely to get finance approved. Also, they can often get a better deal from your own bank, than what you can get. Let me know if you need the number for a good mortgage broker.
4. Find your new home!
Once the above steps are underway, you can start the fun part – shopping for your new home. This may be through real estate agents or privately via Trade Me, etc.
5. Call Regent Law before signing anything.
The vendor’s real estate agent will usually prepare the Agreement you will use when making your offer. If the vendor accepts your offer, you will be legally bound by the terms in the Agreement and will only be able to get out of it if you cannot satisfy one/or some of the conditions. You may not simply be able to change your mind and get out of the Agreement.
Please give us a call before you sign and commit yourself to purchasing a property. We will ensure all the conditions you need are in the Agreement and the appropriate timeframes for KiwiSaver and HomeStart Grant and provided for. We can answer all of your questions and walk you through the process.
