Buying a home in New Zealand is no longer a straight-forward process. For many Kiwis, the thought of buying a home leaves us with more feelings of being overwhelmed and anxious rather than excitement. But fear not. Buying a home in New Zealand doesn’t have to be scary or intimidating. There are government processes in place to make it that little bit easier for first time buyers to secure their first home in a market where the cost of living crisis feels largely against them. So, can you buy a home in NZ?
Who Can Buy a Home in NZ?
If you are a New Zealand citizen or resident, you can, generally, purchase residential property in New Zealand. People from overseas are typically not able to buy property in New Zealand, with a few exceptions.
Check your Eligibility to Buy Property in New Zealand
You’ll Need a Deposit
Typically, banks and non-bank lenders require a deposit of 20% of the property value from home buyers who are New Zealand citizens or residents. For investment property, the criteria is different. You would likely be looking at needing a deposit of 30% or higher. However, for first time buyers looking for their first home to live in, there are a few things you can take advantage of to help meet the deposit requirements of lenders.
First Home Loan: Select banks and other lenders offer a First Home Loan to those who are brand new to the property market. If you are eligible, you may only need a deposit of 5%, which makes the home buying process that little bit easier.
Check First Home Loan Eligibility
First Home Grant: You may be eligible for a First Home Grant – provided you have been contributing to your Kiwisaver for 3 years and meet other criteria – which provides up to $5,000 for individuals or up to 10,000 each for couples towards your first home deposit.
Check First Home Grant Eligibility
Kiwisaver First Home Withdrawal: Your Kiwisaver is more than just a retirement fund. The savings can also be used towards your first home purchase, provided you meet eligibility criteria such as being a Kiwisaver member for at least 3 years. You must intend to live in the property and you cannot withdraw Kiwisaver savings for investment property.
Check Kiwisaver First Home Withdrawal Eligibility
Other ways to save money
Compare bills: Did you know that comparing your utility bills is one of the most powerful ways to save money? That’s right! And NZ Compare makes it so easy. Compare broadband, power, mobile, and money-related bills with our user-friendly websites. Just type in your address, and compare the plans and providers side-by-side. You never know, you may find a plan that suits you and your household better and save hundreds of dollars across the span of a year.
For example, with Broadband Compare, you may even score joining freebies and perks when you switch to a new provider such as discounted broadband for the first couple of months or a free year subscription to a streaming service like Netflix or Prime! How cool is that? You could put the savings you make towards your first home deposit.
Reassess your budget: Have a look at your budget and see where your expenses go. Do you have spending habits that could be changed? For example, a weekly takeaway or daily coffee out? Try reducing your spending habits and put the money that you save towards your deposit. If you have to buy a new phone, appliance, or any product, use PriceMe to compare the prices across thousands of New Zealand retailers and get the best deal!
Compare Home Loans
Take advantage of Money Compare to compare different home loans. It’s important to do your research and compare what is available in the market so that you can make the most fully informed decision about such a significant, long-term life decision and purchase.
You’ll Need to Assess your Credit History
It is generally important to have a positive credit history before you apply for a home loan approval. Lenders typically want to reduce their risk, and if you have below-average credit, you may pose a risk to them. You could get the help of an accountant to help check your credit history and see if/ where you might need to make improvements. An accountant can help you make strategies to improve your credit score if need be.
You May Want a Mortgage Broker
A mortgage broker is a valuable member of your “team”. These professionals know the industry, the market, and have a range of lenders at their fingertips. A reputable mortgage broker will help narrow down the best possible lenders and mortgage options and help you choose the right one based on your goals, the property you wish to buy, income and affordability.
Read More about Mortgage Brokers
You’ll Need Pre-Approval
A pre-approval, or a conditional approval, is a ballpark figure provided by a lender that gives you an idea of how much money you can borrow. This figure is based on your income, credit history, your deposit, and how much you can afford to pay in repayments, either fortnightly or monthly.
You’ll Need to House Hunt and Do Your Homework!
Knowledge is power when it comes to the world of property and the buying process. Take the time to do your research. Establish your individual house non-negotiables and negotiables based on your unique needs, interests and goals with the property. The types of homes you search for may differ depending on if you are looking for a home to live in, or invest in. When seeing a property, you can generally either do so by attending an open home, or by arranging a private viewing with the property’s estate agent.
Consider the following when house hunting:
- Location: is the home near shops, schools, and other amenities?
- The quality of the home: Are their cracks in the walls? Sagging in the floors? Fresh paint? Or random patches? Bora dust?
- The plumbing: check if the water pressure is ideal and if it takes a long time for hot water to come out of taps and the shower.
- The insulation: Will the home retain heat?
When you find the house you want to purchase, it is worth getting a building inspection of the property to make sure it meets standards and is ready to live in.
Make an Offer
When you have found the home you want to buy, you’ll need to make an offer. Be sure to consult your lawyer to make sure the written offer is laid correctly. There are two types of offers.
Conditional offer: When the offer depends on a criteria being met, such as a satisfactory builder’s report or arranging finance.
Unconditional offer: When you simply agree to the contract terms.
Settlement Day and Completing the Purchase
The final purchase, known as the settlement day, usually takes place four to six weeks after the seller accepted your offer. On settlement day, your lawyer will exchange a couple of things with the seller’s lawyers.
This includes:
- The remaining funds
- The transfer documents
- The property keys!
Congratulations! You have successfully purchased a home in New Zealand. Now, time to arrange a moving day. That is another can of worms.
Request Free Advice About the Home Buying Process
Further Reading:
How to Buy a Home with Your Friends
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