Thinking of Buying a House?
Whether this is the first house you will buy or you have bought before it's a big decision, and buying a house can be a mission. But when you get that beautiful new home at the end, it will be all worth it. It's exciting buying a house but lets answer a few of your questions first...
How much will it cost to buy and own a home?
It is a good idea to be fully aware of all the costs associated with buying a house and ownership of property before you start out. To buy a house you will have to hire a lawyer or conveyancer, and you will most likely need to use house inspectors and property valuers, and sometimes more than once! This all adds up!
Another really important thing to think about is the costs involved with home ownership. The mortgage is a very significant cost, but it is not the only thing you are going to have to pay for as a home owner.
Do you have a house to sell as part of buying your new home? Selling a home is expensive and can seriously eat into any equity!
Want to find out more about the costs of home buying, selling and ownership? We have put together some information that will prepare you for the bills in our costs of buying and owning a home section.
What is a mortgage?
A mortgage is a term used when someone lends you money taking your house as security - commonly known as a home loan. The lender is most often a bank and the fact that the house is being used as security is noted on the certificate of title of the property. For all you need to know about mortgages, check out our guide to home loans and mortgages.
How much can I borrow?
Before you even start looking for a house, think about how much you would like to spend and find out how much you can borrow. Some banks websites have a 'how much can I borrow' calculator and this will give you a rough guide of how much they will lend you for a home loan to buy a house.
ANZ has a useful how much can I borrow calculator. Banks' online calculators are usually very simplified and can be inaccurate. So before you make any decisions based on them, make sure you talk to the bank or a mortgage broker.
Any potential lender will assess your personal circumstances thoroughly and make you an offer of finance (hopefully!). You may find that they will offer you a lot more than what you are after, or unfortunately, you may not be able to borrow anywhere near the amount of money you want. In some circumstances, you may find it difficult to get any offer of finance at all - if this is the case - your best shot for a home loan may be to contact a mortgage broker.
Want to find out more about mortgage brokers? All you need to know is in our mortgage broker guide.
How much can I afford?
A better way to find out how much your mortgage should be is to start by working out how much you think you can afford to borrow. Do this by calculating how much you can afford to pay in mortgage payments (sorted.org.nz have a handy budgeting tool). Use a mortgage repayment calculator like this one from Westpac to work out what amount this monthly payment could be mortgage repayments, add this to any deposit or equity - this gives you your house buying budget.
Again, what you think you can afford can differ wildly from the banks' thoughts, so once you have done your numbers, have a chat with your bank or mortgage broker and get your mortgage finance offer sorted.
Buying a house can be very rewarding and a great investment but it does come with major financial risks, especially if you stretch your finances to borrow. Having a mortgage can also impact on your lifestyle - there may not be much extra cash for coffees, takeaways, movies or even holidays... Make sure your finances and lifestyle can handle it!
Should I get a lawyer?
It is a good idea to get a laywer now - before you find a home you want to buy! You will need a property (or conveyancing) lawyer to actually buy a house, and a lawyer can also help you out with the process, writing conditions and clauses, checking contracts and finding out information about the house before you even make an offer.
Most lawyers consider this part of the conveyancing process, so it won't cost you extra. You should, as a bare minimum, get a property lawyer to look over a sale and purchase agreement before you sign it - it is a legally binding document - so it pays to have expert advice on what you are signing.
Conveyancing costs mostly range from $800 - $1,200 for a standard residential house purchase that involves a mortgage. For this price your lawyer will work with you through your house hunt and in most cases only send you the bill once you have bought your house. Make sure you ask your lawyer upfront how much it is going to cost - including disbursements - any lawyer should be able to give you a fixed price for a standard house purchase.
If you get involved in a problematic house purchase, the bill can climb, so if you find yourself with your lawyer on speed dial, make sure they keep you up-to-date regarding costs.
For a comprehensive list of property lawyers who can help you with the conveyancing part of buying a house, check out the New Zealand Law Society property law webpage.