How to buy your house

The concept of owning a home is something many dream of but the process getting to that stage is often a mammoth task that requires a lot of perseverance and patience. We’re here to break down the process into 10 steps that you need to take, right from the early stages through to moving in.

In order to purchase a home in New Zealand, in the majority of cases you must be a New Zealand Permanent Resident or Citizen, have a clean credit history, and in the case of shared ownership, be buying the house for yourself to live in.

 

1. Find a location:

Before you planning any big moves and purchases, consider your lifestyle. Where do you work and how much time do you want/need to commute each day? Where do you want to send your children to school? What do you like about the location you currently live in, and what would you want to change?

Would moving nearer to your family be beneficial, or getting closer to the city, for example? These are foundational aspects you should thoroughly consider before trying to get onto the property ladder, as they will largely influence where you choose to buy.

 

2. Look at your funds and how you can repay your debt and save:

Whilst you’re window shopping for the right location, think about your current financial situation to help you determine the feasibility of committing to purchasing a property. Ask yourself:

• Your spending habits – are you spending unnecessarily?
• Your current income – is your income sufficient to qualify for a home loan?
• If you have debt, how quickly can you repay it?
• Do you have the deposit in your KiwiSaver account? If not, do you have a savings plan? How much are you already putting aside for a house deposit each week or month?
• Is it realistic for you to be thinking about buying a house on your current income, after expenses and purchases?
• Some people are able to call in a financial favour from relatives and friends – you may have heard of ‘the bank of mum and dad’. Could you rope in anyone to help? This is a common way to get ahead when it comes to finding the money to step onto the property ladder. If you can’t, perhaps co-ownership with YouOwn is a viable solution.

 

3. Preparing to buy your home:

Before you start setting your eyes on properties too far out of your budget range, get prequalified for a home loan to see how much you’re realistically able to spend. In order to do this, you’ll need to provide information regarding your income, savings and any debt you currently have.

It’s a very paperwork-driven process that is often something that puts people off following through till the end. Your lender will review this information and tell you how much you’re eligible to borrow, and thus the price range of houses you can look at.

At this point you’ll be able to determine if you are in a position to purchase through ‘market ownership’ – that is buy 100% of the house with a 20% deposit and a home loan with a bank. Or you may only have enough to buy 75% to 90% of a house, and are keen to pursue shared ownership.

• A deposit of only 5% as opposed to the standard 20%.
• Minimal (and manageable) debts, as a guide, less than $15,000.
• A steady income (a minimum of $110,000 combined income, depending on your location).

 

4. Find a real estate agent:

Real estate agents are there to help make the decision-making process a whole lot easier when it comes to choosing a location and a home. They have more niche knowledge about specific places and know what to look out for when hunting for a suitable and desirable place to live.

In the case of YouOwn co-ownership, new houses currently supplied by recognised building companies are available to choose from. If you can’t find what you want, or are looking for an existing property YouOwn can introduce you to an agent.

 

5. Find houses of interest:

Once you’ve done a bit of market research and weighed your findings up against your financial situation, have a look for places you might like to buy. It’s a great way to see if you can match up your ideal location with an ideal home.

How many bedrooms do you need, how many bathrooms would you like, does your lifestyle dictate an outdoor space for kids to play or maybe just quiet dinners on the deck?

 

6. Home inspection report:

Before you settle on your house, you have the opportunity for a pre-purchase inspection. This is helpful when you have purchased a house “off the plans” and you want to make sure you are getting what you expect. If you are buying an existing house, you may want a get a qualified builder to inspect it for you before you make an offer.

 

7. Get a home loan:

Once we agree to work together with YouOwn providing the capital for your deposit, we can help you find a bank who will provide your home loan.

At this point, an independent valuer enters the picture to give their own opinion on the house value. They are knowledgeable of the going rates for other similar properties and provide an independent assessment of value.

 

8. Purchase and settle:

With co-ownership, you sign the sale and purchase agreement with YouOwn as co-owners, pay the builder or vendor a deposit and sign the co-ownership agreement that specifies your rights and obligations. Once you’ve got as far as agreeing on everything and establishing your loan repayment plan, you’re able to sign the loan documents with the lender.

Your solicitor will help you complete documentation to withdraw any KiwiSaver funds, and advise you when signing the loan documents with the bank.

 

9. Legal advice:

With any kind of house buying process, buyers require legal advice before signing any documents (sale and purchase, home loan and co-ownership agreements)

The solicitor undertakes the conveyancing transaction for both co-owners. This involves drawing funds from the bank, YouOwn and your KiwiSaver provider, paying the developer/vendor on settlement and registering the mortgage on the title.

 

10. Move in & own that home:

Once the balance of the purchase price is paid, the bank registers a mortgage over the property and you move in. You start paying off the home loan and you pay YouOwn a charge on their portion of the house.

Thank all the people who helped you get there but congratulate yourself for this massive achievement.

If you follow these steps, then you’re on the right track to owning your first home. There are lots of boxes to tick along the way but with the help of YouOwn and co-ownership, there’s nothing stopping you from putting a plan together to start that journey.