Top Tips for First Home Buyers
06 Jul 2016
1. Find out how much you can borrow – it may be a good idea to approach several different Lenders to find the right mortgage for you.
2. Find out what additional finance is available – Can you use your Kiwisaver funds; are you eligible for a Welcome Home Loan or Home Start Grant.
3. Research the market
• Ask local agents for sales in the area and google them to get an idea what you get for your money.
• There are a number of reports that can be ordered through myvalocity to help in your decision process in the form of estimates of market value, comparable properties sold, sales history, title information, building consents and rating valuations. myvalocity offer a subscription package which can be very useful given most people don’t buy the first home they see.
4. Obtain a Registered Market Valuation which may be required for Mortgage Finance purposes and can be useful in determining what the current market value of a property is.
5. Obtain a Building Report which can help identify any maintenance issues, weather tightness issues, structural issues etc.
6. Seek Legal Advice - Check the title, order Council records and request a copy of the Body Corporate Minutes:
• What is the tenure - is it freehold, Unit Title, Cross-lease or Leasehold.
- Freehold is considered the highest form of land tenure in New Zealand giving the owner the greatest amount of rights.
- A unit title (also known as a Strata Title or Stratum Estate) is typically used for apartments and some small blocks of units. These are governed by the Unit Titles Act 2010 and are administered by a body corporate. You can have a “Stratum Estate in Freehold” or a “Stratum Estate in Leasehold”.
- A cross-lease title offers an owner less rights than a freehold title with owners often requiring agreement from all of the other owners who have an undivided share in the parcel of land to make changes to the improvements on the property. It is also a requirement that the improvements are depicted on the flats plan. If the improvements are not accurately reflected on the flats plan the title is considered defective and will need to be amended to reflect the actual footprint of the improvements on the site. An alternative is to convert the title to freehold tenure however this will need to be agreed upon by all of the owners and could be costly. Cross-lease titles were a popular form of land ownership during the 1960’s through to the 1980’s because of the cost advantages a cross-lease title offered developers. These cost savings ended with the introduction of the Resource Management Act 1991 and hence are no longer a popular form of tenure.
- Leasehold tenure enables a person to purchase the right to occupy the land and building for a period of time which is stipulated within a lease agreement. Most leases usually have a fixed term, typically 21, 50 or 99 years with rights of renewal and rent reviews written into the lease documents. Due consideration needs to be given to how the ground rental is calculated, when the next rent review is and how much longer the lease has to run.
• Does the title have any detrimental encumbrances registered against it i.e. Encumbrances, Land Covenants, Caveats, Gazette Notices etc.
• Order a Land Information Memorandum (LIM) which provides a summary of all the information council hold on a property. This will help identify any special land features or characteristics such as flooding, consented work, public and private drainage and storm water, rates owing, special conditions including NZ historic places trust listings etc.
• If you are purchasing an apartment/unit it is pertinent that you obtain a copy of the body corporate minutes to identify any possible maintenance required in the near future or any known weather tightness/remedial issues. These repairs/issues can come at significant cost.
7. Review Operative and Proposed District Plans to check what can be done on the site, whether or not it can be subdivided and also what can be done on neighboring properties – very important where views are a consideration.