Deposit not the only up-front expense when buying a house

With the Reserve Bank of New Zealand’s recent announcement that Loan to Value (LVR) ratios are set to relax in the New Year, Canstar Blue looks at what costs are actually involved in buying a home, not just the all-important deposit.

Canstar Blue general manager Jose George comments:

“It’s fair to say that the LVR restrictions introduced back in 2016 have had the desired effect of cooling the market. The subsequent easing of those restrictions earlier this year, has then helped to provide more opportunities to those with lower deposits, especially first home buyers. Further relaxation of the restrictions in the New Year will hopefully open the door for more buyers but where raising a deposit is obviously a huge part of buying a property, people must remember to bear in mind all of the other expenses involved.”

Being prepared and knowing the costs you’re facing can take a lot of the pain out of what can be a very stressful process. And, while comparing interest rates and loan terms is essential to managing your money, there’s a lot of other things you need to consider once you find your dream home:
• Building Report

While this may feel like an extra cost you could really do without, it could save you a huge amount of money, and stress, further done the line. The Real Estate Agents Authority (REAA) recommends that buyers pay for a qualified property inspector to undertake an inspection to report on the condition of the property potentially saving your from buying someone else’s problems.

Cost[1] - $400 - $800

• Land Information Memorandum (LIM)

In addition to a building report, you should obtain your own LIM report from your local authority. This is an official record of the property and includes information including rates details and building consents. It may also contain details of risks such as erosion, contamination, or flooding. It can alert you to illegal works on the house or the fact that it might leak. You can order a LIM through the local council or through a lawyer.

Costs - $250 - $400
• Lawyer

You’ll need a lawyer to handle the conveyancing (or transfer) of the house deeds from the vendor to yourself. You may also want to engage them before you sign any contracts or agreements.

Costs - $1,000 - $2,000
• Home insurance

Mortgage lenders will not secure a loan against a property unless it is properly insured. There is a huge variation in costs as it depends on various factors including location, size, age, building materials used and type of property.

Costs Vary

George continues:

“Knowledge really is power when it comes to buying a property. Being prepared and knowing what costs you will have, and at what stage of the process, can take a huge amount of stress out of the situation and may also give you the edge over the competition. You could also do some online research and reach out to your bank, legal adviser and estate agents for the guidance too.”

Most satisfied customers

The housing market is big business in New Zealand. Buyer, seller, landlord or renter, the usual route most of us take into property is via a real estate agent, but with so much choice, how do you know which agent is the one for you?

Real estate agents are equipped with the knowledge and experience to help you find the right home, or to help maximise the return on your asset. Regardless of whether you’re a home owner or tenant, dealing with property involves mammoth financial decisions – so making the right choice can have a huge impact on your wallet as well as your sanity.

Each year Canstar Blue asked consumes to rate their estate agents’ experiences and this year we are delighted to award First National the Canstar Blue Outstanding Customers Satisfaction Award for 2018.

Accepting the award, First National chief executive Bob Brereton said:

“We’ve long understood that providing outstanding customer service is the key to success – so winning the Canstar Blue Outstanding Customers Satisfaction Award is a fantastic recognition of the professionalism and dedication of the people who make up the First National Group here in New Zealand.”

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