First Home Buyer's Guide
So you are thinking about purchasing a home for the first time? Congratulations!
For most people, purchasing a property is one of the biggest decisions of their life, and most certainly the largest financial investment they will ever make. At first glance, the process might seem overwhelming and complex, so we have put together a simple First Home Buyers' Guide to help you understand the process.
Where to start?
As part of the initial process you should approach your bank or a mortgage broker about obtaining pre-approval for lending. This will make matters easier when it comes to submitting an offer on a property. It is also good to work out a budget to determine how much you can afford to pay on lending repayments, as well as putting together a list of your assets and liabilities. Your bank or mortgage broker will ask for this financial information so it is helpful to have it gathered in advance.
Local newspapers, real estate agency windows, and the Internet (e.g. Trade Me, real estate agency websites) are all easily accessible sources of advertising for properties on the market. In addition, driving around neighbourhoods that you might like to live in can show you which properties are for sale.
I've seen a property I like, what next?
After all those open homes and reading through the property pages in the newspaper, you have finally found a property that you would like to put an offer on. There are many ways in which properties are listed for sale, for example:
- Standard offer
- Expressions of interest
Each of these methods have different processes, and you can ask the real estate agent who lists the property for information on the ins and outs of the relevant method. Ultimately, you need to know what the legal options and consequences of each method of forming a contract are and you should discuss these with your lawyer at an early stage.
Speaking of lawyers, what do they do?
Lawyers are not just for criminals or big business, but they play an important part in advising you on all aspects of transferring ownership of a property. Remember that your lawyer is acting solely in your interest. They do not make decisions for you but can advise you on your options and the consequences of such options.
Regardless of the method of offer, you should never sign an Agreement for Sale and Purchase without first consulting with your lawyer. Your lawyer will be able to discuss the various aspects of the property and to give advice on what conditions you may require in the Agreement to protect your interests. You can also get your lawyer to draft an Agreement, or have them look over an Agreement drafted by a real estate agent.
Some of the standard conditions that may be included relate to:
- Title approval
- Land Information Memorandums
- Builders' reports
- Property file inspections
Your lawyer will be able to advise you on the reasons for including the above conditions. They will also be able to discuss other related matters with you such as relationship property issues, establishment of trusts, and wills.
At the beginning of your relationship with your lawyer they are required to send you a letter of engagement which sets out the work they will undertake and the basis on which they charge their fees. Your lawyer may also send you an initial letter setting out an estimate of costs and summarising any Agreement you have entered into.
My offer has been accepted, what next?
Once your offer has been accepted by the vendor of a property, then a contract is in place. This means that you have certain rights and obligations that your lawyer will have discussed with you. An Agreement with conditions is a conditional contract. A purchaser is required to use their best efforts to satisfy any conditions in an Agreement, and once all conditions in an Agreement have been satisfied then the Agreement is unconditional and the purchase price (less any deposit) must be paid on settlement date. Settlement date is the day you can move into the property and ownership is transferred to you. If you have purchased your new property with lending, you will need to commence your loan repayments. Talk to your bank or mortgage broker in advance about the options for the structure and repayment of your lending.
So do I just pull up in the moving truck on settlement day at 8am and move in?
We all wish it was that simple! There are no set times for when you can move into your new home on settlement day, as it all depends on when the transaction is completed. This is dependent on when your lawyer receives loan funds from your lender, when those funds are transferred to the vendor's lawyer, and when the vendor's lawyer authorises the release of the keys for the property. Probably the best thing to do on settlement day is to have patience, and hope that it does not rain! Generally, your lawyer or the real estate agent will contact you when the keys to the property are available. They may be with your lawyer or the real estate agent may drop them off to you.
What are some matters I need to attend to?
There are many matters you will need to attend to, and include:
- Giving adequate notice to your landlord (or your Mum) that you are moving out.
- See your lawyer for signing loan and property transfer documentation.
- Arranging insurance on the property.
- Providing the deposit for the property.
- Providing any further cash contribution for a purchase to your lawyer.
- Arranging electricity, gas and telephone connections.
- Redirect your mail and newspaper.
- Advise your family, friends and those nasty people who send you bills of your new address.
- Advise Government entities such as the NZ Transport Agency (the AA and NZ Post can assist also for licences and registration respectively), Inland Revenue Department, and Electoral Commission of your new address.
Wow, that seems like a lot! Can you give me some helpful details?
Sure we can.
- NZ Post – www.changemyaddress.co.nz or pop into your local NZ Post branch.
- HB Regional Council – 835 9200 – www.hbrc.govt.nz
- Napier City Council – 835 9200 – www.napier.govt.nz
- Hastings District Council – 871 5000 – www.hastingsdc.govt.nz
Local authorities can provide information on your property that can be useful, such as rubbish collection days, property maps, building consent details, etc. Rates information can also be found on the relevant council's website. On settlement, the HB Regional Council and the relevant local authority will are notified of a change of ownership so rates demands will issue in your name. The rating year is 1 July to 30 June in Hawke's Bay.
Electricity/Gas Providers in Hawke's Bay
- Trust Power – 0800 870 033 – www.trustpower.co.nz
- Contact Energy – 0800 862 666 – www.contactenergy.co.nz
- Energy Online – 0800 086 400 – www.energyonline.co.nz
- Genesis Energy – 0800 155 010 – www.genesisenergy.co.nz
- Meridian Energy – 0800 496 496 – www.meridian.co.nz
- Energy Direct NZ – 0800 567 777 - www.energydirectnz.co.nz
You may have to provide a bond or up-front payment for connections, and you should give a meter reading to the provider when you move into the property.
- Telecom (for land lines) – 0800 800 129 - www.telecom.co.nz
As with electricity/gas providers, Telecom may require a bond or up-front payment for connections.
- NZ Transport Agency – 0800 822 422 – www.nzta.govt.nz
- Inland Revenue Department – 0800 227 774 – www.ird.govt.nz
- Elections NZ – 0800 ENROL NOW – www.elections.org.nz
We hope that the above information helps with your understanding of the property purchase process. We are happy to answer any questions you have about the process and the legal implications, so please call the team at Lawson Robinson on 833 5012.
Speak to you soon!