Buying your first home is a monumental decision - one of the largest financial commitments you’ll make in your lifetime. Beyond securing funding and navigating the market, enlisting the help of a qualified lawyer is crucial to ensuring a smooth transaction.

In our three-part series, Key considerations for purchasing your first home, Tom Brodie and Michelle Ansin break down the essential steps in your journey to homeownership. From sorting out your finance and understanding the importance of retaining a lawyer, to navigating the completion of settlement and gearing up for moving day, we’ll provide the guidance you need to confidently take each step toward your new beginnings as a first homeowner.  

Part 1: Where is your home loan money coming from?

The money you use for purchasing your first home may come from many avenues. It is always recommended that you have a general broad understanding of your budget before legally binding yourself to any contracts.

You do not necessarily need to retain a lawyer at this stage of the process and even better, the information is free!

The preliminary steps outlined below will help ensure that you have a clear understanding of your financial standing and the housing market, enabling you to make informed decisions as you move forward in your home-buying journey.

Property tools

The first step is to identify the area that you intend to live in. Several tools available may provide some clarity on the values of the homes in your desired area are:

Valuation databases

Use websites like homes.co.nz and qv.co.nz to review the estimated value range of the property you’re interested in.

Council valuation database

Check council websites for detailed property valuations and rates, for example Auckland Council and Christchurch City Council both have property valuation information available.

Open homes/auctions

It may also be beneficial to attend open homes or auctions in your desired area and talk to the real estate agents about the current market conditions and vendor expectations.  

KiwiSaver eligibility and provider

In New Zealand you may be able to use your KiwiSaver to buy your first home or buy land to build your first home on. We recommend you contact your provider early in this process to check your eligibility and discuss the amount you may be able to withdraw.  

The general KiwiSaver provisions below are a guidance only. You have to engage a lawyer to complete the withdrawal of funds.

Find your KiwiSaver provider

Check your myIR account under the KiwiSaver section to find your provider's contact details.

Withdrawal eligibility

If you’ve been contributing to your KiwiSaver for at least three years and have never owned a home in New Zealand, you may be eligible to withdraw funds for your first home. The amount you may withdraw may be affected if you have been absent from New Zealand during this time.

Withdrawal amount

You can withdraw as much as you wish from your KiwiSaver to purchase your first home but must leave a minimum of $1,000 in your KiwiSaver account.

Timing

Generally a KiwiSaver withdrawal takes 10-15 working days dependant on your provider and your circumstances.  

Determining your budget and obtaining pre-approval

Deposit requirement

You typically need a deposit of 10-20% of the property’s price. Calculate this based on your target property price to understand what you will need to pay upfront. You can utilise your KiwiSaver for a part or whole of the deposit and, if this is your intention, you will need to discuss this early with your lawyer to ensure that any agreement reflects this.

Family support

Are you getting money from family (a gift or loan)? If so, your lawyer will likely need to document this and make disclosure to any lender as required.

Working with a mortgage broker

There are many mortgage brokers available to help secure the loan for your first home. An initial step may be to reach out to friends and family for mortgage broker recommendations. Having a casual conversation with the broker, over the phone or in person to discuss your options is usually a good first step. The mortgage broker will require certain information from you as part of the application process, and these steps include:

• Assessing borrowing capacity: You will need to know your approximate income and expenditure figures to determine how much you can borrow. We suggest preparing a draft budget as a helpful starting point.
• Financial documentation: Gather essential documents such as three months of bank statements, payslips, a written statement from your KiwiSaver provider, copies of your passport, driver's licence and utility bill showing your name and current residential address.
• Conditional approval: Once the mortgage broker has your relevant information, they will go out to the market and seek conditional approval from a lender to a specific value. Your agreement should remain conditional on finance as the conditional approval is not guaranteed. However, you can be reasonably confident that you are in a good position to move forward with your purchase.

Multiple owners

It is becoming more common to have mixed ownership between couples, friends and family. You will need to consider the potential impact of differing views in co-ownership, and we recommend that these are agreed points before you proceed with any offers. Your lawyer will recommend that all parties enter a property sharing agreement to ensure that plans are in place – just in case.    

You're pre-approved to buy; what happens next?

Congratulations, you have determined the likely area of your first home, clarified your budget and obtained pre-approval with your mortgage broker. Now you are ready to take the next step, which is to engage with a lawyer.

The next article in this series explains the vital role that lawyers play in the buying process. If you have questions about the process or would like legal assistance to buy your first home, please contact Tom Brodie, Michelle Ansin or our team of property experts.