Buying Your First Home in New ZealandA Step-by-Step Legal Guide

Buying your first home is exciting - but it can also feel overwhelming.

From getting finance and using KiwiSaver to understanding a Sale and Purchase Agreement, checking the property and finally reaching settlement day, there are several important steps along the way.

For most first-home buyers, it's also the biggest financial commitment they've ever made.

Knowing what happens next - and having the right property lawyer involved at the right time - can make the process much easier to understand.

Step 1 – Understand Your Real Budget

Before you start house hunting, it's useful to understand what buying a home may actually cost. The purchase price is only part of the picture. Other costs can include:

• •Deposit
• •Legal fees
• •Building inspection
• •LIM report
• •Valuation, if required
• •Insurance
• •Moving costs

If you're planning to use KiwiSaver towards your first home, there are also eligibility requirements, documentation and timeframes involved.

A little preparation at this stage can help avoid surprises later.

Step 2 – Get Your Finance Organised

Many first-home buyers arrange mortgage pre-approval before making an offer.

Pre-approval can give you a clearer idea of your potential budget - but there's an important distinction many first-home buyers don't initially realise:

Mortgage pre-approval doesn't necessarily mean that finance for every property is automatically guaranteed.

The lender may still need to approve the particular property and other requirements may apply before finance is confirmed.

This is also why the wording of any finance condition in a Sale and Purchase Agreement can be important.

Step 3 – Found a Home You Love? Look Beyond the Open Home

It's easy to walk into a house and immediately imagine yourself living there. But the things you can't see during an open home can sometimes be just as important as the things you can. Depending on the property, questions may arise around:

• •Building condition
• •Council records
• •Flooding or other natural hazards
• •The property's title
• •Easements and rights of way
• •Covenants or restrictions
• •Previous building work
• •Access and shared driveways

A property can look perfect and still have legal or practical issues that aren't obvious from walking through it.

Step 4 – About to Make an Offer? Understand What You're Signing

This is one of the most important stages of the process.

The Sale and Purchase Agreement is a legally binding contract. It isn't simply a form saying how much you're willing to pay.

The agreement can contain important terms relating to:

• •Finance
• •Building inspection
• •LIM report
• •Title
• •Deposit
• •Settlement date
• •Chattels included in the sale
• •Other conditions specific to the purchase

A property lawyer can review the proposed agreement and explain what its terms mean for the particular transaction.

And timing matters: reviewing an agreement before signing it can be very different from trying to address an issue after you've already become legally committed.

Step 5 – Complete the Important Property Checks

If your offer is conditional, there may be a period in which relevant conditions and property investigations are dealt with. Depending on the purchase, these may involve:

• •Building inspection
• •LIM report
• •Finance approval
• •Insurance
• •Title review

These checks don't all answer the same questions.

For example, a building inspection looks at the physical property, while a LIM provides information held by the local council and a title review considers legal interests affecting the land.

One doesn't necessarily replace the others.

Step 6 – What Does "Going Unconditional" Actually Mean?

You'll hear this phrase a lot when buying property.

Once the relevant conditions have been satisfied or otherwise dealt with and the agreement becomes unconditional, buyer and seller are generally committed to completing the transaction according to the agreement.

This is an important milestone.

Your lawyer then continues dealing with the legal work required to prepare for settlement and transfer of ownership.

Step 7 – What Happens on Settlement Day?

Settlement is when the legal and financial completion of the property purchase takes place.

Your lawyer or conveyancing professional handles the legal side of the transaction, including the relevant documentation, settlement funds and transfer of ownership.

Once settlement has been completed and possession is available under the agreement, you finally reach the moment most first-home buyers have been waiting for: getting the keys to your own home.

Buying at Auction? The Process Is Different

This is particularly important for first-home buyers.

A successful auction purchase will generally be unconditional when the hammer falls.

That means buyers commonly arrange their legal review, finance and property investigations before bidding, rather than expecting to add conditions afterwards.

If you're considering an auction property seriously, finding a property lawyer before auction day can therefore be particularly useful.

Can You Use KiwiSaver to Buy Your First Home?

Eligible first-home buyers may be able to use KiwiSaver funds towards purchasing their home.

There are eligibility requirements, documentation and timing involved in the withdrawal process.

Your lawyer generally plays a role in the legal side of a KiwiSaver first-home withdrawal as part of the transaction.

Because settlement dates matter, this isn't something you'll necessarily want to discover for the first time on settlement day.

Common Mistakes First-Home Buyers Make

First-home buyers are learning a process that property professionals deal with every day. Some common problems can arise when buyers:

• •Sign an agreement without understanding its legal effect
• •Assume mortgage pre-approval guarantees finance for a particular property
• •Don't allow enough time for property checks
• •Rely only on what they can see at an open home
• •Overlook title restrictions, easements or covenants
• •Forget to budget for additional buying costs
• •Leave insurance or legal arrangements until late in the process
• •Feel pressured to make an offer quickly

Understanding the process before you're standing in front of the house you desperately want can make the decisions much easier to navigate.

When Should You Find a Property Lawyer?

You don't necessarily need to wait until your offer has been accepted.

Finding a property lawyer when you're getting serious about buying means you can already have someone available when you find the right property.

For first-home buyers, it can be particularly valuable to find a lawyer who:

• •Regularly handles residential property purchases
• •Explains the process clearly
• •Is comfortable working with first-home buyers
• •Can assist with KiwiSaver where relevant
• •Is available when an agreement needs reviewing
• •Explains fees clearly from the beginning

The right lawyer shouldn't make your first property purchase feel more complicated.

They should help you understand what's happening and what the legal documents mean at each important stage.