Everything a first home buyer needs to know about getting onto the property ladder

Usually has a roof, windows and a door. Like Playschool, only real life.

These are semi-attached and usually on a cross-lease or strata title. Banks are a little more nervous about town houses in larger developments so may restrict lending to 70%. They tend to be more favourable towards properties built in the 70s and less favourable towards anything built after 1985. Clearly, they don’t make them like they used to.

Apartments are increasingly popular with buyers because of the low entry prices, though they’re not viewed positively by lenders. This can make it much more difficult to get a mortgage on an apartment, but has also seen the price of apartments drop. Some banks are not lending on apartments at all anymore, so it’s worth talking to us first if you’re thinking of grabbing an inner city pad.

Apartments are a bit of a weird beast. Often banks won’t lend on the cheapest places at all because they’re too difficult to rent. For apartment like these, which tend to be less than 50sqm or leasehold, you’ll probably need a 40% deposit. Larger apartments with two or more bedrooms that are freehold will need at least 20%-30% deposit as long as you have a good stable income.

To really educate yourself on apartments, spend a night at a tired, old, cheap hotel (just take your own pillow). You’ll notice what happens to apartments that are cheaply made and not well maintained – it feels really run down, shared areas will be scruffy, views blocked by newer buildings and street noise will be very noticeable. Apartments with potential will be soundly built and mostly owner-occupied, with safe entry and exit from the building at night and great proximity to supermarkets, parks and transport.

An auction is where you get into a room and yell about buying a house. If you win, it’s considered an unconditional purchase, so you need to do all of your due diligence homework beforehand. The real estate agent will have given you a copy of the sale and purchase agreement, title and maybe the LIM report. You may need to do a building inspection and valuation. This can get a wee bit expensive if you keep bidding at auction, so it’s best to be choosy.

You’ll also need to register your interest in the auction before the day and be able to front up with a 10% deposit if you win.

Auction checklist:

• Register your interest with the agent before the day
• Agree any changes to the deposit or settlement day with the agent before the auction
• Have your solicitor check the title
• Get your finance fully approved
• Read the LIM report and do any other due diligences
• Do a building inspection or valuation (if required)
• Arrange your 10% deposit (check out our page on deposit bonds for help with this)

A tender is like dating. You put in a written offer with a specified timeframe and the vendor considers your offer alongside others. You can put conditions on the offer but this might make it less appealing than others.

A private treaty is buying by negotiation and lets you put conditions into the sale and purchase agreement.

Private sales are the same as Private Treaty but are worth covering separately because you’ll be negotiating directly with the vendor. Because no one will be managing the process and spotting the issues early there’s more chance that something will go wrong. If you buy privately you’ll need a registered valuation and should have your solicitor check the agreement before you sign. The

alternative is to insert a solicitors’ clause, which is like a Get Out of Jail Free card – if the solicitor’s not happy, you have three days to get out of the agreement.

Once you find a place you want to buy you’ll need to sign a sale and purchase agreement. This is basically just a template where you can insert your own purchase conditions.

We’ve outlined the main conditions below:

• Subject to finance – generally 5 to 10 working days
• Subject to building inspection
• Subject to LIM report
• Subject to solicitors approval – 3 working days (insert this if you are not confident about what you are signing)

Another popular condition is a due diligence clause that gives you full control on the purchase process – unsurprisingly, this isn’t nearly as popular with agents as it is with buyers. Remember though, this is a legal contract and the point of no return; once you go unconditional you’re committed to purchasing the property. It’s mostly not as ominous as that sounds.

Once you’ve signed a sale and purchase agreement we can arrange for a building inspection and valuation and have these available for you before going unconditional.

A LIM report is a document that will put you to sleep if you read it too close to bedtime.

But it's an important doc prepared by the council and is based on its property records. It will tell you whether or not the property has the right consents and a code of compliance. You’ll have to order a LIM report from your Council, which will cost around $250-$350. It often takes up to 10 days to get it too, so order as soon as you’ve signed the sale and purchase agreement. Or if you like looking at heavy documents you can check the council’s property file yourself.

Sometimes, if you're lucky the Real Estate Agent might have it and email it to you at no cost.

Your lawyer is a necessary evil in the house-buying process. You’ll find there’s a huge difference in quality of service, advice and cost from all the lawyers out there, so it’s really a question of what you need.

If personal service is important then pay extra and go to a reputable law firm. There are also a number of low cost transactional services available, which work great if you’re an old hand and don’t need lots of advice or reassurance.

Your lawyer will confirm that you would like to go unconditional with the vendor, check that the title of the property is clean, run through the mortgage documents with you, and settle the funds.

If you are outside of the city or overseas, they’ll courier the mortgage documents. You’ll need to sign them in front of a Justice of the Peace or Public Notary. For non-residents you don’t need to come to New Zealand to buy property – just allow enough time for us to send the paperwork back and forth.

Make sure you are up to speed with the market as it moves day-to-day. Subscribe to email alerts from Trade Me Property and Realestate.co.nz and read them when they come in. If you act, you can be ahead of the game and make sure you have that extra time to undertake the due-diligence required on a property even before the first viewing. So much researching can be online, it’s as simple as searching the address on Google.

Call up the agent and be forward, state your desire to view the property. Don’t be put off by talk of waiting to queue up with all the others at the weekend. If the property is on the market, then it should be ready to view at any time.

Acting in this forward manner may be the opposite of what people tell you in ‘not being too keen and hold your cards close’, but being assertive can be a powerful tactic, it can de-stablise the meticulously planned campaign and programme of the agent!

Another aspect of being that smarter buyer is to make sure you have all your paperwork in place and have the financial arrangements confirmed with the lender. If you take this forward, confident approach, you want to be ready to act and act quickly to make an offer. A clean and ideally unconditional offer well ahead of anyone else is the key.

Fewer properties are going to auction these days as the heat has come out of the market, the heat that caused irrational behaviour last year with short notice auctions. Today sellers are being conditioned to expect a slower pace and property taking longer to sell. So get in quick. Inspect the property, do the due diligence and get an offer on the table before the rest of the mob have even been to the open home. Be aggressive with the offer, couple that with the pace of your action and

you will have the agent telling vendors that they need to take this offer seriously – after all, you would not act so hastily if you were not serious.

The one thing that plays to your favour is the well- known expression shared with vendor by agents. “The first offer is often the best offer”. Be sure to play that card to your full advantage and let the vendor consider the classic conundrum of a “bird in the hand is worth two in the bush”.

An idea for the smarter buyer is to add a personal touch to an offer. Try writing a letter to the vendors to accompany the offer. Sure we all believe that we will always take the best offer irrespective of the circumstances, but you would be amazed how much difference a personal handwritten letter can make.

Share your desire to buy the house and explain why. People get attached to houses and it is not uncommon for owners to be keen to see the new owners as ‘like- them’ in some ways, a family to take care of the house. A touch of empathy can go a long way; and again, nothing ventured-nothing gained!

This is when being silly or forgetful with your money can come back to haunt you. Your home loan won’t be fully approved until the bank has seen your bank statements. Dishonoured direct debits or going into unarranged overdraft can make you look like a risky prospect and you could be declined.

A number of first home buyers start their hunt looking at properties (and going to auctions) well above what they can afford. Eventually they get buyer fatigue and end up buying the first thing they can, which is never a great way of approaching it.

If a place seems too good to be true, it usually is. Do some basic checks yourself before getting an inspection – look under the floor for dampness or rot and look for repairs.

A building inspection will throw up structural issues with a house but will miss the small stuff. It pays to check that everything works – heated towel rails, spa pool, dishwasher, dryer, drains, electric door to hidden lair, hot water, central heating, fans, and oven.

You will have between $1,500 and $3,000 of upfront costs when buying property. Make sure you factor this in to your budget.

Banks will approve you for more than you can reasonably afford. It is important to have a realistic budget and to plan on higher interest rates. Putting your head in the sand simply creates problems later.

If you are going to have kids, travel overseas, go back to study, or join a hippie commune – work out what that means in advance. If you need insurance, we can help with that.

If you only pay the minimum mortgage repayment you won’t get ahead and your mortgage costs will increase when rates go up.

The lowest rate is often not the cheapest option – they can often come with hooks and hidden costs.

Once you have a mortgage it gets harder to repay other debts. Although a hire purchase might be interest-free (and you might absolutely need it for your kitchen) at some point it needs to be repaid and will then impact.