Advice matters
First-home buyer? Five key things to consider

The moment you receive the keys to your first home is an exciting milestone. But getting there can also be a challenging process, with many important decisions to take along the way.

So we asked our SHARE advisers to tell us about the key things that first-home buyers need to consider when embarking on this journey. Read on to learn more.

Must-haves, nice-to-haves, and not-needed

Before you start your house hunt, it’s crucial to narrow down the features you would like in your first home and the suburb you’ll live in. What are the must-haves and what are the nice-to-haves? Is there anything that you can compromise on?

For example, you might be looking for a big backyard for your children to play, a spare room large enough to set up a comfortable home office, or a well-designed kitchen space where you can express your culinary talents.

As for the neighbourhood, would you be willing to make long commutes? What amenities are you looking for? By figuring out your ‘non-negotiables’, you can save time during the actual search.

How much can you afford to spend?

Another important preliminary step is to understand your borrowing capacity – the amount you can borrow to purchase your home.

This number depends on a number of factors, including (but not limited to) your income, how much deposit you have saved, any existing debts you might have, your monthly expenses and so on.

Like to get started? Our SHARE mortgage advisers can help you understand your options. We work with New Zealand’s leading lenders and keep up to date with what they consider in their assessments.

Importantly, we can also work with you to get a pre-approval from one or more lenders. A mortgage pre-approval is an official document from a lender, stating the loan amount they’re willing to give you. And while there may be certain conditions attached, this document can give you a pretty good indication of the price range for your property search.

Keep in mind that a pre-approval shows the maximum the lender is willing to provide. However, rather than applying for the maximum, it’s important to think about what you’re comfortable to spend in repayments, leaving some ‘wiggle room’ in your budget for other expenses. As a general rule of thumb, it’s a good idea not to allocate more than 30 per cent of your monthly household income to mortgage repayments. On top of this, as we’ll see shortly, there are also other expenses to consider, both during your house hunt and as a home owner.

House hunting costs

The cost of home ownership isn’t limited to mortgage repayments. During the house hunt, you’ll also need to factor in things like building reports, LIM reports, property valuation fees (if required), and lawyer fees.

While building reports aren’t mandatory, buying a house is a big financial commitment so it makes sense to ensure that there are no hidden issues with the physical condition of the property. Common problems that a pre-purchase inspection will identify are structural damage, damp, dodgy wiring and faulty pipes. And making your offer conditional on the building report is usually the best way to avoid a costly repair down the track – or at least know about it in advance if you still want to purchase that house.

As for LIM reports, a Land Information Memorandum (LIM) is a comprehensive record of all the information your local council holds about the property. It’s important to check this document with a property lawyer: they can help you look out for potential issues with the authorised planning uses, natural risks, rates arrears, and building consents.

Home ownership costs

Once you’ve secured the keys to your new home, there are a few ongoing costs that you need to know about. Once again, it’s crucial to be mindful of these expenses upfront, so that you can better determine your future house budget.

Ongoing costs usually include the following:

  • Council rates – make sure you check how much rates cost in the area you’re looking at on the local Council website.
  • House insurance – having house insurance is one of the mandatory requirements for getting a mortgage, and it can protect you from the financial consequences of a fire, natural disasters, and other accidental damages.
  • Contents insurance – while having this type of cover is not compulsory, again, it can give you priceless peace of mind by covering the cost of replacing your house contents in case of theft, damage or even natural disasters.
  • Personal insurance – lenders don’t require mortgage holders to have personal cover, but it makes good financial sense. What would happen to you or your partner if you were no longer around – or if you lost your ability to earn an income? Would you still be able to meet your mortgage payments? Insurance types like life cover, income protection and trauma can help you safeguard your family’s home. Get in touch with a SHARE adviser to learn more.
  • Maintenance – Any homeowner knows that things break and have to be replaced, or sometimes they just wear out. The reality is, keeping a house in tip-top condition comes at a price, and it’s a good idea to budget for it. You may consider putting aside a small amount on a regular basis for emergency expenses, or even for small renovations like carpet replacement or painting walls.

Be patient

Lastly, while we know that you probably can’t wait to move in and start this new chapter, a small word of caution: finding the right home takes time. It doesn’t even have to be your forever-home – just a place that you like and that you can comfortably afford, to put a foot in the market door and stop paying rent.

As we’ve seen, there are many things to think about and process. So our advice is, take your time. Buying a house is a big, long-term financial commitment, and you will really need to think it through before signing on the dotted line.

Another piece of advice is to involve as many experts as possible. Not only can this save you time, but it can also give you confidence in your decisions.

We’re in your corner

Ready to start your home ownership journey? Please don’t hesitate to contact us. Our SHARE advisers are experts in mortgages and insurance, and can answer your questions: click here to find an adviser near you.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.