In 2017, I ticked off one of my bucket list goals: to buy a freehold property. And by tick off, I mean literally – it had long been written in my kikki.k Bucket List Journal, alongside goals like ‘Go to Japan’, ‘Try anti-gravity yoga’, ‘Go to Tomorrowland in Belgium’ and ‘Fly a plane’. Needless to say, it was a dream come true.
After I shared the news, I got asked more or less the same questions from friends & acquaintances alike. So I’d love to share my home buying journey and what it was like, as a recount of my personal experience.
The first thing I did was educate myself on KiwiSaver and how it can help you to buy your first home. I researched the eligibility criteria and house caps, then went ahead and applied for the HomeStart Grant. Since I’d been contributing to KiwiSaver for over three years, I was confident I’d be accepted. So when I received my pre-approval, I was ecstatic!
As an individual, however, it was tough for me to find a house within the Auckland house caps – at the time, $600,000 for an existing property, or $650,000 for a new build. I felt discouraged after doing endless searches on Trade Me and never finding any houses that weren’t in the middle of nowhere, or tiny apartments with body corps.
I subscribed to Trade Me’s email alerts by searching within my preferred region, local district, price range, and property type, saving the search, and choosing my preference on how often I wanted to be alerted of new listings. I repeated this email subscription process everywhere, including Property Press, where you can subscribe to the latest listings in the area you’re looking.
I’d looked for a year or so before I gave up, then started looking again a few months later. This time, after months of searching on Auckland’s North Shore, I fell in love with several properties. A quiet unit in Hillcrest appealed to me for its simplicity and privacy, but unfortunately had a tandem garage. (Different to a double garage, I personally thought this would be a huge inconvenience.) I also loved a chic little unit in Milford, which while stylishly furnished with monochromatic decor, was in reality half of a home that had been split into two.
How I found my future house was serendipity. On the same day I went to the Milford unit, I was almost not going to stop by another property, this time in Glenfield. But very luckily, I thought, ‘Might as well’, and went to view it. To my pleasant surprise, it wasn’t a unit this time, but a freehold, freestanding house!
At first glance, it wasn’t very appealing. Unlike a lot of staged open homes, it was plain and unfurnished, so I wasn’t instantly enamoured with it as I had been with the previous properties. Once I took on a more logical and grounded perspective, in reality, it was absolutely wonderful: two spacious bedrooms with an open lounge & dining area. A carport that provides cover to the house. A kitchen with a generous amount of drawers, shelves & cupboards. (I found out later that a previous owner was a cabinet maker.) A front yard and deck, big enough to fit an outdoor dining table and lounge set. Additionally, it was in a fantastic location close to shops, eateries, bars, doctors, dentists, pharmacies, public transport, and more.
Compared to countless homes on sale by negotiation or by auction, it was also refreshing to see a clear asking price of just under $700,000.
At this point, it was time to prepare for the paperwork by finding a local solicitor and applying for the mortgage.
The first thing I did was play around on my bank’s mortgage calculator, or home loan calculator. It works out approximately how much you could borrow based on your income, assets, debts, and expenses, plus what your repayments could be. I experimented multiple times to get an accurate idea. Then I called my bank for an appointment, asking, “I’d like to find out if I can get a mortgage – if I can, how much I can borrow, and if I can’t, what I would need to do to be able to.” At the time, I also had debt, which I disclosed straight away.
I was lucky to be taken care of by a friendly, down to earth, and experienced banking adviser. She assured me my debt wasn’t actually very much in the grand scheme of things (phew!). Then she sent me an email with an application form, which I completed and sent back with my documents.
The next day, she got back to me with good news: a conditional approval! Also called ‘pre-approval’, this allowed me to look at houses within a certain price range. (I remember her saying, “This is great news, I am so excited for you!” This genuine customer service made a huge difference and is something I still clearly remember and appreciate about one of the most significant purchases of my life.) It’s notable that the amount I could borrow was fairly accurate to the amount the online home loan calculator had told me, give or take a few thousand!
After deciding on the house, it was time to negotiate. My house wasn’t on sale as an auction, but had an asking price. I’d cross-referenced different websites to get a rough figure of what the house was worth today, so I knew what was reasonable.
That night, the real estate agent went back and forth between the vender and I while we negotiated the price. I increased my offer twice before I made my third and final offer. The vendor decided to sleep on it, which made that night a nerve-wracking and sleepless one.
But the next day came – and they accepted!
Now that it was on a conditional offer, I had to set some conditions. What conditions you set will be different for everyone. For me it was 1) a building inspection report and 2) a meth test. These were to be done within a certain time frame, which could be 7 days, 10 days, or any other time frame agreed between you and the vendor.
Both passed satisfactorily, which meant that it was now unconditional!
I went into the bank to get the mortgage set up and finalised. Personally, I preferred the certainty and ability to budget with a fixed mortgage rather than a floating mortgage, while half fixed, half floating was also an option. A huge bonus is still being able to make extra repayments on top of fixed monthly repayments, incurring early repayment costs of only cents! For me, it worked well.
The bank’s condition was that we purchased home insurance, which was straightforward as I worked for an insurance company at the time, was familiar with the home insurance process, and received a discount.
A lot of people are confused as to what to insure their home for. It’s not how much you bought the house for, but the rebuilding cost – how much you would need to rebuild the house if it was, for example, lost in a fire. However, it excludes land value. You can get a professional quality surveyor or find an online calculator. Note that what you want is a rebuild cost valuation, not a market valuation.
The good news is, the rebuilding cost is usually significantly less than the purchase price – keeping your home insurance premiums low. You’ll also earn discounts if you have a securely monitored alarm, have an owner occupied property, or combine your home insurance policy with your contents & car insurance policies.
I paid my deposit, which was 10%, and waited for the settlement date, which had been decided earlier on the night we negotiated the price. On settlement day, the rest of the funds were paid from the bank to my solicitor, which were then paid to the vendor’s solicitor. I met up with the real estate agent to collect the keys, and arranged to get power, water, and internet up and running. The official Sale & Purchase Agreement was emailed through, naming me as the owner of the house in North Auckland!
In the end, I didn’t use my KiwiSaver HomeStart Grant because the price was above the house caps, but what I did make good use of was my KiwiSaver First Home Withdrawal. You can withdraw your entire balance, minus $1000, and that’s exactly what I did.
Here are just a few things I wish I’d done earlier:
Saved more to borrow less – a pretty obvious but crucial one, especially with interest to take into account.
Had a higher Kiwisaver contribution rate. I was on the default of 3%, and have since increased it to 8%. If I were to do it again, I’d increase it to the new maximum rate of 10% if possible.
Been more patient and persistent – it takes time to find The One.
Considered all the factors and looked at the fine details (ceilings, walls, window sills, things in need of repair etc). It’s a great idea to bring along your partner, friends and family to view a property. They may notice things you don’t see!
Considered a buyer’s agent. Buyer’s agents are like real estate agents, except they work for you and act in your best interest, not the seller’s. They also liaise on your behalf, potentially saving you many time consuming drives, phone calls, negotiations and headaches.
I hope that this was helpful to you! Check out the resources I used below:
+ Housing New Zealand – Ways We Can Help You to Own a Home (including KiwiSaver)
+ Trade Me Property and Property Press – remember to save your search + sign up for email alerts if you wish.
+ Sorted Mortgage Calculator – I used my own bank’s one, but to be impartial I’ll link this one, which is just as helpful. It’s a good idea to shop around the banks to see if they have any special promotional rates or rewards currently going – from what I've seen, you could score a holiday, earn extra cashback or score a discounted banking + insurance package!
+ Electric Kiwi – Their customer service was amazing. Electric Kiwi, an independent and 100% online company, got my power up and running - remotely - in less than 30 minutes after a quick online chat.
+ Settled.govt.nz – Brought to you by the Real Estate Authority (REA), this is a new website that guides New Zealanders through buying or selling your home. I discovered this from my volunteer work at Citizens Advice Bureau, where volunteers like me are happy to help you with any questions you may have about the home buying process - or just about anything, really!
If you are an aspiring homeowner, good luck, and I wish you all the best!
Sophia
