Step 1: Pre-approval
So you’ve budgeted, saved, put in some extra hours and you’ve got your deposit ready to go! Now it’s time to get pre-approved. Your mortgage adviser will handle everything to do with your pre-approval. They’ll check out your deposit, income, expenses etc and give you a rough idea about what you may be able to spend or whether you can afford to spend what you have in mind.
From here, the adviser will go out and get you a loan offer. This could be multiple offers, from your current bank if you wish, or from a range of others depending on what we think will work best for your individual situation. Every bank has different policies around home loans, so each bank fits different people's needs better.
Once we’re happy that one or more of the offers meet your needs, you're ready to go out and find 'the one!'
Step 2: Finding ‘the one’
Great! You’ve got your pre-approval and you know what you can spend. Time to go shopping!
Looking for a property
As a first home buyer, you’ve probably done a bit of research about what houses are selling for in the area you wish to buy in. You’ll need to keep this in mind when house-hunting. Don't set unrealistic expectations. If you have an approval of $600k, don't go looking at $1.2m homes. Look for properties that are likely to fall somewhere close to your budget.
Real estate agents will usually be able to let you know the guide price on a house but doing your own research with the tools you have available are important too. Check out sites like homes.co.nz and oneroof.co.nz to see what the estimated value is and what similar houses are selling for in the area.
- Method of sale
There are a variety of ways that houses can be sold. Some common methods of sale are price by negotiation, auction, deadline sale and advertised price. Check out the methods of sale here at Settled.govt.nz
It’s important to do your homework on the different methods of selling, as some are fairly straightforward and others are a bit more complex. Whichever the method, it’s always best to get advice from the real estate agent, your mortgage adviser and your solicitor before making any offers or going to auction.
In most cases you are likely to want to insert some conditions on your sale and purchase agreement. These conditions basically give you some time to check certain things and make sure you have your ducks in a row before finalising the purchase.
Some common conditions might cover;
- Finance - to make sure you can arrange your finance
- Building Inspection - to have the house looked at by a builder
- Solicitors approval - that your solicitor is happy with the agreement
There are a raft of other conditions which may be inserted, so it's best to discuss what needs to go in with your solicitor.
- Going unconditional
This is a really exciting time in the process! You have satisfied all your conditions as laid out in the sale and purchase agreement and the sale is now final, pending settlement.
Step 3: Loan structure
Now that you are unconditional, you will arrange a time to discuss your loan structure with your mortgage adviser. Your mortgage adviser will get you some rates, go over the structure with you and make a plan that best suits your situation. In most cases, they will even get you some money back from the bank to help with the expenses we discussed in part 4.
Step 4: Settlement
Settlement day is here! This is the final piece to the puzzle and the day you get your keys.
Settlement day is usually a pretty busy one for your professionals. Your solicitor will be liaising with the vendor's solicitors, the bank, the real estate agent and you throughout the day to ensure a smooth transaction. Once the vendor's solicitor acknowledges receipt of the funds they will let the real estate agent know and you can get your keys.
Congratulations! You’re in your first home and there’s no other feeling quite like it.
Step 5: Making your home loan happy
This important step is often overlooked but is just as important, if not more important, than every other step before it. We call it, ‘making your home loan happy’.
Every six months or so, we will be in touch with you to make sure that your home loan is working for you. If there have been any major changes in your situation, we can look at the loan and make some tweaks.
Depending on whether you fixed your rate we will also contact you as those fixed rates come up for expiry. It’s always best to talk to your adviser again when it comes time to re-fix your interest rate, instead of just picking one without thinking it through. We’ll contact you before it expires so you don't have to worry about it!
Any major changes that happen, i.e. a new baby, a new job, getting married, going overseas or if you plan on paying off your home loan you should run by your mortgage adviser, too. We are here to help you get the most out of your home loan and provide advice about helping you achieve your goals.