When you begin looking to buy your first property, you should contact your Kiwisaver provider for an estimate letter to confirm your eligibility and the approximate amount you can withdraw. Please be aware that your Kiwisaver savings may fluctuate at any time due to the fund your Kiwisaver money is held in.
To withdraw your Kiwisaver, you need to have signed an agreement that can be either conditional or unconditional. Your next step is to complete your Kiwisaver provider’s application to withdraw your Kiwisaver. You will need to provide us with copies of any other required documents e.g. driver’s license, passport, proof of address etc, so we can view the originals and send them to your Kiwisaver provider.
Once we send your forms into your Kiwisaver provider, your Kiwisaver provider will take 10-15 working days to send your Kiwisaver funds (except for $1,000) into our trust account. This money can then be put towards buying your first home or in some cases, paying for the deposit.
Almost everything. You must leave at least $1,000 in your Kiwisaver account.
Following receipt of your Kiwisaver application, your Kiwisaver provider will require at least 10-15 working days to process your application and pay your Kiwisaver into our trust account. We will then hold your Kiwisaver until either it is required to pay a deposit or until the settlement date.
It depends on your circumstances. If you are buying off the plans and your property will not be ready for settlement for a while, it may be better to withdraw your Kiwisaver closer to settlement so that you can keep contributing to your Kiwisaver over that period.
However, if you are unable to access any other form of finance to pay the deposit, then you will need to use your Kiwisaver. Just to be clear, you will not be able to withdraw any further contribution at settlement. You only get one shot at it.
Keep in mind, if you have spent time overseas working, the IRD will want to review your withdrawal, and this may add five working days to the time it takes to withdraw your Kiwisaver.
Your property journey and Kiwisaver situation will be unique to you so please contact us to discuss your options.
If you are looking at buying a property at auction and you are the highest bidder, you will need an immediate deposit of 10% of the purchase price. Unless you have agreed a variation with the seller to pay the deposit later, you will need to pay the deposit out of your own savings and apply your Kiwisaver first home withdrawal towards the settlement funds.
The number one issue to be aware of is timing. If your agreement does not provide enough time for a finance condition or enough time between the unconditional date and settlement date, this will cause you big problems.
It is important to engage a property lawyer as soon as possible. Good news – we can ensure this process runs smoothly and without any headaches for you.
Worst case scenario, if we have not received your Kiwisaver funds prior to the settlement date, your options are:
o You will have to pay the missing amount of money for you to settle and purchase the property. If you choose this option, you will ultimately forfeit the ability for you to withdraw your Kiwisaver funds until a later date (likely your retirement at 65);
o You can delay settlement and pay daily penalty intertest to the seller until your Kiwisaver money is in your lawyer’s trust account; or
o You can default on the agreement i.e. you don’t buy the property. This means you will likely have to pay the seller and damages and forfeit your deposit.
There are three further options to help first home buyers to purchase their first property. You may be eligible for the following incentives:
FirstHome Grant :: Kāinga Ora – Homes and Communities (kaingaora.govt.nz)– One off grants up to $10,000 from the Government that are provided to help you buy your first home.
FirstHome Loan :: Kāinga Ora – Homes and Communities (kaingaora.govt.nz)– First Home Loans are issued by selected banks and other lenders and underwritten by Kāinga Ora. This allows the lender to provide loans that would otherwise sit outside their lending standards.
Home| KiwiBuild – Homes that have been built specifically for first home buyers and eligible purchasers.
Please contact us via contact@housemlegal.co.nz if you would like to discuss using your Kiwisaver or any of the above options to help buy your first home.
Conveyancing is the technical term that describes the task of preparing documents for the conveyance of a property from one person to another. To buy or sell your house, you will need to engage a lawyer who can help you with your conveyancing.
Doing your due diligence means using the care that a reasonable person takes to avoid harm. In short, do your research! You should undertake due diligence on a property before signing an agreement. Sometimes you may feel constrained by timing to sign the agreement so you must insert an adequate due diligence clause (we can assist you with this on an urgent basis). The best-case scenario is for you to undertake due diligence before signing an agreement. Here are some matters you should consider when undertaking due diligence. We have separated the options into things you can do and things your lawyer can do for you:
o You: Check out the local community. The more you know about the area where you are buying the better. Ideally, you should try to visit the property at different times of the day to experience the sun, wind, neighbourhood noises etc. Try to talk to any neighbours or any other locals you know nearby. If they cannot help you, someone they know probably can.
o You: Understand what is happening in the local area. Do your research regarding schools, public transport and local amenities. Most of this information is available online. Your local council will have a wealth of free information available that will advise you whether there are any large developments nearby, any proposed zoning changes or any upcoming roading projects.
o You: Contact a building inspector. A building inspector will look at the structural integrity of the premises and will be able to assess if there are any leaks, unconsented works etc. If there are any issues in the report, you may negotiate with the seller to have the defects rectified or you may be able to negotiate a lower purchase price. If you would like to order a building inspection, we can provide you with a recommendation.
o You: Order a valuation. Most banks will make their finance approval conditional upon the bank ordering a valuation that confirms the property is worth what you are buying it for. Be careful because banks will often want to use their own approved valuers so do not organise a valuation that they may not accept.
o You: Figure out what you can afford. There are lots of great free online tools to help you calculate how much lending a bank may offer you based on your savings, salary and monthly expenses. Thinking further ahead, it is important to consider how much the rates, insurance, and body corporate fees will be for your property. Your life will be less stressful if you can get your finance pre-approved by your lender before you sign an agreement. It is up to you whether you engage with a lender directly or via a mortgage broker. A mortgage broker may be able to get you better than advertised interest rates with a lender. If you would like to be introduced to a mortgage broker, we can provide an introduction.
o Lawyer: A title (record of title) review will provide you with valuable information regarding what registered interests are on the property and what impact these may have on the value and use of the property e.g. easements, covenants, consent notices, encumbrances etc.
o You/Lawyer: It is your decision whether to order a Land Information Memorandum (LIM) from the local council. Your lawyer can help you review a LIM which may contain information such as unconsented building works, contamination issues, flood risks, zoning (which tells you what you can do with the land) and rates. It is your responsibility to compare the information in the LIM with what is at the property e.g. a carport that is not shown on the original plans. A property lawyer is not qualified to provide you with any advice regarding building or town planning matters. If you require expert advice for these areas, we can refer you to a specialist.
o You/Lawyer: Understand the different ownership methods. The three most common ownership options in New Zealand are your name personally, family trust or company. Your lawyer can help you consider what option may benefit you best. If you are purchasing as a couple, you can own a property as joint tenants or tenants in common. All the above options have different legal and tax implications that may require specialist help which we can either assist you with or provide you with an expert.
At the end of the day, it is up to you regarding how much due diligence you undertake. The more thorough your investigation is means you will be less likely to encounter problems later. All the above options take time so it is crucial to factor time into any decisions you will make.
o You will find it very difficult to change an agreement after you have signed it.
o You can insert conditions in the agreement to protect yourself.
o You can save time and money by preventing any small risks from snowballing into big issues.
o You will receive independent advice that focuses on your best interests. Be careful as some people (who don’t have your best interests in mind and act for another person) will try and get you to sign things when you are not ready to sign them.
o You will be teamed up with someone who understands that buying and selling a property is one of the most emotional and stressful events of your life.
A Land Information Memorandum (LIM) is a summary of information that a territorial authority (Council) holds on a property e.g. zoning, resource consents, and building consents.
If you wish to rely on the information in a LIM and protect your interests, you need the LIM to be ordered under your name. This is because the Council only has a contractual relationship with the person who ordered the LIM. If the LIM is addressed to someone else e.g. a real estate agent or the seller (if you are the buyer), then you will not be able to use the LIM to sue the Council because the Council only owes a duty of care to the party who ordered the LIM. If a Council has omitted relevant details from the LIM and it impacts the value of your property, then you may be able to sue the Council that you ordered your LIM from and recover the value of your losses from them.
It is your job to order a LIM from the local council where the property is located. The exact cost of a LIM is dependent on each local council. For example, Auckland Council will charge you $310 for a LIM to be delivered to you within 10 workday days and $419 for a LIM to be delivered to you within three working days: How to order a Land Information Memorandum (LIM) (aucklandcouncil.govt.nz).
Normally, you have two options: approach your bank and speak to them or use a mortgage broker. Mortgage brokers do not cost you any money (they receive a fee from the lender if you take out a mortgage with that lender) and they can often get you better rates than what are currently advertised to the public. Mortgage brokers are also a wealth of information who can help you pay off your mortgage faster.
Please let us know if you would like to be introduced to a trusted mortgage broker.
You will need to provide your lawyer with a certificate of currency (COC) that meets your lender’s lending requirements. It is your responsibility to contact your insurer to receive a COC and you will not be able to receive your lending until this has been completed. Make sure you check the terms of your mortgage documents to ensure that you have the correct COC for your property. When you purchase a unit title, your body corporate levies will normally cover your COC / home insurance requirements.
It depends on what type of agreement you have signed. We have summarised the most common methods of paying the deposit.
Price by negotiation: You will pay the deposit once all the conditions have been satisfied.
Tender: You will pay the deposit when you submit your signed tender.
Auction: You will pay the deposit on the day you win the auction.
An unconditional agreement means when both parties' conditions have been satisfied and notice of this has been communicated to the other party e.g. the buyer’s due diligence condition has been satisfied or the seller has entered into another unconditional agreement to purchase another property.
Your lender will be notified that your agreement has gone unconditional, and your lender will issue your mortgage documents. You should meet with your lawyer to discuss and sign the mortgage documents.
You must check with your lender regarding how they would like the mortgage documents to be signed because some will only accept couriered originals whereas some will accept digitally signed versions. The earlier you can get this done, the less stressful your life will be leading up to settlement day.
Prior to the settlement day, the purchaser has one further right to inspect the property. Normally, the purchaser will accompany the real estate agent around the property to check all the chattels are working and all the fixtures and fittings that are being purchased remain where they were. If there are any issues with the pre‑settlement inspection, your lawyer will contact the vendor’s lawyer to resolve these issues prior to settlement date. We have an extensive checklist for you to take with you to ensure that you do not missing anything at the pre-settlement inspection.
So, when do I get the keys to my new house on Settlement Day?
Your lawyer will receive your mortgage funds into their trust account and then pay this money with all your savings, KiwiSaver etc, to the vendor’s lawyer. Settlement may occur any time between 9 am and 4 pm.
If everything goes smoothly, you will receive confirmation from your lawyer that you are now the owner of the property and you can receive the keys from the real estate agent.
Fridays are the busiest day for settlements because people like to move in over the weekend so it is best to assume your property will not settle until later in the afternoon. Watch out for sitting with a moving truck outside your new house all day (this has happened to a client before).
You will need to send your savings to our trust account at least three working days before settlement.
This means if you are settling on a Friday, the funds need to be in our trust account by the Tuesday before settlement.
At this stage, you will know how much money you will need to contribute towards purchasing the property because the vendor’s lawyer will have sent us their settlement statement which shows the amount you will need to pay on the settlement date to buy the property.
This amount will equal the purchase price less the deposit and any adjusted amounts for rates, rent or body corporate levies.
The seller will pick a method based on what the property market is doing because each of the below options are more beneficial depending on the current economic conditions.
Price by negotiation
Normally, a purchaser will make an offer based on an advertised price. When the purchaser submits an offer, the purchaser will need to include the name of the purchaser(s), the price, the deposit, the settlement date, and any conditions. It is common for the purchaser to include conditions such as due diligence, finance or a building inspection. The seller is also able to include conditions in the agreement e.g. the seller entering into another unconditional purchase agreement for their next property, an escape clause if this purchaser receives a better offer etc. It is then up to both sides to negotiate between themselves regarding the final terms and conditions of the agreement.
Auction
Several weeks before the auction date, the seller will provide a copy of the auction agreement to all interested purchasers. If the purchaser wants to vary the terms of the agreement e.g. pay a lower deposit price upon signing the agreement, this will need to be agreed upon with the seller before bidding at the auction. It is important that you have completed all your due diligence before the auction day. It is very uncommon for an auction agreement to have any conditions in it and as such the agreement will become unconditional once signed by both parties.
The seller will need to set a reserve price which is kept confidential from all the bidders. If you want to bid at an auction, you will need to register with the real estate agent before the auction begins.
At the auction, the auctioneer will take bids from interested parties. Once the reserve price has been met the highest bidder will win the auction. This means the highest bidder will sign the agreement and pay the deposit immediately following the auction.
Tender
If the seller elects to sell their property by tender, a purchaser will submit a confidential written offer before a set deadline date. Like price by negotiation, a purchaser will be given a tender form to include their purchase price and terms. Following the deadline date, the seller will consider all the options and pick the option that suits them best. Normally, a seller will look for an offer that has the fewest buyer conditions, preferred settlement date, and the highest price however the seller does not have to accept the highest offer or any offer at all. Often, the purchaser is required to pay the deposit when it submits its tender form. The seller may elect to negotiate with a purchaser/tenderer before it accepts the tender. After the tender, any unsuccessful tenderers will receive their deposit back.
Please contact us if you would like some advice regarding which sale method may suit you best. Alternatively, if you are a purchaser, we can guide you through an agreement to ensure you understand how each option may suit your own needs.
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