Buying guide
Buying Guide: Tips for Buying your First Home
What are some common mistakes made by first home buyers? Find out how to avoid them and get ready to buy your first home
Last updated: 14 March 2023
What you’ll learn:
- Why to avoid going over budget
- Have advisers to help from making mistakes
- How to ask good questions to avoid nasty surprises
Congratulations on being in the position to buy a home. We don’t need to tell you this is the biggest purchase you’ll ever make so you’ll want to do everything right if you can. Before the first time home buying process, you’ll do your research and take advice from experts on due diligence.
As with anything you do rarely, you’ll make the odd mistake but this article will help you keep these to a minimum.
Common first home buyer mistakes
1. Don't break the bank
What’s your budget? Among the very first steps in buying a home is working out what you can afford. With your mortgage adviser, you’ll weigh up how much you want to spend, the type of property you’d like, and where you want to buy.
Our Property Insights tool can help you get a feel for house prices in a given city or suburb.
When you are pre-approved for a mortgage you’ll have a pretty good idea how much you can spend. You'll know exactly how much when you find the property and the lender has looked at it and seen the valuation.
When you set your budget, don’t forget to factor in the varied costs included in buying a house, some of which you’ll include as conditions in your offer:
- building inspections
- valuations
- legal fees
- insurance
Don’t view a house you can’t afford (ask the agent what the price range of a home is before viewing so you know it’s within your budget) and keep your budget in mind at all times particularly if you’re in a competitive bidding situation.
Don’t let your heart rule your head. At the end of a lengthy house hunt, it's all too easy to throw your budget out the window if you find “the one.” There are plenty more fish in the sea.
It's important to know your budget when hunting for your first home.
2. Don't forget to make use of any first home buyer schemes
There are several schemes designed to help New Zealanders buy their first homes, so don't forget to look into them as you get started. Your mortgage adviser will be across all the possibilities. They include:
Using your KiwiSaver:
Many Kiwis will be able to use KiwiSaver for their first home purchase. This could be either through KiwiSaver first home withdrawals, or KiwiSaver First Home Grants.
The First Home Loan Scheme
This used to be known as the Welcome Home Loan, and can reduce the standard 10-20% deposit required by most NZ home loan lenders to 5% of the house price. The First Home Loan is done through Kāinga Ora.
3. Don't be afraid to ask questions
It all starts at the open home. Approach it the same way as you would taking a car for a test drive. Does everything work? Is there any serious structural damage?
Your first house is rarely going to be a dream house, but it also doesn’t need to be a complete wreck where the roof leaks and all the piles need replacing. Your lender is not going to be interested in giving you extra money for renovations.
A little guide to open homes
Here’s a list of questions for the agent which they have to answer honestly and not knowingly withhold any information on:
- the condition of the roof
- any signs of water damage
- the piles
- plumbing and wiring
- possible drug contamination
- drainage
- whether boundary fences are placed correctly
To avoid any nasty surprises, always get a builder’s report on a house you’re serious about – you can do this before making an offer or as a condition of your offer, but have a building inspector lined up so it can be done quickly. If any issues are discovered, get an indication of how much they would cost to fix or replace.
4. Don't think too short term
When you're buying your first house, it can be tempting to spend every cent in your budget. But will you get that money back when it’s time to move on in a few years’ time?
Be smart. Do your market research and make sure there will be buyers who appreciate what you like when it’s time to sell up and take your next step up the property ladder.
Take a look at our Property Price Index to see what the market is doing in your region, and for your preferred type of property. The index is produced from data on properties listed on Trade Me Property, and provides an insight into 'for sale' price trends by type and size of property.
5. Check out the neighbourhood first
Discovering that you’ve unwittingly bought right next to the drummer of an amateur metal band after you’ve moved in because you didn’t bother to look over the back fence, is probably a bit too late. Enjoy those late night rehearsals!
Remember: you can change the way your house looks but you can’t change your neighbours. There’s a lot to be said for checking on the home’s neighbours, and to take a walk around the area at all times of day and night, before you put your offer in.
Another key thing to research before you buy is to check out what are the amenities on offer in your area, such as schools, transport links, employment hubs and shops. These all impact the value of your house, its future resale and the convenience of your day-to-day life.
6. Don't go it alone
It's normal to be daunted by buying your first property but if you use a team of advisers to help, you’ll feel much more confident and you’ll make fewer costly mistakes. Have a good lawyer lined up and ready to work with and advise you from early on in the buying process. Mortgage advisers are helping buyers at all stages of their life journey and will help you draw up your budget, figure out your credit score, get pre-approval and find a lender who is the best fit for your loan. They’ll also help you apply for any first home loans or schemes. Ask friend or family for a mortgage adviser they’ve used and liked. This is usually a free service but check that at the outset.
*This information is not intended as a complete guide, as it doesn’t consider your individual needs or financial situation. Trade Me accepts no responsibility or liability for any inaccuracies or omissions in the content. Always obtain independent legal advice before buying or selling property.
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