Here are six traps to avoid to help ensure your experience buying a property is an exciting and positive one.
1. Signing an agreement before receiving legal advice
As your lawyers, it is our duty to ensure you don’t agree to onerous terms and to protect your position.
We can draft further terms into your agreement for sale and purchase so it reflects your understanding of the deal, and avoid nasty surprises!
Correctly drawing up an agreement can save you a lot of time, hassle and expense in the long run.
2. Mistaking loan pre-approval for finance approval
When searching for your dream property, it is common to go into your bank and find out how much you can borrow.
Do not mistake this as bank finance approval. Ensure your sale & purchase agreement has a finance condition.
Despite being approved for a loan, your bank may require you obtain a registered valuation or builders report before they drawdown your money.
Ask your bank for written confirmation of finance before satisfying your finance condition.
3. Not doing your Due Diligence
For most people their house will be their biggest investment, yet many people will spend more time checking out their car before purchasing it! At a minimum, you should:
- obtain a LIM or a search of the council records
- obtain a Builders Report, and
- be prepared to conduct further investigations (i.e. market valuation, check your insurance position).
4. Leaving the final inspection until settlement day
Standard agreements only entitle the purchaser to one pre-settlement inspection, which must take place prior to settlement.
To avoid complications, arrange an inspection time in advance of settlement.
It is better to resolve any issues in advance of settlement (i.e. agree on a sum to be withheld).
5. Thinking you can use Kiwisaver funds towards your deposit
KiwiSaver and Housing New Zealand ‘deposit subsidy’ funds cannot be accessed for your deposit.
These funds are deposited into your solicitor’s trust account upon settlement.
This can be quite a lengthy process. Speak to your KiwiSaver provider about timeframes.
6. Not factoring in unexpected costs
It’s common to factor in certain costs (i.e. legal fees, LIM & Builders report), but don’t forget the following:
- your bank may require a registered valuation to ensure you meet current required LVR (loan-to-value ratio) levels
- the cost of insurance
- refund of rates, body corporate and ground rent (if applicable) that the Vendor has paid in advance and needs to be refunded, and
- moving costs and potential installation fees.
We are happy to help you through the exciting process of buying a property and ensuring that it is an enjoyable experience. Please contact our property law specialists.