# Buying a House in NZ?



## NZ4me

Hi,

I'm wondering if someone can give me a brief idea of the process of buying a house in NZ... In particular, I'm curious about what the typical requirements from the banks are?

What is the minimum % downpayment that a bank will ask for?
Is there a cap on the mortgage payment/gross income ratio?

Any suggestions when looking into a purchase and trying to manage the process?

THanks!


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## rogercruse

NZ4me said:


> Hi,
> 
> I'm wondering if someone can give me a brief idea of the process of buying a house in NZ... In particular, I'm curious about what the typical requirements from the banks are?
> 
> What is the minimum % downpayment that a bank will ask for?
> Is there a cap on the mortgage payment/gross income ratio?
> 
> Any suggestions when looking into a purchase and trying to manage the process?
> 
> THanks!


I can't help you with specifics but the Auckland Regional Migrant Service (ARMS) do run a free half day course about purchasing property. They have a Real Estate Agent, a Mortgage Broker and a Laywer to cover the details

ARMS Homepage


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## topcat83

rogercruse said:


> I can't help you with specifics but the Auckland Regional Migrant Service (ARMS) do run a free half day course about purchasing property. They have a Real Estate Agent, a Mortgage Broker and a Laywer to cover the details
> 
> ARMS Homepage


Useful - I'd be interested in going, and we've been here 4 years!!

When we bought our current house we found it much easier than in the UK. 
When you put an offer in, it goes in writing - and it's a legal contract. So make sure you have something like 'subject to survey, LIM and finance' in the clauses. Also make sure it says your name plus 'Or Nominee'. There's usually a time limit written into it too - so you have to confirm you're buying within a certain length of time. Once you've confirmed you leave a 10% deposit, which you lose if you back out.

It's worth contacting a financial adviser and solicitor in advance - they'll be able to advise you. One of the reasons for the 'Or Nominee' clause is that Family Trusts are often recommended for tax and inheritance purposes and you may be advised to get the Family Trust to buy the house. 

We saw our house and had an offer accepted within 36 hours of landing in the country, and had moved in within 4 weeks. Try doing that in the UK!!!


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## NZ4me

Thanks. Are there any requirements from the bank? In Canada, we need to prepare a minimum of 5% of the price in our bank account before they will consider giving us a mortgage. And with such a low downpayment, you have to pay an extra point or two of interest which goes towards "insurance" on the mortgage (as the equity is so low it is a bit of a risk). WIth a downpayment of 20% it is not necessary to pay for the insurance.

All the major banks are governed by the same rules which state what percent of your salary can go towards mortgage payments to prevent you from over-extended yourself. You therefore can't really "shop around" between major banks to get a bigger mortgage. THey all use the same software package to crunch the numbers and will give you the same answer. (There are a few exceptions, such as credit unions, which are a bit different.)

I was wondering in NZ had any such restrictions or requirements... trying to get a handle on how much I would need to put down and how much of a loan I would be considered for...

Thanks!


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## Song_Si

Hi
Suggest you try some bank websites for specific facts and figures; for example Kiwibank, their site has info on home loans Looking to buy - Kiwibank and a calculator for how much you would be able to borrow, repapyments, time to pay etc at Home Loan & Mortgage Calculator - Kiwibank

And yes things can happen very quickly - the last house I sold - less then 4 weeks from offer to new owners moving in - they had pre-arranged finance, and I was able to move at short notice.


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## QueenBeesWax

Hi there

It use to be 10% deposit, but it could be higher now because of the recession. And last time I brought, I think the mortgage repayments couldn't be more than 30% of your week wages. Might be higher than that though. You can shop around though, some banks will lend you more, with less deposit. Going through a Mortgage Broker is a good way, they are free, and get paid by the Banks so will be able to tell you more or less on the spot how much you can borrow and how much deposit you will need.

And if you were borrowing over 90%, then there was lenders mortgage insurance that you needed to pay as well. Buying a house in NZ is pretty streamlined.

You see a house, tell Agent you want to put in an offer
He prepares a contract, and you tell him your offer (never offer asking price go lower)
Make sure at bottom of contract you include: Subject to finance, buildings report, LIM report, valuation report (These are your "outs")
He has a heart attack because your offer is so low, you tell him this is your offer and take it to the Vendors
NEVER TELL HIM HOW MUCH MONEY YOU HAVE GOT TO SPEND
He takes offer to Vendor, they can counteroffer, he brings offer back to you with counter offer
You can counteroffer back
Then you say, this is my final offer!
Hopefully,
He comes back and says yes they accept
You usually have 5-10 days before it goes unconditional
(Meaning within this time you have to get the house checked out by a builder etc) and get your finance
(Good to get pre-approved finance from bank before you make offers though)
Once house goes unconditional
Settlement is usually 30 days after that (or longer or shorter if you and Vendor agree)


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## NZ4me

Thanks! Very similar to what we have in Canada with regards to the LIM and 30% max. At one point in Vancouver, the market was so "hot" that people were lining up to buy houses without any conditions - see it in the morning, put in the offer in the afternoon, close in the evening!! NOT a good time to be a buyer!

Thanks again for the overview.


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## QueenBeesWax

NZ4me said:


> Thanks! Very similar to what we have in Canada with regards to the LIM and 30% max. At one point in Vancouver, the market was so "hot" that people were lining up to buy houses without any conditions - see it in the morning, put in the offer in the afternoon, close in the evening!! NOT a good time to be a buyer!
> 
> Thanks again for the overview.


Ah yes those were the days, haha, use to be like that back in NZ too. Just make sure you get a house with good insulation and heating. Most older houses pre 80's, have absolutely zilch insulation and heating. Sometimes in winter it will be warmer outside than inside your cold little box! And they'd never heard of double glazing until quite recently!


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## swnz

When you have a bit of time available, it's worth having a look at this site.

The site will show you the current mortgage rates across all major mortgage-lending financial institutions, and has some handy calculators (comparisons amongst lenders, repayment plan etc.)

Where abouts in NZ are you looking to relocate to? We might be able to provide some more tips specific to the area.


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## Song_Si

Note re real estate agents
There is no requirement to use them, and many houses are listed for sale privately by the vendors. 
Trade Me Property is one of the sites you may find helpful. Also has some useful resource links - I see one for a bank mentioning 'if you have less than 20%' - I think that's about standard deposit now.

RE fees in NZ are high by international standards, sliding scales depending on the sale price but roughly 4% for an average home. On top of this the vendor has to pay for all advertising - so you can understand why many choose to sell privately and get more cash despite selling for a slightly lower price.

I sold a house in Wellington, April 2009 - used an agent as was no longer living there - fees cost approx NZ$24,000, and another 1500 for lawyer - and it sold to a couple who lived down the road wanting to upgrade! Oh well . . .


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## Gimme5

QueenBeesWax said:


> Hi there
> 
> It use to be 10% deposit, but it could be higher now because of the recession. And last time I brought, I think the mortgage repayments couldn't be more than 30% of your week wages. Might be higher than that though. You can shop around though, some banks will lend you more, with less deposit. Going through a Mortgage Broker is a good way, they are free, and get paid by the Banks so will be able to tell you more or less on the spot how much you can borrow and how much deposit you will need.
> 
> And if you were borrowing over 90%, then there was lenders mortgage insurance that you needed to pay as well. Buying a house in NZ is pretty streamlined.
> 
> You see a house, tell Agent you want to put in an offer
> He prepares a contract, and you tell him your offer (never offer asking price go lower)
> Make sure at bottom of contract you include: Subject to finance, buildings report, LIM report, valuation report (These are your "outs")
> He has a heart attack because your offer is so low, you tell him this is your offer and take it to the Vendors
> NEVER TELL HIM HOW MUCH MONEY YOU HAVE GOT TO SPEND
> He takes offer to Vendor, they can counteroffer, he brings offer back to you with counter offer
> You can counteroffer back
> Then you say, this is my final offer!
> Hopefully,
> He comes back and says yes they accept
> You usually have 5-10 days before it goes unconditional
> (Meaning within this time you have to get the house checked out by a builder etc) and get your finance
> (Good to get pre-approved finance from bank before you make offers though)
> Once house goes unconditional
> Settlement is usually 30 days after that (or longer or shorter if you and Vendor agree)


Lol, "NEVER TELL HIM HOW MUCH MONEY YOU HAVE GOT TO SPEND". Even if you did, they know you're lying anyway.

Agents and vendors love out of town buyers; they almost always pay too much. Resist buying until you've spent some time here and especially in the suburb you're wanting to buy in. You really need to view a lot of properties and attend lots of auctions to have a feel on where the market is before making your move. Some properties are grossly over priced.


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## NZ4me

We're looking at Christchurch.


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## Gimme5

NZ4me said:


> We're looking at Christchurch.


When's the big move? Hope it's not anytime soon. You're aware they just had a massive 7.1 earthquake don't you? It devastated the city's infrastructure and services, and laid waste to many buildings and whole suburbs. Maybe someone who lives in Christchurch and tell you more.


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## NZCowboy

Gimme5 said:


> When's the big move? Hope it's not anytime soon. You're aware they just had a massive 7.1 earthquake don't you? It devastated the city's infrastructure and services, and laid waste to many buildings and whole suburbs. Maybe someone who lives in Christchurch and tell you more.


You are a bit out of touch, its almost back to business as usual in Chch. I have a brother(last year of masters in geology) and sister in Chch, they are saying in alot of Chch you would know an earthquake happened, alot of damage is very localised.

Heres some quotes from last Sundays papers
_The taps are flowing with clean water and beer, the kilted busker is garnering laughs in the square, and the mobs of Japanese tourists are again taking holiday snaps of Christchurch Cathedral.

After a hell week of nerve-fraying aftershocks and the depressing task of clearing rubble and restoring infrastructure, the first signs of normality are returning to the city. Power and water have been almost completely restored and most schools and businesses will be back up and running tomorrow

Schools, too, are reopening. There are 220 schools in the region; 205 have already opened or will open tomorrow.

But for some, normality is still a long way off. Of the 2290 quake-affected houses inspected so far, 28 have been declared unsafe. A further 279 have been yellow-stickered, meaning they cannot be occupied until further inspections are carried out.

In the central business district, 55 buildings have been declared unsafe._
Quake: Heart of the city beating again | Stuff.co.nz


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## NZCowboy

Here is a useful site about the home buying process in NZ
Steps to buying a home - market conditions - agreements - Professionals New Zealand - Steps to Buying your Home

Its good to study up the house buying process. A couple of months ago I was back in NZ looking to buy another house, and only just arrived in town and visiting some real estate agents, to get a feel for the market. One agent said she had a property that was being auctioned that evening, she showed me the property. It was too late in the day to arrange finance with my bank, but I went along to look. By chance there was no bids on the property, the agent was pushing me to put in a bid, but I sat on my hands. Waited to the property was passed in, then turned to the agent and said I wish to put an offer in. I knew that if I waited I could put in a conditional offer (conditional on gaining finance, checking LIM's/building permits etc) if I had bid it would be unconditional and binding.

So after a little offer/counter offer between myself and the vendor we agreed on a price and I had seven days to arrange finance and check the building reports/LIM's.
Everything checked out ok and finance was no problem and the sale went unconditional after a couple of days. Ended up getting a nice house for almost 15% under GV, within days of arriving in NZ, my luggage took longer getting to NZ but thats another story ..lol 
It seems to be buyers market at the moment. Heading back again in 5 weeks time, to check out the new houses coming on the market for spring, as we plan to shift back to NZ in Jan 2011.


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## Gimme5

NZCowboy said:


> You are a bit out of touch, its almost back to business as usual in Chch. I have a brother(last year of masters in geology) and sister in Chch, they are saying in alot of Chch you would know an earthquake happened, alot of damage is very localised.
> 
> Heres some quotes from last Sundays papers
> _The taps are flowing with clean water and beer, the kilted busker is garnering laughs in the square, and the mobs of Japanese tourists are again taking holiday snaps of Christchurch Cathedral.
> 
> After a hell week of nerve-fraying aftershocks and the depressing task of clearing rubble and restoring infrastructure, the first signs of normality are returning to the city. Power and water have been almost completely restored and most schools and businesses will be back up and running tomorrow
> 
> Schools, too, are reopening. There are 220 schools in the region; 205 have already opened or will open tomorrow.
> 
> But for some, normality is still a long way off. Of the 2290 quake-affected houses inspected so far, 28 have been declared unsafe. A further 279 have been yellow-stickered, meaning they cannot be occupied until further inspections are carried out.
> 
> In the central business district, 55 buildings have been declared unsafe._
> Quake: Heart of the city beating again | Stuff.co.nz


BREAKING NEWS in today's NZ Herald. State of Emergency extended.

Earthquake states of emergency extended - National - NZ Herald News

Like I said, all I know is what I read in the papers and see on TV but someone on the ground will be in a better position to advice. For example, it was reported that there are no motel rooms and rentals available because they were all snapped up by insurance companies. Some landlords and motel owners even tried to profit by hiking rates. You can't drink the water without first boiling it before of raw sewage contamination, etc, etc. Not exactly a conducive or pleasant environment for a new migrant starting out especially if they've got young kids in tow. Just my 2 cents.


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## QueenBeesWax

There doesn't seem to be a shortage of rental accommodation in Christchurch.

Search Results

And I think it's only parts of Christchurch where you still have to boil water for drinking.


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## NZCowboy

Gimme5 said:


> BREAKING NEWS in today's NZ Herald. State of Emergency extended.
> 
> Earthquake states of emergency extended - National - NZ Herald News
> 
> Like I said, all I know is what I read in the papers and see on TV but someone on the ground will be in a better position to advice. For example, it was reported that there are no motel rooms and rentals available because they were all snapped up by insurance companies. Some landlords and motel owners even tried to profit by hiking rates. You can't drink the water without first boiling it before of raw sewage contamination, etc, etc. Not exactly a conducive or pleasant environment for a new migrant starting out especially if they've got young kids in tow. Just my 2 cents.


As I said you are a little out of date ..
I have a brother and sister residing in different parts of Chch, and I will be passing through Chch, in a couple of weeks, to check out my properties which are largely unaffected. While I may personally not be on the ground, I have good people on the ground who manage my properties who I'm in regular contact. 

_WATER

The boil-water notice has been lifted across the city and Banks Peninsula._
Latest Canterbury services information | Stuff.co.nz

Just done a couple of searches for accommodation, Reviews of Hotels, Flights and Vacation Rentals - TripAdvisor www.combinedhotels.com seems to be plenty of accommodation.

Sorry but where was your info from?

Just my 5 cents worth .... NZ done away with 1 & 2 cents coins a number of years ago, you're bit dated just like your info.


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## Gimme5

NZCowboy said:


> As I said you are a little out of date ..
> I have a brother and sister residing in different parts of Chch, and I will be passing through Chch, in a couple of weeks, to check out my properties which are largely unaffected. While I may personally not be on the ground, I have good people on the ground who manage my properties who I'm in regular contact.
> 
> _WATER
> 
> The boil-water notice has been lifted across the city and Banks Peninsula._
> Latest Canterbury services information | Stuff.co.nz
> 
> Just done a couple of searches for accommodation, Reviews of Hotels, Flights and Vacation Rentals - TripAdvisor www.combinedhotels.com seems to be plenty of accommodation.
> 
> Sorry but where was your info from?
> 
> Just my 5 cents worth .... NZ done away with 1 & 2 cents coins a number of years ago, you're bit dated just like your info.


"Just my 5 cents worth .... NZ done away with 1 & 2 cents coins a number of years ago, you're bit dated just like your info. "

Strange, and I thought the 5 cent coin was out of circulation half a decade ago?


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## Song_Si

*NZ Real Estate agents*

thought this may be of interest to people looking to buy a house; am a few years out of touch with NZ real estate - 5000 less agents is probably a good thing, but it may also be a warning of the desperation some agents face, ie keener to make a sale and gloss over 'facts'. 

I never had what i would rate as even satisfactory performance from a real estate agent; the ratio of their skils to their fees is way out imo.


*Quarter of estate agents walk out*
By Michael Dickison
5:30 AM Tuesday Jun 7, 2011










*A quarter of New Zealand real estate agents - almost 5000 - have deserted the industry in the past year during a bleak period of low sales.*

Real Estate Agents Authority figures show almost 2000 Auckland agents have suspended their licences or let them lapse in the past 12 months.

Ray White agency chief executive Carey Smith said the slow real estate market had "pulverised" the sales force, who depended on commissions for their income.

"Sales are down, particularly in rural, and that had people seeking other employment," Mr Smith said.

"Independent contractors need to make sales to stay in business."

Agents are also facing much tougher scrutiny after new regulations were introduced to clamp down on "cowboys".

Nationwide, the number of agents fell from 17,809 to 13,092 - a drop of 26 per cent.

In Auckland, the drop was 25 per cent, from 7353 to 5539.

Real Estate Agents Authority chief executive Keith Manch said many in the industry considered that the number of agents could fall further, to as low as 10,000.

"In the economic situation, to maintain your licence you need to be pretty committed," Mr Manch said.

After peaking in late 2007, the real estate market suffered as house values fell throughout 2008.

The overall number of sales also dropped dramatically, from more than 9000 a month at the peak to fewer than 5000 a month - a fall of 44 per cent, according to Quotable Value figures.

Industry insiders said branch offices in poorer Auckland neighbourhoods suffered worst during the sales slump, and suburbs closer to the city centre fared better.

Ray White Ponsonby branch head Bryce Earwaker said he had not lost any staff during the past year, and he knew of only one sales staff resignation among competitors.

But in Papakura, one realtor's office has shrunk from 30 staff to 10.

Ray White Papakura branch principal Ted Ingram said all staff who left did so for the same reason.

"They can't make any money - sales are down. It's just too tough."

Mr Ingram introduced a sales limit during the recession, and told salespeople who could not meet it that it might be better for them to go into another industry.

"Those who haven't made their businesses more efficient are no longer in business."

The Real Estate Agents Authority, which the Government set up in November 2009, introduced a new licensing system in March last year.

Those who already had licences could keep them at $800 a year, or put them on hold at $85 a year.

A higher standard of qualification to gain a licence was also introduced, meaning people who let their licences lapse face a more difficult test to get back into the industry.

Mr Smith said some people would have kept a realtor's licence even though they were not active in the market.

Others would have taken the opportunity of a lull in sales to go back into education and upskill to a higher qualification, he said.

But the main driving force behind the exodus from the industry was simply the economy.

"There's a combination of factors but I would put it mainly down to the number of sales," Mr Smith said.

He said there were signs of the real estate market recovering, but the number of sales staff was unlikely to grow yet.

The new system introduced a distinction between salespeople and agents. Only agents are allowed to operate an office.

The Real Estate Agents Authority has brought in other changes to the industry, including a more clearly defined educational system and responsibilities for salespeople.

A disciplinary tribunal has publicly adjudicated on a small number of transgressions, including foul rants, alleged thefts and forgeries, and a dispute involving a marriage breakup.

"Each person is more aware of their responsibilities and there's a level of accountabilities that's been introduced," Mr Smith said.

The changes had generally been positive for the industry, he said.

Mr Manch said that those left in the industry would be operating at a higher level of standards and consumer protection.


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## topcat83

I cannot understand what real estate agents in NZ do for their 3-4%. I've just sold my Mum's house in the UK - the estate agent did a much more professional job, produced a wonderful glossy sales brochure with professional photos and a house plan, and charged me 1% commission. 

Hopefully this means that the 25% that have gone are the bad ones. We've fortunately not had to pay a real estate agent anything yet as we've only bought, not sold anything. But between my son and I we have bought 5 properties from 5 different agencies - so I do feel I've seen a good cross-section. And their quality and ethics vary tremendously. I had one telling me that I couldn't put the clauses into the offer that I wanted, and that I had to pay the 10% deposit into their trust account on the day we put the offer in! Fortunately this was property no 4 and we were experienced enough to know better.... 

I think the difference is that in the UK there is a watchdog to keep an eye, and strict rules. Plus all the people in the office share the commission - it's not just the person who makes the sale. It's a much more co-operative effort. 

There is a type of watchdog in NZ, but the industry is in effect self-governing. So the advice I'd give to anyone is do your homework. Read the following as a minimum: http://www.dbh.govt.nz/UserFiles/File/Publications/Building/consumer/home-buyers.pdf


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## Darla.R

Now that GST on new builds is 15% I think it's much better value to buy an existing property and you don't have the risk of the builder going bankrupt half way through.

I hear that Sovereign Homes went into liquidation in March, it used to be one of New Zealand's largest non-franchised builders.


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## anski

The established agents are still around, they have weathered both the boom & bust years & over the years they build up a loyal client base of repeat buyers. 

Those others that joined the industry in prosperous times thinking it was an easy way to make a living have now left when the going got tough.

Remember you can always sell your own property on Trademe until sold for a single fee of $195, it was free when they first introduced the real estate section, but still a very cheap way to sell your own property.
After all who knows more about your house than you?

I sold 3 houses in Sydney myself, in all cases reaching a higher sale price than real estate agents had advised & one of my houses sold ifirst time in a 2 hour open home viewing with a single advert placed in the weekend paper costing a mere $75.


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