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Mortgage Information Service

There can be lots of questions about mortgages, buying houses, areas to buy in, areas to avoid, best types of insurance etc. The solutions can be as individual as you. That is why we encourage you to talk to our experienced professionals, before you make a buying decision. It doesn't cost anything and can prove invaluable, as we have built up a storehouse of information over the years we have been in business, helping others and buying property for ourselves, etc.

Call us on 0800 005 066 or email enquiry@mortgagehelp.co.nz with your questions.

Here is some information that may help:

Always talk to our experienced advisors first - saves time, hassle and money.

Property Checklist 1: What do you want in a house?

Do you like brick or timber or doesn't it matter?
What suburbs do you like?
What suburbs do you dislike?
How far are you prepared to commute to work?
How many bedrooms do you want? (A three-bedroom house is usually easier to resell than one with two bedrooms.)
Do you need a fenced yard? (The front fence is easy to do yourself, but having to build fences between you and the neighbours if they aren't already there can be stressful and can come at a time when finances are restricted. Remember that sometimes 'Good fences make good neighbours'!)
Is there garaging for your car/cars?
Do you need public transport and is it available?
Do you need schools and shops to be handy?
Does the house have, or is it adaptable for, wheelchair access for a friend or relative?
Is the kitchen eat-in or is there a separate dining room?
Do you want walk-in wardrobes/en suite/ pantry/second toilet?
Do all extensions, buildings, pergolas, sheds (even pools) have council approval?
Does the house have a code of compliance certificate (fully approved by council)?
How long before the floor coverings need replacement.
Do all the doors (including cupboards) and windows close easily?
Check taps and toilet flushes for problems. Are the pipes noisy?
How long does it take for hot water to come through?
Are any of the ceilings stained or is any wallpaper peeling from a leaky roof or drain?
Are all buildings, sheds, improvements and portable extras included in the contract? (Including satellite dishes, aviaries, garages etc. If in doubt, include it.)

Make sure you:

1. Know where you stand financially before you begin,

2. Know what you want, or at least the basics of what you need in a house, and

3. Never, never, never sign anything on the day no matter how many other people you are told are looking at the property! You need time to check off everything on the following property checklist. Tick each item off as you work through them, adding any other points that apply to your needs, and if you want to make further notes use your workbook.

Property Checklist 2: Before you sign anything!

Warning: Failure to take the simple precaution of working through this checklist before you sign any legal documents may leave you sorely sorry in the future.

Request a Land Information Memorandum Report (LIM Report) from your council. This report includes details of all town planning issues, certificates, schedules, consents and permits held by the council on the property, as well as any special site features such as wind zoning or flooding.
Is the property on a freehold, cross lease or unit title? Make sure you understand the implications of cross-lease or unit titles - talk with your solicitor.
Check on your neighbours. Talk to them. Look around. Listen. Sniff the air. (Are they shift or day workers? Do they have any disgusting habits, home businesses or pets that you cannot live beside?)
Inspect the property and neighbourhood noise level after dark. (Drive past it several times or take a walk down the street or around the block - being careful not to get mugged!)
Ask neighbours about possible pollution or terrible smells from nearby industry.
Get someone to check the structural integrity, stumps, roof, plumbing and electrical; and check for dry rot, mice and bora.
Ask local businesses about flooding levels. Asking neighbours can be unreliable.
Check for the public facilities, schools, shops and transport that you need.
Ring the council to verify rates, rateable value and ensure all structures, additions and extensions have approval or have been erected long enough not to require approval.
Do you want the phone number to stay with the property?
·How long have the previous owners had it, and why are they really selling? If a number of owners have owned a property over a short period of time, or if it goes up for sale every time it rains heavily, then there could be something seriously wrong. Ask the council and neighbours.
How long has the property been on the market? If it's only been a short time, the vendor may not budge much on price.

Value for Money Check

There are two checks you can make for investigating a property's value for money - I usually do both of them.

First look at similar properties in similar areas to see what prices are being asked and see if it's roughly the same.
Secondly, find out how much the current owner paid for the property.

Remember that just because someone sets a price, it doesn't mean the property is worth it.

You can find out how much the current owner paid from Quotable Value, the company that took over from the old government-owned Valuation New Zealand.

Always talk to our experienced advisors first - save time, hassle and money.

Be aware that when signing a real estate contract you are signing just that 'a contract'. This is binding once signed by all parties. If you are not seen to be performing to the utmost on your part of the contract (say in satisfying conditions) then you could be taken to court and virtually cleaned out. We have seen some horror stories because people don't understand the impact of contract law. Get legal advice before signing or you may run a contract pas us, so we can ensure you are protected. Also ask your real estate agent for a blank contract - so you can see what you are in for early on.

Always talk to our experienced advisors first - save time, hassle and money.

Unconditional Date

The unconditional date is the date on which the last of any condition inserted into the agreement is due for satisfaction.

Possession Date

This is the date you can move into the property or take physical possession.

Settlement Date

This is the date that all or where a deposit has been paid, the balance of the purchase price must be paid. Settlement date is commonly agreed to be the same as the possession date.

DEPOSIT

A common misconception is that the deposit is not payable until the agreement becomes unconditional. Unless this is specified in the agreement, the deposit is payable immediately upon the signing of the agreement. Deposits are frequently 5 to 10% of the agreed purchase price but there is no minimum deposit and the amount can be negotiated with the seller. Make sure whatever your deposit terms are that you have sufficient funds available to pay it when it is due - either on signing the agreement or on a specified date.

If you do not have the funds yourself, contact your broker. It is a good idea to pre-arrange finance when you decide to start looking for a property. This will also give you an idea of what your budget is.

CONDITIONS

In many instances, you may wish to make a conditional offer to allow you further time to arrange finance or carry out further checks on the property. Common conditions you may wish to consider making your offer subject to include:

Finance being approved
Satisfactory independent valuation
Satisfactory title search
Satisfactory building/engineer's report
Satisfactory LIM report
Sale of your existing home.

Any condition you instruct the real estate agent to insert into the agreement should state that it is for the "sole approval and benefit of the purchaser".

Finance Condition

This condition gives you time to arrange finance. Try to allow at least 5 working days from the date the agreement is signed to arrange finance (and a valuation if required).

Independent Valuation Condition

Where you have already obtained pre-approval finance from a lender, you may still need to obtain an independent valuation of the property to determine the amount of your loan. You may also want to obtain an independent valuation if you are unsure about the purchase price agreed. Go over this with us.

Title Search Condition

This condition specifies that the agreement is conditional upon your (or your solicitor's) approval and satisfaction of the title to the property. Your lawyer will make a search of the title to the property to check there are no problems with the legal title and advise you on what restrictions apply.

Building/Engineer's Report Condition

You may want to hire a builder or engineer to inspect the property to make sure it is structurally sound and identify any repairs required. This condition should allow you to request the seller fix the problems or re-negotiate the purchase price to reflect the cost. Try to contact a builder or engineer in advance of making an offer to check what time frame you should allow in the condition and the cost.

LIM Report Condition

A LIM report is a Land Information Memorandum report from the local council where the property is located. The report provides information on the property which the council holds on its files, eg building permits issued, subdivision or land use consents. If you select the LIM condition option in the standard agreement for sale and purchase, you have 5 working days to request the LIM report and 15 working days to advise the seller of your approval of the report. This period may be changed.

The cost of a LIM report and the processing time varies from each council. In Auckland the average cost is $200.

A LIM report will only give you the information that the Council holds on a property - which may be limited. See the section on "Protecting your interest in the property". If you have made your offer subject to a LIM report condition, we suggest you contact us first to discuss your options.

Sale of Purchaser's Property Condition

If you are relying on the sale of your existing home to finance your purchase of another property, you can make your offer conditional on your signing an agreement for the sale of your existing property, on that sale becoming unconditional or on the settlement date for the sale. This condition must be carefully linked to the correct time frames in the sale agreement and allow you sufficient time to confirm whether the conditional event has happened. For example, if your offer is conditional on settlement of the sale (which may occur at any time until 5.00 pm on settlement date) ensure your condition stipulates you have until at least 6.00pm on settlement date or the next working day to advise the seller. If you do not go to 'sufficient' effort to sell your own place, you could face legal action if you fail to sell. This cost one couple in 2007 $400,000.

UNCONDITIONAL AGREEMENTS

It is important to remember that once the seller signs the agreement, you are bound to go through with the contract subject to whatever conditions you have included in your offer. This means that unless you have included conditions in your offer, you have entered into an unconditional agreement to buy the property. At this point, it is irrelevant that you do not have sufficient finance to proceed or you discover a problem with the property.

Do not enter into an unconditional agreement unless you have conducted thorough checks of the property before making your offer, have arranged sufficient finance and sought advice from your lawyer.

Remember that even if you have pre-approved finance, most lenders will still require you obtain an independent valuation to calculate your loan amount. You must ensure you have adequate funds yourself to make up any shortfall between your loan amount and the purchase price.

AUCTIONS

It is increasingly common for properties to be sold by auction. This method of sale is equivalent to an unconditional agreement meaning you must carry out all your checks before the auction with no guarantee you will be the highest bidder. If you are the highest bidder at an auction and your bid meets the seller's reserve price, you are bound to buy the property. Most auctions require a minimum 10% deposit is paid following the successful bid at the auction and a settlement date of between 30 and 90 days from the auction.

SALE BY TENDER

The tender process involves making a written bid to the seller with your best offer. Your offer can include conditions. The seller can then consider all bids received and can accept the bid they consider the most attractive. Most tenders will require you to include your deposit with the bid which is refunded if you are not successful.