The Hidden Costs of Buying a Home / Expert advice from Nathan Miglani
Firstly, it’s essential to use a good solicitor. They’re a key part of the process, performing all the legal work required to legally transfer ownership of a property. If you can, choose a solicitor before you make any offers so you can talk to them about what to expect in a sale and purchase agreement.
Once you’ve made an offer, they’ll check the legal document, perform any LIM and title checks, and arrange any KiwiSaver contributions. They’ll confirm your offer and pay the deposit when the conditions are met and arrange the drawdown of your mortgage on settlement day. You can expect to pay somewhere around $1,500 to $2,000 for their services.
As a condition of your lending, you may be required to obtain a registered valuation of the property you want to buy. If you employ a registered property valuer, they’ll inspect the property and value it within the context of the market and other sales in the neighbourhood, providing a written report of their findings. The cost for a registered valuation is typically around $600 to $700 and is paid by
the customer (i.e. you) and not the bank. It’s important to check with your mortgage adviser before hiring a valuer, as most of the banks have their own preferred valuation system.
It’s a smart move to also obtain a professional building inspection. It may be tempting to skip this step when you’re eager to get into a new home (and trying to avoid additional expenses!), but an inspection can save you big money. Earthquake damage not properly repaired or ‘leaky building syndrome’ may be hard for casual observers to spot but can cost a lot to repair. Make sure you hire a professional building inspector to do the job. Though well-meaning friends and family members might offer to look over the property for free, they may not have the correct tools and experience to uncover the issues. The cost of hiring a professional (usually around $600 to $700) is well worth it when you consider how much you could potentially save. And, remember, if a property inspection was a condition of your sale and purchase agreement, and unexpected issues are discovered, you may be able to renegotiate the purchase price to cover the repairs.
For those applying for finance with a 20 per cent deposit, your lender may contribute some money towards these costs – ask your mortgage adviser whether this is a possibility. But those with less than 20 per cent deposit will usually find these sorts of bonuses don’t apply, so you’ll need to make sure you can cover the costs yourself. Talk to your mortgage adviser about creating a budget that takes these additional expenses into account.
You’ve worked hard and sacrificed a lot, and now you’ve saved the deposit for your home loan. Well done! You’re on your way towards buying a property. But you’re not quite there yet – there are some other essential costs you’ll need to budget for.
Nathan Miglani of Loan Market explains.