5 Commonly Overlooked Costs of Buying a Home New Zealand
The cost of home ownership in New Zealand is about more than the sale price. While the cost of the home itself is of course very important, so are the ongoing costs of owning a home and buying property. If you’re thinking about taking the leap and buying a home NZ, check out these suggestions from Mortgage Masters on the commonly overlooked costs you should budget for.
Lenders Mortgage Insurance
One of the main hidden costs that first time buyers often overlook is lenders mortgage insurance (LMI). This insurance protects the lender rather than the homeowner and is usually a one-off payment due at settlement. LMI is separate from the mortgage itself so you will need to cover the costs before you can officially take possession, although sometimes it can be capitalised into your loan and charged interest instead. Keep in mind that LMI is required for home purchases where you need to borrow more than 80% of the total property value. If you have a 10% or 15% deposit instead of the standard 20%, then you should expect to pay LMI.
Building Reports
Something else to consider when buying a home is the cost of home ownership building reports. While a building report isn’t required to put an offer in, it’s a smart move so you can understand the property’s condition. Building reports generally cost $300-$500 depending on the size of the home. This cost is well worth it as you can avoid hefty repairs later by investing in a building report before buying.
LIM Report
In addition to the ongoing costs of owning a home, you should be prepared to pay for a copy of the Land Information Memorandum for your property. This LIM report summarises the property, with information on rates, prior work consent, major events and land issues like flooding or earthquakes. Home owners can update these reports over time, so when you buy a home, make sure you get an updated LIM copy from the agent or seller. This way, you can identify any possible problems with the home or land. Budget $300-$400 for the LIM report and don’t forget to ask to see your local council file in case there’s additional information you should know.
Conveyancer Fees
Buying a house NZ also involves paying your lawyer or conveyancer to handle the legalities. Make sure all your paperwork is completed and your legal obligations are fulfilled with the right conveyancer leading the way. Generally, conveyancer fees cost around $2 000 to $4 000 based on how straightforward or complex the purchase is. This is money well spent considering conveyancers will check the property title, legal boundaries and any restrictions.
Council Rates
Lastly, the extra costs of buying a house also include council rates. This is an ongoing cost of owning a home that you’ll need to plan for moving forward, with rates varying depending on which part of New Zealand you live in. Overall, New Zealand’s average council rates per year are $2 572, which works out to be $233 per month. Council rates can add up when you consider home maintenance, repairs, insurance, body corporate fees and mortgage repayments, so it’s important to budget accordingly.
Contact Mortgage Masters About Buying a House NZ
The more you know about the extra costs of buying a house, the more you can prepare for purchasing property in New Zealand. Get in touch with the trusted advisers at Mortgage Masters to discuss your home loan application.
