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Finding the mortgage that best suits your circumstances and requirements
can be time consuming and stressful. There are many different factors
to consider: interest rates, mortgage type, mortgage term, repayment
options and lending institution. It’s a highly competitive market
and the choices can seem endless.
A mortgage broker can minimise the confusion that comes with so many
choices:
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Mortgage brokers are experts in their
field. |
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Their advice is independent. |
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They will do your financial homework
for you. |
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They can negotiate with banks and lending
institutions on your behalf. |
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They will help you find a solution
that best suits your personal circumstances. |
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They get paid by the banks and so their
service is free to you!. |
Any offer is made on a Sale and Purchase Agreement form; there is
a standard document that has been drafted by the Real Estate Institute
of New Zealand and the Auckland District Law Society. The real estate
agent will provide you with a copy. If the sale is a private one,
you should obtain a copy from your lawyer.
The sale and purchase agreement outlines your offer, the date of settlement,
and any conditions that must be met before the sale can go ahead.
Offers can be conditional upon one or more of the following clauses:
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Subject to finance suitable to the
purchaser. Allows time to
arrange for unconditional approval of finance from the bank
– request a minimum of 5 working days. |
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Subject to a LIM report. A
LIM report is prepared by your local council and will provide
a summary of property information held by the council about
the house, section and immediate neighbourhood. |
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Subject to a satisfactory title search.
This allows your lawyer
the opportunity to ensure that there are no problems with the
title or restrictions, covenants or easements. |
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Subject to the sale of another property.
You may have another property
that you want to sell first, and need time to make an unconditional
sale on that property. |
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Subject to a building inspector’s
report. This allows you
to request a building inspection to check for any defects in
the building itself. This would be at your own cost. |
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Subject to an engineer’s report.
An engineer’s report
will check for structural problems such as the stability of
the land. This is particularly relevant for steep or low lying
sections. |
You may also want to stipulate other conditions.
It is a good idea to get a lawyer to have a look at your Sale and
Purchase Agreement before you make an offer. You should also talk
to your lawyer before any subsequent offers and amendments are made.
Some buyers choose to take shortcuts in an attempt to reduce legal
costs but buying a home is probably the biggest financial decision
you will ever make. Mistakes can be expensive.
If you have received pre-approval from your bank to make an offer,
it doesn’t imply that you can make a cash offer. Any offer that
you make will still need to be a conditional one (the bank will have
stipulated that your offer must be conditional on finance).
It is common for several offers and counter-offers to be made before
an agreement is reached. Consequently, you probably won’t want
to submit your best offer up front as you will want to leave room
for negotiation.
Buying by tender has some fundamental differences compared to submitting
an ordinary offer on a Sale and Purchase Agreement.
When a property is sold by tender potential buyers are given the opportunity
to place a written offer. Offers submitted by tender are usually unconditional.
If your offer is accepted you are committed to buying the property.
Although you can put conditions in your offer, it is preferable that
conditions are not attached in order to increase the offer’s
attractiveness to the seller.
If you are considering making an offer you will need to take the following
steps:
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Register your interest with the real
estate agent. The agent will give you a copy of the tender document,
which includes all the necessary details for submitting an offer. |
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Obtain full approval from a lending
institution allowing you to make an unconditional offer up to
a specified amount. The lender will require the full details
of the property you wish to buy. You may also be required to
obtain a valuation. |
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Discuss the tender document with your
lawyer. He/she will need to do all the necessary checks such
as a title search. |
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Prepare a written offer. |
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Depending on the property, its age,
the extent of any modifications and additions and the land it
is situated on, you may also wish to arrange for an engineer’s
report, building consultant’s report and/or LIM report.
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You may need to include a deposit with
your offer. This will be refunded if your offer is not accepted. |
You will want to consider your bid carefully and put in your best
offer. The tender process can impose significant costs on a buyer.
These costs are non-refundable if your offer is turned down.
If you are the highest bidder but your bid is not acceptable to the
seller, you may be given the opportunity to negotiate on an individual
basis.
If you are apprehensive about the extra costs involved with a tender
or have any other reservations about the tender process, you may want
to consider placing an offer before the tender date. Your real estate
agent will inform you whether this is possible. If a tender is “closed”,
offers won’t be considered before the tender closing date.
Keep in mind, however, that offers placed before the tender date will
probably need to be unconditional. If you do decide to present an
offer, usually all other buyers who have registered their interest
will be given the same opportunity to make an offer.
Unlike the tender process, where the bids of other potential buyers
are confidential, an auction is a public process. You will know the
other bids that are being placed. As with the tender process, the
sequence of events will be different than when an ordinary offer is
made.
If you are considering bidding at an auction, you will need to register
your interest with the real estate agent. The agent will give you
a copy of the auction contract.
Placing a bid at an auction will involve up front costs for the buyer.
You will need to take the following steps in order to make an unconditional
offer:
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Contact your broker to gain full approval
to make bids up to a predetermined limit. Your broker will be
able to advise which lending institutions may require a valuation
from a registered valuer. |
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Contact your lawyer. He/she will need
to complete all the necessary checks such as a title search. |
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Depending on the type of property,
its age, the extent of any modifications and additions, and
the land it is situated upon, you may want to get an engineer’s
report, building consultant’s report and/or LIM report. |
Attending an auction can be a daunting experience. If you are concerned,
take someone along for support. Real estate agents will also be available
on the day to answer any questions and assist you when bidding. Make
sure that you know your top price before you turn up. You may decide
that you are not willing to spend the full amount that has been approved
by your lender.
The seller will usually set a reserve price. This is the lowest price
that they are willing to sell for. Bidding will usually start well
below this reserve. The auctioneer may start the bidding with large
steps, but they will become smaller as the bidding progresses. Towards
the end, the auctioneer may accept bids as small as $1,000 or even
$500.
Don’t be scared to stand back during the early stages of bidding
and wait until some of the potential buyers have dropped out. You
don’t want to bid the price up anymore than necessary.
Once your offer has been accepted, you will be required to pay a deposit
to the real estate agent. The amount of this deposit can vary. This
“deposit” is different to the deposit required by the
lender on settlement. Payment is usually by cheque, which is deposited
in the real estate agency’s trust account for safekeeping. If
the sale does not go ahead you will get your money back. However,
once the sale becomes unconditional the money will be passed onto
the seller.
This deposit is protected by law. If the real estate agent goes broke
there is a fidelity fund to cover payment.
As soon as your offer is accepted, you will need to contact your broker
to get the final process rolling.
Your lawyer will need to complete all the necessary checks. Many of
these will have been specified in your Sale and Purchase Agreement:
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Title search and any ownership restrictions. |
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Checking whether the payment of rates,
water, etc., is up to date. If the seller has paid any costs
in advance, then your lawyer will calculate the amount that
you will have to reimburse. |
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Contacting your lender to arrange payment
of your loan and your share of the purchase price. |
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Preparing your mortgage documents |
You will be responsible for obtaining reports from building consultants,
engineers and the council.
When all the conditions of your offer are met your lawyer will contact
the seller’s lawyer to advise them that the sale has become
unconditional.
Your lawyer will contact you prior to settlement day to inform you
how much is still owing, after taking into account the deposit you
have already paid to the real estate agent as well as your loan. You
will need to arrange for any amount outstanding to be paid to your
lawyer, who will ensure that the seller receives the correct amount.
Once this money has been paid, you can collect the keys to your new
home and move in.
You should receive your title showing ownership within a week following
sale. Contact your lawyer if it has not arrived.
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