Want to buy your own home? Christchurch financial adviser DAVID WEUSTEN offers advice.
You've found a home you want to buy, so what do you need next to make it happen?
In and around Christchurch, obtaining insurance when buying a home is difficult and expensive. You may be able to acquire cover from your existing insurer or the one already covering the property, but with new terms and higher premiums.
TC3 (technical category 3) land can be hard to get cover for and the insurer will want a builder's report, EQC scope of works and information on existing claims first. Lenders will want the same.
Assigning existing EQC and insurance claims is a big issue in Christchurch, and it is easy to get burnt. You need to do careful due diligence and have your contracts drafted or reviewed by your lawyer.
The longer the Canterbury region goes without any large earthquakes, the more relaxed the insurers will become.
With more than 36 lenders offering home loans there is no shortage of choice - you can find current interest rates online at interest.co.nz.
You could start by approaching your current bank; the advantage is that they know you and how well you conduct your accounts. Be aware the bank employee can only promote their employer's products and services, which may or may not be competitive or the best fit for you.
Alternatively, you could approach a financial adviser or mortgage broker. They should be familiar with the many lenders and can help you with other financial matters.
When you apply for a mortgage you will need some of the following: personal identification, proof of income, proof you have a deposit, recent bank records and a sale and purchase agreement if you have made an offer on a home.
Real estate agents use the standard Auckland Law Society sales and purchase agreement. On the front page is the date, details of the seller and buyers, the address and legal description of the property and the size of the land.
The term "estate" on the form means the ownership type, which could include the following:
Fee simple: Freehold or absolute ownership (the term freehold here does not mean no debt, a debt-free title is legally referred to as unencumbered).
Cross lease: A hybrid form of multi-unit ownership in which each owner has an undivided share of the land, with a leasehold from the other owners on their unit or flat.
Stratum estate: Also known as a unit title or strata title, this is a form of ownership for multi-unit dwellings such as apartment buildings or blocks of flats.
Other items in the sale and purchase agreement include:
Payment of purchase price: This is where you put how much you are offering to pay, a figure which can be altered if counter offers are made.
Deposit: This is the percentage of the agreed sale price (usually but not always 10 per cent) that you pay when the contract is declared unconditional by your lawyer. (You pay the balance on the settlement date when you take over ownership and get the keys).
Conditions: These can include securing suitable finance requirements, a builder's report, insurance, information on earthquake damage, council reports and lawyer's confirmation of contract. The agreement will not be confirmed until the conditions are met.
Tenancies: If the property is tenanted then these details will be recorded here.
David Weusten has 33 years' experience in the finance industry, owns Financial Service Providers NZ, is a budget adviser and business mentor and has published three books. Email firstname.lastname@example.org. Next week - mortgages and other costs.
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