Buying a home is a milestone to celebrate, but also a big financial commitment. Here’s how due diligence can help you avoid the most frequent missteps New Zealand home buyers make.
Not having a clear budget from the start
Before you fall in love with a listing, it’s important to have a defined budget. Otherwise, you may waste time looking at homes you can’t afford – or worse, stretch beyond your means.
Not sure where to start? Check out our article on preparing for the different costs of homeownership.
Not knowing what mortgage options are available
Some people go straight to their banks when looking for a mortgage. But banks can only offer their own products – which may or may not be the most appropriate option for your needs.
From comparing mortgages to helping you structure your home loan, a Mortgage Link adviser is there to guide you through the whole process, including researching options across a range of lenders (banks and non-bank) - click here to find a mortgage adviser in your area.
Waiting too long to sort out finance
Many first-home buyers put off applying for a mortgage until they’ve found a property – but this can seriously limit your options.
In today’s market, banks can take several weeks to process loan applications. That delay can cost you a property, especially if you’re under time pressure or need finance sorted before buying at auction. Talk to a Mortgage Link adviser early so you can act quickly when the right home comes along.
Overlooking your credit history
Your credit score matters more than you think, because errors or unpaid debts can affect your mortgage approval. Checking your credit report early in the piece gives you time to resolve any issues and present your finances in the best light. Learn more about how credit scores impact your home loan.
Skipping a thorough property inspection
That freshly painted villa might look perfect, but is it as healthy as it appears? Moisture issues, leaky cladding, poor wiring and structural faults often go unnoticed without a professional builder’s inspection. Even if the vendor provides a report, it’s still recommended to arrange your own through an independent inspector who’s working in your best interest.
Not reviewing the LIM and council records
The Land Information Memorandum (LIM) and property file can reveal a lot about a home, from unconsented work to flood risks and zoning rules. Overlooking these details could result in costly repairs or legal restrictions down the line. A property lawyer should review all documentation before you proceed and go unconditional.
Missing the fine print in the title
Property titles contain key information about ownership, access, restrictions and other rights. Failing to review the title can lead to unexpected legal headaches, especially if there are easements or covenants in place. Once again, your lawyer can check this for you and flag anything that needs close attention.
Ignoring risks in unit titles or body corporates
Buying an apartment or townhouse? You’ll need to understand how the body corporation works, including rules, maintenance plans and insurance. Review the disclosure statement and financials carefully and get your lawyer to check for red flags like unresolved weathertightness issues or large upcoming levies.
Underestimating natural hazards
With extreme weather events becoming more common, it’s important to know if a property has been affected by flooding or earthquakes. Ask the real estate agent or make an (Official Information Act request) to Toka Tū Ake for previous natural hazard claims. Some homes may be harder (or more expensive) to insure, and you’ll want to know that before committing.
Assuming you know the value
Even if you think you have a good sense of a property’s value, it’s worth noting that Council Valuations (CVs) don’t represent current market prices. Online estimates, such as those from Homes.co.nz can provide a general indication based on recent sales, but they should be treated as reference points rather than definitive valuations.
A registered valuation gives a more accurate picture and may be required by your lender, especially if you have a smaller deposit. It’s also a helpful tool when deciding what to offer in a competitive market.
Not asking the right questions
Don’t be afraid to quiz the real estate agent. Ask how long the property has been on the market, whether it’s owner-occupied or rented, and if there are any known issues or recent renovations. If they’re aware of any problems (for example, unconsented work), they’re legally obliged to tell you. Always cross-check the answers with your lawyer or building inspector.
Forgetting about deposit support schemes
Depending on your situation, you may be eligible for the KiwiSaver withdrawal or a First Home Loan (with just 5% deposit). Not quite sure? Get in touch. Your Mortgage Link adviser can help you understand what you qualify for and how to apply.
Remember: you don’t have to do it alone
There’s a lot to consider when buying a home. But with the right advice, you can avoid the pitfalls and feel confident at every step.
Talk to a Mortgage Link adviser today and start your home-buying journey with support that works for you.
Disclaimer: Link Financial Group 2022 Ltd – FSP 1004590, trading as Mortgage Link and Insurance Link FSP 696731 holds a licence issued by the Financial Markets Authority to provide financial advice. Please visit https://mortgagelink.co.nz/available-disclosure/ for more information and Disclosure information.
