Kiwisaver/Mortgage and Insurance

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#1764179 14-Apr-2017 09:29

Home and contents is something like $2K per year for me. $225K won't get you much unless you live in a small town or way way out. The bank will look at your outgoings and decide for themselves what you can afford.

Kiwisaver for first home can take a long time to process. You have to apply (from memory) at least a month before settlement date, but you have to have all your forms and procedures worked out well in advance. Ask your lawyer. Lawyer might cost you $2k, plus you may have other expenses like builders reports. If you don't get a house, say in a tender, you may still have significant legal bills.

Once you get the house you may need to do repairs.

Don't stretch yourself too thin.

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#1764201 14-Apr-2017 10:14

nickb800:

You cannot get a mortgage rate fixed for 30 years in NZ. TSB released 10 year fixed product in 2015, and that was a first for the private banks (the government used to offer 30yr terms via the State Advances Corporation).

Yes you can stop contributing to Kiwisaver, it's called a contributions holiday, and you can effectively do it indefinitely. So that frees up 3% of your income to go on mortgage repayments

Yes, but if you are not contributing to Kiwisaver then you are missing out on the employer and government contributions.

I would suggest planning to remain in Kiwisaver, but the knowledge that you can stop Kiwisaver contributions gives you a buffer if you get desperate under sudden unexpected interest rate rises.

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#1764204 14-Apr-2017 10:16

timmmay:

If you don't get a house, say in a tender, you may still have significant legal bills.

In an unsuccessful tender I would have thought the lawyer would have just reviewed and completed the tender form? Or do they have to do a whole lot of faffing about with checking the property title?

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#1764296 14-Apr-2017 13:20

alasta:
timmmay:

If you don't get a house, say in a tender, you may still have significant legal bills.

In an unsuccessful tender I would have thought the lawyer would have just reviewed and completed the tender form? Or do they have to do a whole lot of faffing about with checking the property title?

IANAL. But from past experience you can put in your own terms in a tender. So you can put in the sale and purchase agreement that it is conditional on you doing your due diligence afterwards if it is successful. Eg building inspection, checking title etc.

alasta

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#1764388 14-Apr-2017 14:50

mattwnz:
alasta:

In an unsuccessful tender I would have thought the lawyer would have just reviewed and completed the tender form? Or do they have to do a whole lot of faffing about with checking the property title?

IANAL. But from past experience you can put in your own terms in a tender. So you can put in the sale and purchase agreement that it is conditional on you doing your due diligence afterwards if it is successful. Eg building inspection, checking title etc.

The standard real estate agents' forms that I have seen have a section where you can specify these types of conditions. In fact they seem to be set out so that they can be completed without a lawyer's input, but obviously you'd be a fool not to get your lawyer to look over it regardless.

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#1764390 14-Apr-2017 14:58

alasta:

mattwnz:
alasta:

In an unsuccessful tender I would have thought the lawyer would have just reviewed and completed the tender form? Or do they have to do a whole lot of faffing about with checking the property title?

IANAL. But from past experience you can put in your own terms in a tender. So you can put in the sale and purchase agreement that it is conditional on you doing your due diligence afterwards if it is successful. Eg building inspection, checking title etc.

The standard real estate agents' forms that I have seen have a section where you can specify these types of conditions. In fact they seem to be set out so that they can be completed without a lawyer's input, but obviously you'd be a fool not to get your lawyer to look over it regardless.

There are a range of forms, and some special ones for tenders. However agents don't always use the most appropriate forms from my experience. It certainly pays to get a lawyer to read through them incase of any odd terms that have been added. People who aren't familiar with buying and selling a house should obviously use a lawyer. However there is no point in paying for a lot of checks (eg building inspections) if you don't even have a chance of buying it, which is why people usuall add that as a condition to the contract. Personally I avoid tenders anyway, as they are terrible for buyers. I have even had agents say that you need to make the offer as clean as possible. For auctions you have to do all your due diligence before the auction, which also isn't good, as you may have a few thousand dollar in costs, and never even have a chance of buying it. But at least you know what other people are prepared to pay for it, where as a tender is completely blind. eg. Eg in a tender you may offer 50k more than the next highest bidder. Whereas at an auction., you would have likely only had to pay slightly more than the next highest bidder.

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#1764591 14-Apr-2017 23:38

nzkiwiman: I am trying to build in some wriggle room into my numbers, which is why I think the max I can borrow is going to be less than the calculators

Glad to see somebody is being sensible and not spending their last dollar.

mattwnz: It is incredibly hard for someone single to buy a home ... If your income is low, you may also qualify for rates relief.

I don't want to advertise any particular service, but the Welcome Home Loan from Kiwibank does sound enticing for lower incomes.

nickb800: Yes you can stop contributing to Kiwisaver, it's called a contributions holiday, and you can effectively do it indefinitely. So that frees up 3% of your income to go on mortgage repayments

alasta: Yes, but if you are not contributing to Kiwisaver then you are missing out on the employer and government contributions.

I would suggest planning to remain in Kiwisaver

You are getting money for nothing if your employer and the government contribute. Make use of this benefit for as long as possible. You have to be a pretty savvy investor or have huge investments to earn more than the 3% employer contribution + $1500 government MTC to not make use of these contributions. As a contractor, I really miss that employer contribution.

Please keep this GZ community vibrant by contributing in a constructive & respectful manner.

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#1764764 15-Apr-2017 17:16

Whats your dad going to live in, that you must move?

My house. contents and car and a 2nd car on 3rd party is $180 a month.

The house part of that is $75.70 a month.

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#1764767 15-Apr-2017 17:34

I don't really agree with being able to use kiwisaver to buy a house, as I think it should be used for retirement. I also think that it has only helped to fuel house prices, as it means that most people who have kiwisaver, will have at least a 10k deposit already (20+k for a couple). So when there is a lack of supply, such as with the current housing crisis, it means that people can afford to pay more, as they already have a larger deposit at their disposal.

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#1764770 15-Apr-2017 17:39

Its actually not a bad idea to buy a place IF you can afford it.

If you were to budget this, I would be budgeting using a mortgage rate of about 6 -> 6.5%. The rates are lowish now, but if they go up, the bank is still going to expect payments.

I had a 60m2 house which i rented out and would pay $72 per month for home insurance. Bear in mind, that may seem is on the high side because it was rented to tenants. What I would do if I were you is call up your insurance company and say, I am looking at a property, doing some budgeting and would like to know how much it would cost to insure a house which is x size in this particular city.

Then I would ask neighbors in the area if they wouldn't mind giving you and idea of what they are paying in rates. This is usually dependent on your local council, how much they charge and the size of your land, but you might be able to work out a rough estimate.

I would also factor in a bit for water as well.

Its also worth working out if you want to buy the property with a friend or partner. You may have some legal costs if but if you both decide you want to buy a place together for 5years+ then you can have a joint ownership/share type of setup. Or you could get a flatmate or someone to else who pays rent that can help with repayments. I would probably build up a contingency fund in case they move out suddenly and you need to get someone else, if you go down this road.

There are other costs when purchasing, such as legal fees and some banks will charge mortgage establishment fees or low equity fees, so its worth bearing this in mind.

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#1766630 18-Apr-2017 11:07

pctek:

Whats your dad going to live in, that you must move?

My house. contents and car and a 2nd car on 3rd party is $180 a month.

The house part of that is $75.70 a month.

I suspect I know the reason, but I won't say on a public internet forum

Thanks to everyone who has given me some numbers to plug into my calculator
It really doesn't look like the numbers are working to give myself a house, but I'll continue to wait for Kiwisaver to come back to me and take that to a mortgage broker

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#1766661 18-Apr-2017 11:58

Rates - you can easily find the rates to be paid from the council website of the area you are looking at - plug the address in, and it will tell you the rates. Easy to look at Real Estate listings and find out the rates from there (find a place in your price range from the listings, should have the address for open homes, and look it up on council website).

Be aware, in some areas (I know Napier is one), you will get a rates bill from the City Council, and another from the Regional Council (a lot smaller in Napier's case).

Some areas, you may have to pay for water separately too.

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#1766699 18-Apr-2017 13:24

trig42:
Rates - you can easily find the rates to be paid from the council website of the area you are looking at - plug the address in, and it will tell you the rates. Easy to look at Real Estate listings and find out the rates from there (find a place in your price range from the listings, should have the address for open homes, and look it up on council website).

Be aware, in some areas (I know Napier is one), you will get a rates bill from the City Council, and another from the Regional Council (a lot smaller in Napier's case).

Some areas, you may have to pay for water separately too.

If you pay over the top for the house, the rates will likely increase as the RV often goes up to better reflect the sale price.

nzkiwiman

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#1767315 19-Apr-2017 13:42

Got my Kiwisaver information from my provider yesterday and so have booked in a meeting with a local mortgage finder firm.

As I was doing my budget (using some of the prices listed here for items I didn't know) and while it started of looking pretty good, eventually I figured out I needed to stop living as I had a $500+ deficit each month

So, not looking likely that I could get a mortgage that would actually provide me enough to get a house

mattwnz

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#1767325 19-Apr-2017 13:48

nickb800:

You cannot get a mortgage rate fixed for 30 years in NZ. TSB released 10 year fixed product in 2015, and that was a first for the private banks (the government used to offer 30yr terms via the State Advances Corporation).

Yes you can stop contributing to Kiwisaver, it's called a contributions holiday, and you can effectively do it indefinitely. So that frees up 3% of your income to go on mortgage repayments

At the moment you can, but that could always change in the future, as the government loves making changes to kiwisaver. Also if your employer is already contributing, then that is potentially a lot of lost money, unless you can get them to replace it with a payrise.

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