Beyond the deposit: Unpacking first-time home ownership costs

Buying your first home – it’s a big milestone to tick off, but it’s important to know that it comes with a price tag beyond the number you see on the listing. From legal fees, to building reports and council rates, getting your head around the financial side of becoming a home owner can feel overwhelming. But don’t let that send you into a spiral! Understanding the expenses involved upfront - before you sign the sale and purchase agreement -will make things feel more manageable.

Read on for a breakdown of the essential costs, so you cant make your first step onto the property ladder feeling under control and excited.

Purchase costs

As you start scouring the real estate listings for your first property, here are some key costs to factor into your plans:

1. Builder’s report – when you make an offer on a property, usually the offer will be conditional on a builder’s report. Or, if the home you love is up for auction, you’d commission the builder’s report before auction day. Either way, $400-600 will help arm you with a professional opinion on whether the house you’re buying has any structural issues that could cause     headaches down the line.
2. LIM report – while a land information memorandum (LIM) is not always required by banks, many buyers include it when undertaking their due diligence. A LIM, available for an average of $350, offers a range of information the council considers relevant to the property, from zoning and consents, to heritage protection and flooding.
3. Registered valuation – before approving the mortgage, your lender may require you to get a registered valuation if your deposit is lower than 20%, or you’re buying through a private sale. If this could be the case, you should budget for between $700 - $1,200 but bare in mind it does vary property to property. If your registered valuation needs to be urgent then it generally costs abit more (approx. $250).
4. Solicitor’s fees – as you navigate the home buying process, a good lawyer will be your trusted ally. From reviewing the property title to clarify your rights and any restrictions on the property, to examining the auction contract and sale and purchase agreement, ordering a LIM, managing conditions and organising KiwiSaver withdrawals, they’re worth the $1,800 plus in fees. If you’re buying your first home with a friend, partner or family member, they can also advise on ownership structures and protect your future interests if/when the property is sold.

Ownership costs

It’s one thing to buy a property, but quite another to maintain it – the costs don’t stop coming once you’ve reached settlement day! First, there’s your initial set up costs:

1. Movers or renting a truck – if you’re moving out of your parents’ home or a flat, you might not have much furniture or appliances to transport. But you’d be surprised how stuff piles up, so plan ahead for whether you’ll need to pay for movers or a rental truck, as this can range from $400-$2,000 depending on the distance and service.
2. Furniture and appliances – most people don’t have the funds to buy a    house-worth of furniture and appliances for move-in day, and there’s no     need to rush – take your time, browse and save up for the pieces you want.     You can survive without the nice-to-haves, but a fridge, washing machine     and bed are usually considered the basics, so putting aside at least     $2,000 is ideal.

Then once you’ve moved in, there’s the costs you need tobudget for on a regular basis:

1. Rates     – we can’t share a dollar amount for council rates, which fund essential     services and infrastructure, as they vary considerably depending on the     property and location – but you should be able to find these out during     the purchase process.
2. Insurance – plan ahead for a (very) rainy day by taking out a     house insurance policy from your settlement date – this will usually be     required by your lender. Before you buy your new home, you can source a     range of online quotes for a particular property, to allow you to budget     ahead. Contents insurance is also recommended - if you’ve been renting you     may already have this set up, so make sure to change the policy details     with your insurer.
3. Mortgage payments – your mortgage is likely your biggest ongoing cost.     Over the period of your loan, our team is always available for advice     regarding refixing, refinancing, making lump sum payments, mortgage     top-ups and more.
4. Utilities – these     include power, internet and water, and will vary widely depending on     location, property and your usage behaviour. When looking for a power     provider, comparison sites like Powerswitch can help you make an informed decision. Water bills     will depend on the local council, with some including it in your rates     bill, and some treating it separately through monthly billing.

Don’t let this list intimidate you – it’s all about beinginformed so you can plan ahead, and avoid surprises. We know budgets can betight, but on top of the costs above, it’s worth putting aside a small ‘just incase’ fund so you can handle unforeseen costs that might pop up.

And remember – our team are mortgage experts, clued up onevery step of the process, and can help with referrals for the otherprofessionals you’ll need on your side as you begin your property journey.

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