Buying a home is likely going to be the biggest investment you ever make.

It can also be a very stressful and emotional time, so it’s easy to get caught up in the process and overlook some of the other expenses that go along with buying a home. As a first-time buyer you’re already putting in a significant amount of money, so we want to make sure you avoid any surprises and can plan your budget accordingly, so that you can really relish in that first home buyer glow and don’t get caught out. 

Aside from the purchase price, there are several other expenses to think about: fees for professionals during your house search, mortgage payments, repair and renovation costs, ongoing fees, council rates, and the expense of setting up your new place.

Don't get too overwhelmed - we know that what we're about to run through below will likely sound like a lot, but keep in mind that you could be eligible for some cashback from the bank which you could use to help cover a lot of these expenses. Talk to your Buddy adviser about how to make the most of your cashback opportunities when taking out your first mortgage!

Now, let’s go over the additional costs you should plan for to prevent any unexpected surprises.

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1. House Hunting Expenses

Sure, browsing listings during your commute and touring homes on weekends don’t seem too pricey at first. But when you start diving into the home-buying process, it’s wise to bring in a few experts to help with the details before you commit to anything. You’ll need:

A Lawyer

Buying a house involves a lot of legal stuff and paperwork. To make sure you understand everything and what you’re agreeing to, you’ll need a lawyer or conveyancer.

They’ll check the title record for the property, which shows the boundaries and details your rights and any restrictions. However, lawyers often charge a fee per property to go over auction documents like the LIM report and auction contract, typically around $250-$300. If you’re looking at several properties, these costs can add up.

On the whole, you can expect to pay between $1,500 and $3,000 in legal fees for buying a house, depending on the property and how much work is involved. If you’re buying a new build or planning to construct one, the fees might be higher due to more paperwork.

Our Buddy advisers work with some excellent lawyers and can make some recommendations for you, or you could ask your real estate agent to point you in the right direction. 

Building Inspector

If you’re eyeing a property, it’s a smart move to hire a building inspector to give it a proper check. Even though some sellers or agents might offer a pre-made report, it’s better to get your own from someone you trust so you can ensure they’ve really looked at all aspects of the property. 

Expect to pay between $300 and $1,000 for an inspection, depending on what kind of report you want and the size of the property. A quick verbal report might be cheaper, but a detailed written one will generally cost at least $500. It’s important to note that in New Zealand, building inspectors don’t need certification, so it’s a good idea to shop around.

Getting a professional inspection before you go to auction or put in an offer can save you from nasty surprises and big costs later on. It can also give you an idea of how much (if any) repairs, renovations, or maintenance might set you back so you can prepare for this when you’re getting ready to buy. We wouldn’t recommend getting a building inspection for every property you look at, but definitely any property that you’re seriously looking to purchase. 

Your Buddy adviser can recommend a few great inspectors, or you could also check out the Building Officials Institute of New Zealand.

LIM Report

You might have heard this term thrown around a lot in the property world. A Land Information Memorandum (or LIM report) will give you a rundown of the property’s info from the council, like rates, permits for any work done, and any potential issues such as subsidence or flooding. Since LIM reports can get updated, make sure any report you get from a seller or agent is the latest version.

Typically, you can expect to pay around $300 to $400 for this report, though prices might differ based on location. If you need it in a rush, within 48 hours or so, expect to pay a bit more.

2. Mortgage Repayments

Ok we get it, this one is pretty obvious. But there are a few things to consider here, on top of your normal payments which will be comprised of both principal (paying off the actual mortgage itself and reducing the debt) and interest (what the bank charges you for lending you the money). 

Changing Interest Rates

When approving your mortgage application, banks will check if you can handle repayments using a higher interest rate than what’s currently available, just to make sure you’re covered if rates go up (this is called the stress test). They often stress test your affordability at 2-3% higher than the current market rates, so the bank can be confident that you can still make your repayments if this happens.

However, even if you meet the stress test, it’s important to keep in mind for your budget that rates can fluctuate, and depending on how long you’ve fixed for, you want to have a plan available if you need to pay higher rates. If rates do drop, you can talk to your Buddy adviser about ways to pay off your loan faster. And don’t forget to shop around for the best lender - our team has access to 26 different providers so we can get you the best deal around.

If you want to find out what you can afford to borrow and what your repayments would look like at different interest rates, CalculatorBuddy™ has you covered!

3. Renovations and Furnishings

Renos

A bit of classic Kiwi DIY can be practical, but can also quickly become more expensive than you think. 

Before you start smashing through walls, we recommend doing some solid research on the projects that you want to undertake. This includes how long things will take, and setting out a realistic budget (and then adding 15% to this for any variances). If there’s a long list of things you want to get stuck into, start with the most pressing ones that will have the biggest impact - like heating and insulation. It’s a good idea to check if you need consent from your local council before making significant changes to the property, as these can have implications on your resale value if the process isn’t handled correctly, and there are also costs involved with acquiring council consent. 

Furnishings

We know that it’s super tempting to want to bring all your plans for your dream home to life at once, but we usually find that buyers who hold off on this until they’re a bit more settled, end up maximising their dollar when they’ve had a chance to work out what they need. 

The sale and purchase agreement will outline what big ticket items (dishwasher, stove, light fittings etc.) are included, so don’t go on a spending spree until you’re fully aware of what the home comes with. Sometimes you might even get lucky and pick up an extra appliance the previous owners ran out of space to take! If you know that your budget will be quite tight with your new mortgage payments, check out places like Facebook Marketplace and TradeMe for some hidden gems that are often a lot easier on the wallet! 

4. Ongoing Costs

Sadly, owning a home comes with a certain amount of fixed costs that you likely didn’t have to think about when you were renting or flatting. It’s important to factor these into your monthly budget:

Council Rates

As a homeowner, one of your biggest regular costs will be council rates. These charges help fund local services and infrastructure such as road maintenance, garbage collection, parks, stormwater systems, and libraries.

Rates can vary based on your location, so it's worth visiting your local council’s website to see the specific rates for your area. To make payments easier, you can usually choose to set up direct debits for smaller, more frequent payments instead of dealing with a few big bills.

Insurance

Since the home you’ve just bought is likely the most expensive thing you’ve ever owned, you’re going to want to take out an insurance policy to protect your investment. The banks will enforce that you take out policy also with them noted as the interested party. The Cordell sum sure is a user-friendly online calculator that delivers property rebuild cost estimates quickly and easily.

Maintenance

Whether you’re buying a brand new home or building from scratch, remember that every property will need some upkeep as time goes on. While you can tackle minor fixes yourself, larger jobs like roof repairs, exterior painting, and plumbing issues usually call for professionals. Planning ahead for these potential costs and setting aside some savings, or even creating different accounts for routine maintenance expenses, can help you stay prepared. 

Body Corporate Fees

If you buy an apartment or unit, you’ll be responsible for Body Corporate fees which cover things like maintaining the building and its shared facilities, insurance, and electricity for common areas (such as hallways and lobbies). Make sure to factor these in if you’re looking at buying this type of property so you can factor this into your budget.

Summary

Homeownership means juggling your mortgage payments with all these other expenses while still enjoying your life. If you can find the right balance, you should be able to sort the admin side of your home without giving up your daily cuppa and smashed avo fix. Your Buddy adviser can guide you in structuring your mortgage to fit your needs and future plans.

Keen to know more? Whether you’re ready to buy now or just starting to think about your first home, get in touch with our friendly team to have a chat. Our advisers are highly trained and super experienced, and have helped hundreds of Kiwis into their first home. We don’t just get you the best deal on a loan, we work with you to take the uncertainty and hassle out of the process. 

We’re here for you every step of the way - because that’s what a Buddy is for!