Let’s take a journey through these often-overlooked expenses that every potential homeowner in New Zealand should be aware of:
The paper trail: reports and inspections
Before you even make an offer, you’ll need to do your homework. This means:
- LIM (Land Information Memorandum) report: NZ$300-$400
- Building inspection: NZ$500-$1,000
These reports are crucial; they can reveal potential issues with the property that could save you thousands in the long run.
Legal eagles: solicitor fees
Once you have found a property that you like before making an offer, you’ll need a solicitor or conveyancer. Their fees can range from NZ$1,000 to NZ$3,000, depending on the complexity of the sale.
Securing the funds: mortgage-related costs
While you might be focused on interest rates, don’t forget about:
- Mortgage arrangement fees: Can be NZ$200-$1,000
- Valuation fees: NZ$300-$1,000 if required by the lender
- Lenders Mortgage Insurance (LMI): Required if borrowing more than 80% of the property’s value. The cost is typically between 0.5% and 2.0% of the loan amount. For example, a NZ$500,000 loan might incur an LMI cost ranging from NZ$2,500 to NZ$10,000. LMI is a one-time upfront payment and is not an annual charge. It’s generally paid at the time of loan settlement and can sometimes be added to the loan amount.
The big move: relocation expenses
Moving costs are often underestimated, especially if you’re relocating to a different city. Factor in:
- Professional movers: NZ$500-$2,000 depending on distance and amount
- Packing materials: NZ$50-$200
- Temporary storage: NZ$100-$300 per month if needed
Setting up shop: utility connections
Don’t forget the costs of setting up:
- Power
- Water
- Internet
- Gas (if applicable)
These can all come with connection fees, which can vary but typically range from NZ$50-$200 per service.
Ongoing commitments: regular expenses
Your financial obligations don’t end at settlement. Remember to budget for:
- Council rates: NZ$1,000-$2,000 annually, depending on the location
- Body corporate fees (for apartments or units): NZ$1,000-$3,000 annually
- Home and contents insurance: NZ$400-$1,000 annually
Expect the unexpected: maintenance and repairs
No matter how thorough your inspection, there’s always a chance of unexpected issues. It’s wise to set aside a contingency fund for repairs and maintenance, especially for older properties. A good rule of thumb is to save 1-2% of the property’s value annually for maintenance.
The fine print: other potential costs
Depending on your situation, you might also face:
- Break fees: If switching from an existing fixed-term mortgage, fees can be substantial
- Mortgage repayment costs: First-time buyers often underestimate these, especially if they’ve budgeted only for the monthly principal and interest
By understanding these hidden costs, you can budget more effectively and avoid nasty surprises down the track. Remember, while these additional expenses might seem daunting, they’re a normal part of the home buying process. The key is to be prepared and factor them into your budget from the start.
At Your Property Buddies, we’re committed to addressing the concerns raised by our community. Our goal is to empower you with the information you need to make informed decisions. While we don’t offer financial advice, we can connect you with screened, experienced real estate professionals and tradies.
By prioritising transparency and comprehensive understanding, we aim to support you every step of the way, ensuring you’re well-prepared for all aspects of your property journey – hidden costs included.
Happy house hunting! Remember, when it comes to buying a home, knowledge truly is power. Using a step-by-step buyer's guide or checklist can significantly help you on your journey. Our standardised, step-by-step checklist is designed to assist you, but it may not cover every individual scenario. It’s a helpful guide, but not exhaustive. For personalised guidance tailored to your unique situation, we highly recommend consulting trusted real estate professional(s).