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The Real Cost Of Buying A Home In NZ · That Home Loan Hub

0:10
SPEAKER_00: We're going to talk about typical costs when buying a house in New Zealand.
0:15
SPEAKER_00: AI edition.
0:16
SPEAKER_00: And we're going to question AI on its calculations.
0:20
SPEAKER_00: Because, you know, just like you, we like to use AI.
0:22
SPEAKER_00: And a lot of buyers come to us and they go, Oh, I've done this and I've done that.
0:25
SPEAKER_00: And ChatGPT said this and that.
0:27
SPEAKER_00: So um, so let's let's go line by line.
0:29
SPEAKER_00: And I've got Megan to help me out today.
0:31
SPEAKER_00: Hello, Megan.
0:32
SPEAKER_03: Hello.
0:33
SPEAKER_00: We're gonna go line by line and see what our ChatGPT friend has told us.
0:38
SPEAKER_00: So for the lawyers, Chat GPT is assuming you need to have between 1500 to 3,000.
0:44
SPEAKER_00: And this just during purchase and settlement.
0:46
SPEAKER_00: What do you think?
0:47
SPEAKER_03: Yeah, that one, like, I'll just do a disclaimer.
0:51
SPEAKER_03: Like, none of these costs are real estate costs.
0:53
SPEAKER_03: So we're just kind of talking because we think that it would be interesting, not because we are coming from a position of actually knowing some of these.
1:02
SPEAKER_03: So$1,500 to three grand, that sounds a bit like the cost that we had when we moved to our new well, our current house.
1:11
SPEAKER_03: And that would have been about six years ago.
1:14
SPEAKER_03: So it would be reasonable to assume that that might have gone up.
1:18
SPEAKER_03: And it might also be based on how complicated the transaction is.
1:22
SPEAKER_03: Like if it was a trust, a business, or just a straight first home purchase.
1:26
SPEAKER_03: Yeah.
1:27
SPEAKER_03: Or how much the lawyer had to support the person maybe during that process.
1:31
SPEAKER_00: And look, in our in the past, I've been very, very lucky to have fantastic lawyers that I've partnered with that would forgive the first few contracts because people would put an offer and then the contract doesn't go anywhere because the offer hasn't been accepted.
1:44
SPEAKER_00: So usually lawyers just absorb that cost if they're good lawyers.
1:47
SPEAKER_00: But I have heard that normally they would charge$150 to$300 per hour.
1:51
SPEAKER_00: And again, depends, like if it's a five-minute quick job, just glance over it and go, yep, cool, put those conditions.
1:56
SPEAKER_00: But if it's something more complicated and complex, then yeah, the lawyers may charge you that.
2:02
SPEAKER_00: Do ask if they're if they do have a package for first-term buyers, if they have a fixed fee, because Kiwi Saver withdrawal is also an additional fee that people don't realize.
2:11
SPEAKER_00: And as you say, if you're gonna be a needy client, shall I say, please don't throw exit and you need more support and you keep asking the lawyers questions, then they will probably charge you a little bit extra as well.
2:25
SPEAKER_00: But also, as you say, the complications.
2:26
SPEAKER_00: Like I had one recently where they couldn't settle on time because the vendors had some sort of caveat on the property, and the other party didn't want to remove the caveat until they agreed to terms.
2:37
SPEAKER_00: So my poor buyers have been stuck in a limbo for the last week trying to settle on the property.
2:43
SPEAKER_00: And again, I'm worried for them because I'm thinking, are they going to incure all those extra costs from the lawyer?
2:48
SPEAKER_00: Because the lawyer had to go back and forth, back and forth, and not fault at their own, but the lawyer has also spent time on it.
2:55
SPEAKER_00: So who pays that bill?
2:56
SPEAKER_03: Yeah, yeah.
2:57
SPEAKER_03: And what I say to my clients is ask the lawyer.
3:00
SPEAKER_03: You know, it seems basic, but if you're worried about the fees, ask them.
3:06
SPEAKER_03: We have a lot of elderly clients, and we always recommend that they get the paperwork checked.
3:11
SPEAKER_03: And there's so many people that I suspect haven't checked their paperwork because they're worried or they'll blatantly say, I'm worried about the cost from the lawyer, it's adding up.
3:22
SPEAKER_03: And if you start that conversation with the lawyer, treat it more like a job interview and say, Hey, how much does your typical conveyancing for selling cost?
3:31
SPEAKER_03: And then say, Well, if we're moving to a retirement village, how much does that typically cost?
3:36
SPEAKER_03: Or if we're purchasing, how much does that typically cost?
3:39
SPEAKER_03: It's okay to ask.
3:41
SPEAKER_03: Like in this day and age, it's knowledge is power and you know, informed consent is big.
3:46
SPEAKER_03: Yeah.
3:47
SPEAKER_00: Exactly.
3:48
SPEAKER_00: So, all right, 1500 to 3,000.
3:50
SPEAKER_00: Chat GPT sort of got it right.
3:52
SPEAKER_00: Lim report.
3:53
SPEAKER_00: He thinks it's gonna be, I don't know why it's a he.
3:56
SPEAKER_00: Um, it's gonna be between 200 to 450.
3:59
SPEAKER_00: What do you think?
4:00
SPEAKER_03: In Carpenter, I'd love it if it was 200.
4:02
SPEAKER_03: We've just had a price increase.
4:03
SPEAKER_03: It was 385, I think it was, roughly.
4:06
SPEAKER_03: Now it's gone up to about 470.
4:08
SPEAKER_03: So yeah, it depends on the council, I think.
4:11
SPEAKER_00: So I usually allow 500.
4:13
SPEAKER_00: I usually say to my clients, just aim for 500.
4:16
SPEAKER_00: I like to underpromise and over-deliver.
4:18
SPEAKER_00: Yeah.
4:18
SPEAKER_00: So if we can't inflate that price up front and then surprise you and delight you and go, hey, it's actually cheaper, yeah, right, everybody wins.
4:26
SPEAKER_00: But if you're gonna think, oh, it's only gonna be 200 and then realize it's gonna cost you way more than that, what are you gonna do then?
4:33
SPEAKER_03: I don't know anyone who gets limbs for 200, but you know, I only operate in Carpenter.
4:39
SPEAKER_03: So maybe some of the smaller towns might.
4:42
SPEAKER_00: Yeah, I would love to hear from you if you're listening from smaller towns.
4:45
SPEAKER_00: Building inspection, 400 to 800.
4:48
SPEAKER_03: Again, I think that's really light.
4:50
SPEAKER_03: The builders that we have here, some of them, it depends on the square footage and whether it's two stories and how complicated the roof structure is and a bunch of things, but I would say between six and nine hundred would be more realistic for these costs.
5:09
SPEAKER_03: Again, because the building inspectors are independent companies, we always say to the clients, ring ring a bunch of them and find out which one you're comfortable dealing with and you know what their fees are for this particular property.
5:23
SPEAKER_00: Okay, let's go registered valuation.
5:26
SPEAKER_00: This one had me laughing.
5:28
SPEAKER_00: 600 to 1200.
5:31
SPEAKER_03: Yeah, I mean, that's more your area, isn't it?
5:34
SPEAKER_03: Yeah.
5:34
SPEAKER_03: But I've heard from clients it's about a thousand dollars.
5:36
SPEAKER_03: Correct.
5:37
SPEAKER_00: Yeah so I've never, ever, ever in the last nine years of being a mortgage advisor and then another six, seven years of being a banker before that, have seen$600 before.
5:49
SPEAKER_00: So$600 is definitely wrong.
5:50
SPEAKER_00: You're looking more around$900,950 for a basic valuation.
5:54
SPEAKER_00: Now, there is an urgency fee of$250 on top.
5:56
SPEAKER_00: So if you wanted an urgent one,$250, and usually you get the report back within two, three days.
6:01
SPEAKER_00: Now, if it's a complex one, so if you're looking at a build or a lifestyle block or it's a big house, I know I've when I've spoken to values before, they go by square meters sometimes.
6:13
SPEAKER_00: So they've got some sort of formula.
6:15
SPEAKER_00: I remember then maybe I should get a value here.
6:17
SPEAKER_00: Yeah, I remember they're telling me before that there is a formula the way they calculate their costing.
6:22
SPEAKER_00: So if it's a big, big house, you're probably gonna look at$1,500 and up.
6:25
SPEAKER_00: So um, so definitely not$600.
6:28
SPEAKER_00: Okay, moving cost.
6:30
SPEAKER_03: Yeah, again, this one$500 to$2,000.
6:34
SPEAKER_03: I was like, is the$500 where you rent your own truck, or maybe you don't have very much furniture.
6:40
SPEAKER_03: I'm not sure.
6:41
SPEAKER_03: I think it was over a thousand the last time we moved, and yeah, that was six, seven years ago.
6:46
SPEAKER_03: We had quite a lot of stuff, but we only moved from Johnsonville to Carpenter, so it wasn't a very long trip.
6:54
SPEAKER_03: Yeah.
6:54
SPEAKER_03: So I know some retirement villages provide trucks and they'll even do the ferry ride to the South Island.
7:01
SPEAKER_03: Oh wow.
7:02
SPEAKER_03: There's a lot of things that can be included, but if it's just moving from house to house, I would allow at least 1,500-ish.
7:12
SPEAKER_03: And that's off the top of my head.
7:13
SPEAKER_03: I was gonna say the same 15 to 2K, and then if you've got a really big house or a lot of very like if you're move moving a piano or something difficult or delicate, you might want to just get some quotes.
7:25
SPEAKER_03: Yeah.
7:26
SPEAKER_03: Wanna rely on chat GPT?
7:28
SPEAKER_00: No, can I just say for a moment, we'll just divert.
7:31
SPEAKER_00: I wanna say about the moving piano deadland.
7:35
SPEAKER_00: I feel like there's so many abandoned pianos.
7:37
SPEAKER_00: There are so many orphaned pianos out there, especially the big, big, the giant heavy ones.
7:44
SPEAKER_00: Yeah, yeah.
7:45
SPEAKER_00: Okay, moving back.
7:48
SPEAKER_00: Oh, this one's interesting, and then after that one as well.
7:51
SPEAKER_00: Home insurance$1,500 to$3,000 per year.
7:55
SPEAKER_03: What do you think about that?
7:56
SPEAKER_03: Because that's you'd probably see more of that because Zebra Neso also provides insurance.
8:02
SPEAKER_03: What do you think about that?
8:03
SPEAKER_00: So for the house insurance, we're looking at at least gosh$2,000.
8:10
SPEAKER_00: Wow.
8:11
SPEAKER_00: $2,000 per year, I would say, two and a half.
8:15
SPEAKER_00: Yeah, something like that.
8:16
SPEAKER_03: Okay.
8:16
SPEAKER_03: And you don't have to pay it all at once, though, do you?
8:18
SPEAKER_03: You can pay it like in instalments.
8:21
SPEAKER_03: Like fortnightly or monthly.
8:23
SPEAKER_03: You can, yep.
8:24
SPEAKER_00: You can.
8:25
SPEAKER_00: So you can pay weekly, monthly, fortnightly.
8:28
SPEAKER_00: The insurance we deal with, it's usually monthly.
8:31
SPEAKER_03: Yep.
8:31
SPEAKER_00: But if you pay annually, you're able to secure this little discount.
8:36
SPEAKER_03: Ooh, that's a good tip.
8:37
SPEAKER_00: So I've just paid all of mine and I managed to save, let's say, quite significant cost because I've got multiple properties on the go, and I think I saved about five grand.
8:48
SPEAKER_03: Wow.
8:49
SPEAKER_00: Paying it up front.
8:50
SPEAKER_03: Wow.
8:50
SPEAKER_00: So um, because when you paid monthly, there is a funding line for it.
8:54
SPEAKER_00: Yeah.
8:54
SPEAKER_00: So they usually slap about 8% extra.
8:57
SPEAKER_03: I guess they've got a check that each month that you've paid.
9:00
SPEAKER_03: Is that why?
9:01
SPEAKER_03: Like be a bit somebody would need to go and check that it's actually gone through.
9:05
SPEAKER_00: Yeah.
9:05
SPEAKER_03: Yeah.
9:06
SPEAKER_03: Okay.
9:06
SPEAKER_03: But I guess it would also be helpful if you've got a fixed income and you you want that peace of mind.
9:13
SPEAKER_00: Hmm.
9:13
SPEAKER_00: Exactly.
9:14
SPEAKER_00: Now, with the insurance, you need to make sure that when you put it in, you don't need to activate it until settlement date.
9:24
SPEAKER_00: Good tap.
9:25
SPEAKER_00: A lot of people sometimes want to activate it straight away, but until you fully take the possession, you don't have to.
9:32
SPEAKER_00: Because until you've taken the possession on settlement day, it is the vendor's responsibility.
9:37
SPEAKER_00: So often people ask me what if the house burns down in the midtime.
9:39
SPEAKER_00: Well, that that's a vendor.
9:42
SPEAKER_00: And then that contract becomes null and void.
9:44
SPEAKER_00: You don't buy that house.
9:45
SPEAKER_00: And it did happen before.
9:46
SPEAKER_00: I had a client that put an offer, and apparently the house flooded or something, the toilets flooded, or something happened.
9:54
SPEAKER_00: And yeah, and he was already unconditional.
9:56
SPEAKER_00: And they managed to be like, no, that's cool, we'll just cancel because they needed to renovate, repair, and do all sorts of things.
10:02
SPEAKER_00: So yeah, so don't activate it until the settlement date.
10:05
SPEAKER_03: Yep, fair enough.
10:06
SPEAKER_03: And then there's rates.
10:08
SPEAKER_03: Um again, they put three to five grand in here.
10:11
SPEAKER_03: I would say in carpet, more like four something to six something.
10:16
SPEAKER_03: I've even seen rates of seven, seven thousand.
10:19
SPEAKER_00: So do you want to know how much my rates are?
10:21
unknown: No.
10:23
SPEAKER_00: My rates are about nine and a half thousand, I think.
10:27
SPEAKER_01: Oh, ouch, ouch, ouch, ouch.
10:29
SPEAKER_01: Yeah.
10:29
SPEAKER_01: Good to know, hey, before you buy.
10:33
SPEAKER_00: Absolutely.
10:33
SPEAKER_00: So definitely do a rate check.
10:35
SPEAKER_00: Now, there is a website that you can go to.
10:38
SPEAKER_00: Every council has the rates check.
10:42
SPEAKER_00: You can put the address in there and it will tell you.
10:45
SPEAKER_03: And the agent should also know.
10:47
SPEAKER_03: It's one of the things we tell people.
10:49
SPEAKER_00: You would be surprised how many times I get a property sent to me and I ask for that information and I look for that information, you know, on TradeMe or real estate or wherever the property is advertised, and I get nothing.
11:02
SPEAKER_00: Oh my gosh.
11:03
SPEAKER_03: We put it on the brochures.
11:05
SPEAKER_00: Yeah.
11:05
SPEAKER_00: And that helps.
11:06
SPEAKER_00: So this is where I usually look.
11:07
SPEAKER_00: I go, okay, where are the rates?
11:08
SPEAKER_00: Yeah.
11:09
SPEAKER_00: But yeah.
11:10
SPEAKER_00: Some agents don't.
11:11
SPEAKER_00: All right.
11:11
SPEAKER_00: Next one.
11:12
SPEAKER_03: They've got repairs and maintenance.
11:14
SPEAKER_03: And I would say that they're saying two to ten grand.
11:20
SPEAKER_03: Yeah.
11:21
SPEAKER_03: This is sort of like a gray area because that's super gray area.
11:26
SPEAKER_03: Yeah.
11:27
SPEAKER_03: Like how how can how long is a piece of string?
11:29
SPEAKER_03: And is there any repairs and maintenance that are needed as well?
11:33
SPEAKER_03: Like you can't just assume that there will be.
11:36
SPEAKER_03: But it depends on the job.
11:37
SPEAKER_03: It depends on what, like, are you just renovating because you don't like the colour of the bench, or is the shower laking?
11:45
SPEAKER_03: It's a weird one.
11:47
SPEAKER_00: Yeah, it is.
11:48
SPEAKER_00: It is.
11:49
SPEAKER_00: So uh with the renovations as well.
11:50
SPEAKER_00: Like if you're buying a brand new house, then there's probably not much renovation as such, but maybe landscaping.
11:57
SPEAKER_00: And again, how long is the piece of string?
11:58
SPEAKER_00: You know, if you're landscaping and you need to concrete something, or if you need to put the grass, the topsoil, whatever.
12:04
SPEAKER_03: Mature trees.
12:06
SPEAKER_00: Like 20 grand.
12:07
SPEAKER_00: Yeah.
12:07
SPEAKER_00: Easy.
12:08
SPEAKER_00: So I guess when you're buying a house, that cost should be in your head before you even put an offer.
12:13
SPEAKER_03: Talk to your broker about it and say, can I have the extra for this?
12:16
SPEAKER_00: Yeah.
12:16
SPEAKER_03: Or I'm gonna need to move in and straight away do this.
12:20
SPEAKER_03: Can I have the extra built into the loan?
12:22
SPEAKER_00: Yeah.
12:23
SPEAKER_03: Yeah.
12:24
SPEAKER_00: Awesome.
12:25
SPEAKER_03: And then they have mortgage slash loan fees.
12:29
SPEAKER_03: But I was wondering about that, because you get cash back, don't you?
12:32
SPEAKER_03: So do you still get charged mortgage and loan fees?
12:37
SPEAKER_00: Mortgage and loan fees.
12:39
SPEAKER_00: So usually there used to be an application fee.
12:42
SPEAKER_00: And if you didn't have enough deposit, they would slap on$150 to$400 an application fee.
12:48
SPEAKER_00: Now, usually when you go through us, we manage to waive that because we can sweat talk them.
12:52
SPEAKER_00: And I guess because of the sheer volume of buyers that go through, we managed to waive that fee.
12:57
SPEAKER_00: However, if you're under Kayanga Ora First Home Loan Program, there is a premium, insurance premium that you have to pay, and they can add it to your loan.
13:09
SPEAKER_00: So it's called low equity premium LVR something.
13:15
SPEAKER_00: So um yeah, so it's usually it went up, it was 0.8, I think, of the loan amount, and now it's 0.3, 0.5 or 0.3% of the loan amount.
13:24
SPEAKER_00: So if you're borrowing 500k, it's up really fast.
13:27
SPEAKER_00: So um, but it gets slapped onto your loan.
13:30
SPEAKER_00: You don't have to come up with that extra unless you want to.
13:32
SPEAKER_03: You would tell the buyers about that as well, wouldn't you?
13:35
SPEAKER_00: Well, they can see that on their let-off offer.
13:38
SPEAKER_03: Yeah, yeah.
13:39
SPEAKER_00: And before they commit to unconditional, we go through all the costing with them.
13:44
SPEAKER_02: Yeah.
13:44
SPEAKER_00: So all in all, to summarize, I usually say to my first-home buyers, you need to have at least five grand in your pocket for all these other things, right?
13:52
SPEAKER_00: That's your lawyer, that's your valuation, that's your builder's report, that's your limb.
13:55
SPEAKER_00: Five grand should cover that.
13:57
SPEAKER_00: The rest is more optional because rates you can pay on instalments, insurance you can pay on instalments, maintenance you can do as you go.
14:06
SPEAKER_00: But as long as you've got five grand set aside, that's not part of your home deposit, you should be sweet.
14:12
SPEAKER_03: Excellent.
14:13
SPEAKER_03: Okay, and then they've got title registration and legal disbursements, and they've estimated between why am I calling Chat GPT they?
14:25
SPEAKER_03: Well, I call him him.
14:28
SPEAKER_03: It estimates between one and one hundred and three hundred dollars.
14:32
SPEAKER_03: So again, that would be like a a lawyer fee.
14:36
SPEAKER_03: It seems light.
14:38
SPEAKER_03: What do you think?
14:39
SPEAKER_00: Hmm.
14:40
SPEAKER_00: I think so.
14:41
SPEAKER_03: I think it seems a bit light, but I guess that's something you could ask a lawyer if you're in doubt.
14:46
SPEAKER_00: Yeah.
14:46
SPEAKER_03: And they should they should tell you as part of the conversation.
14:49
SPEAKER_00: Again, I've seen it on lawyers' emails of engagement.
14:52
SPEAKER_00: So before they engage a client, the good lawyers that I've seen, they would normally send you a letter and they'll go, cool.
14:57
SPEAKER_00: Here is our estimate costs, and here is some disbursements and you know, title searches and whatever, whatever, whatever.
15:06
SPEAKER_00: They have actual breakdowns.
15:07
SPEAKER_00: If their breakdowns are not there, ask them.
15:09
SPEAKER_00: Yeah.
15:10
SPEAKER_00: Because they should be providing you this information up front before you commit to those things.
15:14
SPEAKER_03: Yeah, absolutely.
15:15
SPEAKER_00: Yeah.
15:16
SPEAKER_03: So if in doubt, ask.
15:19
SPEAKER_00: Love it.
15:20
SPEAKER_00: And this is how we're gonna end the episode today.
15:22
SPEAKER_00: If in doubt, ask real people, not Chad GPT.
15:25
SPEAKER_00: Can I add that?
15:26
SPEAKER_00: Yeah, I like that.
15:28
SPEAKER_00: Beautiful.
15:29
SPEAKER_00: Thank you so much, Megan.
15:30
SPEAKER_00: And um hope to see you again.
15:31
SPEAKER_00: And again, for those that haven't heard before, please like, follow, and subscribe and share this episode with your friends because together we can make this world a little bit better.
15:39
SPEAKER_00: One episode at a time.