Hidden Costs When Buying Your Dream Eastern Suburbs’ / Remuera Home

You have found your dream Eastern Bays’ home – the sun-filled deck, American oak floors and floor-to-ceiling windows offering splendid views of Rangitoto. But before you bid at the auction or put in your offer, you should take into account the extra costs in order to avoid a financial disaster!

Ruoxi Wang, Eastern Suburbs' Specialist, ray white, orakei, mission bay, kohimarama, st heliers, st johns, glendowie, top real estate agent

What are these costs?

These costs are in addition to the purchase price. Often you will be concerned about the purchase price and how it fits perfectly into your budget (understandably) but forget about other bills that will add up. My aim in this article is to explain such ‘hidden’ costs so that these are not surprises. 

I want you to buy, move in and enjoy your dream Eastern Bays’ home.

These hidden costs can be largely broken down into 4 groups.

1. Immediate Purchase costs:

A. Mortgage Payments

The first thing to do is to figure out how much you are paying in mortgage every month. You can use the Westpac home loan calculator here to find out roughly how much you need to set aside every month for the house. Generally, the deposit for your first home is 20%. Some banks have the capacity to do low-deposit loans but you will likely have to fork out more in interest costs. Consult with a good mortgage broker (we work with a mortgage broker here at Ray White Remuera) to find out about financing options.

B. Inspection Expenses 

This is the cost incurred during the home-viewing phase where you get a licensed building inspector or engineer to check over the property for any structural defects or moisture issues.

Ruoxi Wang, Eastern Suburbs' Specialist, ray white, orakei, mission bay, kohimarama, st heliers, st johns, glendowie, top real estate agent

Building inspectors will go around the house to check (as far as the naked eye can see) that the dwelling has no potential structural issues and if there are, to illuminate which areas require work to be done.  Building inspections can also involve using the latest technology, e.g. moisture detectors and thermal imaging to check if there are any moisture issues with the house. This is often done on plaster houses, simply because these type of construction coupled with certain design flaws tend to have the highest risk of leaking. Also, if you were purchasing a plaster home, banks would normally require you to get a building report that is satisfactory (i.e. no excessively high moisture readings) before approving your loan.

Building inspection reports can cost anywhere from $250 to $1000. Verbal reports are cheaper and are for cases where you are just seeking a peace of mind. Written reports would cost more and are probably best/required if

  • you want to rely on that report if anything were to go wrong in the future
  • it is a requirement from the bank
  • you are trying to get out of a contract that is conditional on building report an you discovered issues.

Building inspectors often take a day to generate a report although there are some who are able to produce same day inspections (likely for a higher price) if there is a need for such urgency.

C. LIM / Property File 

This stands for Land Information Memorandum. It outlines any consents, permits, swimming pool fence regulations, public services, flood paths and contours. Most of the time, the LIM is provided by the vendor, if not, you will need to obtain it from Auckland Council. It costs $298 to order a standard LIM which will take up to 10 working days to arrive. An urgent one takes 3 working days and costs $402.

I also encourage buyers to conduct full due diligence. This would include getting access to the property file which has copies of the actual consent documents, original floor plans, elevations and drainage plans – basically everything about the house that is in public records. This can also be obtained from Auckland Council and are much cheaper ($93 for an urgent file).

Ruoxi Wang, Eastern Suburbs' Specialist, ray white, orakei, mission bay, kohimarama, st heliers, st johns, glendowie, top real estate agent

D. Legal Expenses 

Solicitors are required to help you with title searches, the conveyancing, which means the transfer of title from the seller to you and register the mortgage. They will also liaise with the banks on settlement day and assist you to arrange payment through their trust fund.

Solicitors can also help you with pre-contractual issues. That means they can review the title (to ensure it is not defective), LIM (point out any sections worth noting such as unstable land or flight paths) and sales and purchase agreement (flag out any unusual terms and conditions that might be disadvantageous) for you before you make an offer. Some solicitors charge a small fee for these pre-contractual attendances (i.e. answering all the legal questions you may have) on each property that you might be keen on offering. Other solicitors offer this service free of charge and only bill you for their conveyancing. Therefore, you must clarify with them and know their costs before you proceed.

Generally, conveyancing costs start from about $1300 + GST and disbursements (which is usually about $300), assuming that it is a straightforward purchase (i.e. no complicated layering or structuring).

Ruoxi Wang, Eastern Suburbs' Specialist, ray white, orakei, mission bay, kohimarama, st heliers, st johns, glendowie, top real estate agent

Solicitors can also advise you on the structure of ownership e.g. buying the property as tenants in common, buying the property under a company or having a trust etc. You may also wish to seek accounting advice from a specialist property accountant to ensure that you are aware of possible tax issues and benefits from any restructuring.

After 22 October 2018, laws around foreign ownership of residential property have changed. As a result of these restrictions, the banks now require your solicitors to provide a confirmation in relation to the Overseas Investment Act 2005 (OIA) that as a conveyancer: 

(i) they have complied, or before lodging the transfer will comply, with the OIA, and 

(ii) if OIA consent is required under the amended laws, you have confirmed that consent has been granted. What this means for you is that you have to be able to provide the same confirmations to your solicitors. 

The penalties for providing false confirmations are severe and may include the unwinding of the transaction.

E. Rates Adjustments 

Council rates are usually paid in advance, so you will have to pick up the tab for your first rates’ period. This can be up to 6 months’ worth if the vendor has paid that far in advance. Take note that if you are buying a property that previously ran Airbnb, you might have to fork out an additional amount for the commercial rates. I have homeowners in Glendowie that saw their rate bill triple.

F. Loan Expenses 

These are imposed on you by your bank to create the loan, mortgage registration and associated bank costs. There are generally not much loan expenses because banks do often waive them. Mortgage brokers are also paid by the banks, so that won’t cost you anything. 

Ruoxi Wang, Eastern Suburbs' Specialist, ray white, orakei, mission bay, kohimarama, st heliers, st johns, glendowie, top real estate agent

The only cost that might unexpectedly crop up is the cost of a registered valuation. Registered valuations might be required by banks in order to approve a loan. This often occurs with properties that are recently subdivided or built and have not received their capital value from Auckland Council. The banks therefore want to be sure that the security they are taking (i.e. the house) is worth the amount they are lending you.

2. Inclusion Costs:

A. Furnishing Costs

These are the things that you are used to in your current (and previous homes) that your new home may lack. Things like curtains that match the decor that your furniture, or favourite rug will bring with it. A screen door for the front because the previous owners didn’t have one.

Personal touches around the home, like a new welcome mat for the front porch, some new pot plants or a new outdoor setting for the back patio? A bare patio or an old sun-burnt outdoor setting will be a daily reminder of your extravagance with your purchase price if you can’t afford some new items when you move in to your dream home.

Ruoxi Wang, Eastern Suburbs' Specialist, ray white, orakei, mission bay, kohimarama, st heliers, st johns, glendowie, top real estate agent

B. Moving Costs

This might not be a huge cost in the grand scheme of things. Remember to factor in the following

  • Transport cost – moving trucks start about $100/hour not including the initial vehicle charge out.
  • Cleaning cost – If you are leaving a rental, you might need to pay for a professional company to clean up the costs. When you move to your new home, you might also need to pay for some cleaners to come and do another thorough clean since the vendor is only obliged to leave the house in a reasonably clean state.
Ruoxi Wang, Eastern Suburbs' Specialist, ray white, orakei, mission bay, kohimarama, st heliers, st johns, glendowie, top real estate agent

3. Welcome Costs:

It is said that some homes will appear to resent their new owners, they will almost seem like they have a personality! Neil Jenman writes “They will show their displeasure with a series of welcoming calamities to test their new owners.”

All jokes aside though, this can be frustrating to new owners. The oven stops working straight after moving in, a certain circuit keeps tripping the circuit breaker, the seemingly full gas bottle runs out right away, the hot water system blows up, the front door falls off its hinges etc. It’s strange how moving into a new home can unsettle certain aspects of it. If you haven’t kept some finances for these “just-in case” items, they can really hurt you, so be prepared.

4. Running Costs:

Ruoxi Wang, Eastern Suburbs' Specialist, ray white, orakei, mission bay, kohimarama, st heliers, st johns, glendowie, top real estate agent

A lot of people forget about the running costs of a home. We account in our budget for our home loan repayments, but what about other home ownership expenses like council rates, home and contents insurance, electricity bills, water bills, internet bills and gas bills etc?

Don’t forget about regular maintenance costs as well, you need to be able to make sure the house runs like a well-oiled machine. You want to live in it for a while don’t you? That could mean triming the hedges (to get a good view of Rangitoto island), cleaning the swimming pool (so that your children’s friends at Glendowie College can come for an afternoon party), regular cleaning/spraying of the roof, waterblasting the ground and even sweeping the chimney. Of course, if you need any recommendations of reliable and cost-effective tradespersons, get in touch!

Obviously there can be some variation in these costs, and not all of them will apply to every purchase, but as buyers, you need to be aware that these costs can pop up and if you are not prepared for them, they can make life difficult.

But that’s what home ownership is about right? Taking a bit of calculated risk and gaining a bit of independence while having some extra responsibility. Finally having something to call your own!

Remember – if you need any help in any step of the process, for example whether to sell or buy first, just drop me an email or give me a call.

Happy house hunting!

Found this post useful and have more questions?

I have detailed statistics at my fingertips, including recent sales within the Eastern Suburbs (or any suburbs), so do not hesitate to contact me for a no-obligation discussion over coffee on your future plans to either buy or sell. 

Contact Ruoxi for a 10-min chat today!

Ruoxi Wang, Eastern Suburbs' Specialist, ray white, orakei, mission bay, kohimarama, st heliers, st johns, glendowie, top real estate agent, new zealand premium homes, nz premium homes
Disclaimer: Yes, I am a licensee salesperson under the REAA 2008, but I am not your salesperson and this article does not create any relationship between you and me (other than reader and author of course). All the information on this website is published in good faith, for general information purpose only and should not be seen as specific financial or investment advice. I do not make any warranties about the completeness, reliability and accuracy of this information. Any action you take upon the information you find on this website is strictly at your own risk. Copyright: The material contained in this website, including property information and images, may not be used in any way without the express permission of NZ Premium Homes or Ruoxi Wang.

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