What to Do Next After Getting Pre-Approved for a Home Loan

You’ve just got your pre-approval and you’re keen to start looking for a property. But when you find the right one, what do you do next?

For most first home buyers, the part after you're pre approved can be the most daunting, so in this article, I will walk you through the process and provide you with valuable insights to ensure a smooth and successful home buying experience.

Before You Start Looking At Properties, Engage A Lawyer For The Legal Stuff

Once you start going to open homes and find a property you like, things are going to move pretty quickly.

Apart from your Mortgage Adviser, an essential part of your support team is going to be your lawyer.

They will be able to look over the Sale & Purchase Agreement before you make an offer, advise you on any conditions you may need to include and check the property Title & LIM report.

They will also help with your KiwiSaver first home withdrawal and complete the property purchase transaction for you at the end - so get in touch with one early on.

#Tip: Remember a Sale & Purchase Agreement is a legal document so check with your solicitor before signing anything.

House Insurance 

Something that is often overlooked (as it normally occurs towards the end of the process), is House Insurance.

The bank will require full insurance on the property before they can release the funds to you on settlement, so it’s actually an important part of the process.

Before making an offer on a property it’s a good idea to check if the property you are looking to buy can actually be insured, as some areas have restrictions.

You can also get a quote to understand how much it would cost you to insure the property.

It's a good idea to organise your insurance when your offer is accepted so you can relax knowing that your cover is in place when you settle.

Making an Offer: Important Clauses to Consider

As mentioned above, your lawyer will advise you on any conditions you may need to include when making an offer on a property.

These conditions provide protection and allow you to conduct necessary due diligence before proceeding with the purchase.

Here are some important clauses to consider:

Finance Clause 

If you need to borrow money from the bank to buy the property then you definitely want to include a 10-15 working days finance clause in your agreement (speak to your Adviser around how many days you are best to include here). This clause allows you time to secure a formal approval from the bank and ensures that they are happy with taking on the property as security. 

Builders Report:

While not a mandatory requirement, obtaining a builders report is highly recommended. A professional inspection by a qualified builder will provide you with valuable insights into the condition of the property and any potential issues that may need attention. This knowledge will enable you to make an informed decision and negotiate repairs or adjustments if necessary.

LIM Report:

The Land Information Memorandum (LIM) report is a comprehensive document containing critical information about the property. It’s a good idea to have this report reviewed by your lawyer so you can gain a clear understanding of any potential issues with the property, such as zoning restrictions, building consents, or other relevant details. The LIM report can help you make an informed decision and identify any red flags before finalising the purchase.

Once Your Offer Has Been Accepted It’s Time to Finalise Things!

If all goes well and the vendor accepts your offer, there are a few important things that need to take place in order to finalise things:

Sale & Purchase Agreement

Provide a signed and dated Sale & Purchase Agreement to your Mortgage Adviser: This document is vital for initiating the formal lending process with the bank. Remember, your pre-approval is just that, a “pre-approval”. In order to get a formal approval the bank needs to accept the property as security. Your Mortgage Adviser will review the agreement and ensure that all necessary details are in order before submitting it to the lender.

Registered Valuation

Depending on the lender's requirements, you may need a registered valuation on the property. Your Mortgage Adviser can guide you through this process and arrange the valuation on your behalf.

Fulfilling Additional Conditions

If there are any additional conditions specified in the Sale & Purchase Agreement, ensure that you attend to them and provide all relevant information promptly. This will help avoid any potential delays in the process. Your Mortgage Adviser & Lawyer will be able to guide you through the requirements and ensure a smooth transition towards settlement.

Going “Unconditional” and Paying Your Deposit

Once you have ticked off all the conditions and officially gone “unconditional” you are locked into completing the sale and it's time to pay the deposit.

You’ll need to make sure that you have the necessary funds readily available to avoid any delays.

If you're eligible to access your KiwiSaver for the deposit, you will need to reach out to your KiwiSaver provider early as it can take up to 20 working days for those funds to come through (your lawyer will be able to help you with this).

The deposit you pay upon going unconditional is the amount you agreed to on the Sale & Purchase Agreement. Normally it's a 10% deposit, but in some cases you can negotiate less. Whatever the amount is, you will need to have it available to transfer to the Real Estate agent's trust account upon going unconditional. 

The balance of the purchase will be taken care of on settlement day by your solicitor.

Finalising Your Loan Structure

At this stage, it's essential to discuss and determine how you want to structure your home loan.

Here at Future Mortgages we will be able to help tailor the right structure for you so it aligns with you future goals.

Once this part is finalised, the mortgage documentation will be sent to your lawyer and you will be asked to meet with them to sign the loan documents.

Make sure to thoroughly discuss the paperwork with your lawyer before signing, so you fully understand the terms and conditions.

Final Inspection Of The Property

Before you settle and officially take ownership of the house, you have the opportunity for a final inspection.

This inspection allows you to ensure that everything is in order before you move in.