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What miracle did this new home owner need?

This home owner had spotted a bargain and needed to move fast!

Why did they describe getting a deal as "nothing short of miraculous"?

Read what happened.

A Land Information Memorandum (LIM) report is a summary of information that the council holds on a property. 

A LIM can alert you to any significant issues and help you decide whether to buy the property or not, or whether you should adjust the price you are willing to pay for it.

 A LIM can have quite a lot of information, or not much - it depends on how much the council has had to do with the property.

A LIM can help you confirm that any alterations to a building have been consented and signed off (code compliance certificate has been issued).  LIMs also highlight any recorded problems with the land, e.g. flooding or erosion hazards.

A LIM will include:

  • Special land features or characteristics (including potential erosion, slippage or subsidence), flooding of any type and possible contamination or hazardous substances
  • Information on private and public storm-water and sewerage drains
  • Rates information including any rates owing
  • Any consents, notices, orders or requisitions affecting the land or buildings
  • District Plan classifications that relate to the land or buildings
  • Special conditions including NZ Historic Places Trust listings
  • Network utility in relation to the Building Act 1991 or 2004.
  • Any other information the Council deems relevant such as compliance certificates
  • Licences

Auckland Council’s standard LIM service costs $275 (incl GST). An urgent LIM costs $380 (incl GST).

By law Council has to provide the information within 10 days of the request (and payment).

What is the difference between a LIM and a property file?

A LIM is a summary of information that is held on a property, whereas a property file will hold additional, detailed information that is not included in a LIM report, such as:

Building and resource consent documentation

Correspondence about the property.

What council has on file depends on what has been done on the property since the original building was constructed, and relevance to the property, e.g. licence and registration information.

How to get a LIM

The process for applying for a LIM depends on where the property is located, but you may have the option to order a LIM online or in person.

Find out more here: Auckland Council

It is a good idea to look over the LIM with your lawyer as they have experience with LIMs and can help you understand the full implications of anything the LIM reveals.

There are limits to what a LIM will tell you.  It will not cover aspects the council doesn't know about such as unpermitted work or the condition of the property.  Older properties may have incomplete records.

When buying a home it pays to know about its condition, beyond what the LIM tells you. You don't want to find yourself faced with large repair bills for work you didn't discover until after you move in.

This is where a pre-purchase building inspection comes in.

A pre-purchase building inspection is an inspection of a property that looks for significant defects, maintenance issues, signs of deterioration or inferior work. An inspection will tell you if there are any signs that the property is a leaky building, for example.

Identifying building issues before making a purchase means that you can choose to pull out or modify your offer. You could include in the sale and purchase agreement that certain issues are resolved before settlement.

When getting a building inspection, ask for a pre-purchase inspection so the inspector includes relevant areas in the report.

A building inspection is a visual examination of the building covering only those things that can be reasonably accessed and viewed. This includes the condition of the building framing, the roof, chimneys, foundations, exterior walls, heating systems, windows and doors, insulation, interior flooring, ceilings etc. They may also check driveways, sheds and garages, retaining walls, verandas and balconies etc.

They may also do non-invasive moisture testing.

An inspector will not do invasive testing such as the removal of wall linings to check for insulation or leak problems. They may recommend further inspection by qualified tradespeople such as Plumbers or Electricians if there is visual evidence of non-compliance or other issues. While they will report evidence of pest damage, unless specified it won't include checks for pests beyond that which can be detected visually.

Depending on who you use, a building inspection report may include estimates on resolving any areas of concern.

The cost of a building inspection will depend on the size, if there are any additional structures such as garages, where it is located and its age etc

If you want to buy a home or property, does it matter if there is a Real Estate agent involved?  What if you have to deal directly with the home owner to get the property you want?

Some people are happier dealing directly with the property owner than going through a Real Estate agent. As there will be no agent commissions to pay you may be able to negotiate a lower purchase price.

However, Real Estate agents play a role ensuring the process runs smoothly.  An agent will be able to say why the property is for sale, whether there are other buyers etc

You will still need to get a lawyer involved, particularly to check the Sale and Purchase agreement.

If you do purchase a property via private sale, never pay the deposit directly to the Vendor.

If the agreement is cancelled it may be hard to get your money back.  A deposit should only be paid into a trust account so if there is no agent involved it can be paid directly to the Vendors lawyers trust account.

An auction is when a property is purchased by the interested parties publically negotiating a price.

Houses for sale by auction don't usually have a price advertised.  This is so that the price can be determined by the market (i.e. people who want to buy it.)  Usually if a house is going to auction, the real estate agent or client has decided there is enough interest to make an auction a good option.  The vendor will normally set a reserve price prior to the property going to auction which is the minimum price they will accept.

Sometimes a property is put up for sale by auction as a way of getting a quick sale, so don't assume an auction is going to be crowded with motivated buyers.                                                                                                                                     

How it works

The Auctioneer will start by asking for an opening bid.

The Auctioneerwill decide the amount the bidding will be raised by - for example if the opening bid is $350,000 they may call for bids to increase by $10,000 increments - so in this case the next bid will be $360,000 .

To bid, you attract the attention of the Auctioneer - for example, by raising your hand or calling out your bid.

Bids have to reach the reserve price which the vendor has decided before hand.  Once it does, the house is on the market and will be sold to the highest bidder once bidding has stopped.

If your bid is successful you need to pay a deposit on the day - normally 10% of the purchase price so make sure you have that money available. 

Offers at an auction (or prior to) must be unconditional - i.e. you can't make it conditional on you selling an existing property or other conditions.  Check the terms of sale for that particular auction so you know what you are agreeing to.

An unconditional offer is effectively a cash offer and is legally binding.

If the property is passed in, it means the bidding didn't reach the reserve price.  If you were the highest bidder, you will be given the first opportunity to negotiate with the vendor futher.

Before you go to an auction

  • Do your research on the property - get a title search and a LIM before the auction.  Check the sales information for similar properties in the same area so you have an idea what the sale price might be.  Go to the auction with a preferred price, and the top price you are willing to pay.
  • Attend some auctions just to watch so you become familiar with the process
  • Talk to your lawyer and get them to check the Contract of Sale before the auction
  • Get a building inspection done
  • Sort out your finances.  You need to know what your limit is going to be on the day, and have the required deposit available.
  • Register to bid: if you register before the auction day, you will be kept informed of progress during the marketing phase leading up to the auction - including if a pre-auction offer is made.

You can also make an offer prior to auction day.  If you do, all other registered parties will be informed.  The auction may be bought forward.

If you find the whole process unnerving, you can get someone to bid on your behalf.  Remember that it is the Auctioneer’s job to get the best offer on the day so stick to the limit you decided prior to the auction.

A mortgage will probably be the biggest financial commitment you will ever make. And buying your first home can be a stressful and confusing experience, with many options and no shortage of advice to consider.

There are many different types of mortgages, with different interest rates and conditions that can vary between the different lenders.

Getting the best deal on your home loan could result in a saving of thousands of dollars in fees and interest.

That's where a good Mortgage Broker (like us) will make it easier for you. We offer friendly, independent advice and make sure the process is as painless as possible.

We use our knowledge of mortgages and the products on offer by banks and finance companies to get the best deal for your particular situation, without you having to do all that leg work yourself.

We'll take time to understand your needs, financial situation and goals to make sure you get the best solution.

Because we act for you (not the banks) we can negotiate terms and structure your loan so that you potentially save thousands of dollars over the lifetime of the loan. We have helped self employed and people with low deposits to get finance – presenting the deal to ensure it has the best chance to get approved.

If you want to get the right home loan for your unique needs talk to Edge Mortgages.

"We are so glad that we followed the recommendation to work with Edge Mortgages and offer the same recommendation to others who are considering buying a home. Get in contact with them and let their skills, experience and professionalism speak for itself. M and N Murray"

How much will you be able to borrow?

How much you can borrow is based on your total income compared to your total outgoings. But every bank has different lending criteria so one may lend you a lot more that another on the same day, in exactly the same circumstances.

Don't assume that if you have been turned down for a loan by the bank you've been with for years, that you won't be able to get a loan from anyone else. It doesn't make much difference to them how long you have been with them if you do fit their lending rules.

You may also be surprised at the difference between how much the bank says you can afford and how much you feel comfortable borrowing.

We make the process easy by working through the best option to suit your situation, so talk to us today!

Now that you've got your loan approved here's some simple tips for making sure you don't fall into traps...

Structure, structure, structure

Setting up the correct structure at the beginning of the term of the loan is very important. Make sure you talk to your Solicitor & Accountant at this stage as you need to make sure that both the ownership and borrowing entities are correct to give you the best tax advantages and/or asset protection.

Changing the structure after settlement can be costly.

Paying the loan off quickly

Always a good idea if you can. To do this make sure that you have a portion of your loan as a revolving credit so you can deposit extra whenever you like without penalty and withdraw again if you need to (discussed in my other Articles).

If you want to stick with a standard term loan for the whole debt then make sure that you leave the maximum term in place. For example, you can have up to 30 years to pay a mortgage off. If you have the cash-flow ability to pay the loan off over 15 years it's best not to make the term 15 years - leave it at 30 years but simply make the payments higher (which has the same result).

If you have a 15 year term and your income circumstances change, and you need to reduce your monthly payments (by changing it back to a longer term) when times aren't quite as good, you'll have to submit a brand new application with supporting information. WHY? – when you increase the term of the loan you are, in effect, borrowing more money from the Bank as the interest you'll end up paying is higher. The risk to them also goes up as they will hold your mortgage longer.

The same issues could arise if you are moving from Principal & Interest to Interest-only on a loan as well.

Fixing your Loan

Even the best Chief Economists will admit that rate forecasts often change as they are effected so much by unforeseen events. Fixing rates is a personal decision based on cash-flow, upcoming family events and income fluctuations. Splitting your mortgage into more than one fixed rate may help balance your debt against changes in market and your personal position.

Whether it's the first time you are fixing or the twentieth make sure you always talk to your Financial Advisor to make sure that you get the latest market predictions and to let them know if you have anything planned which may affect cashflow over the short to medium term.

The above all reinforce the fact that you should get advice from finance professionals throughout the life of your mortgage.

Never be afraid to ask questions or seek advice.

Borrowers will often negotiate hard to get a tiny amount off an interest rate but what is often not understood, or appreciated, is the power of structuring lending in the correct way.

Whether you are looking to pay debt of quickly, increase a property portfolio or simply set-and-forget when it comes to your mortgage, there are many different structuring options available.

Not only is every borrower different but even an individual’s needs change over time. First homes, investment properties, marriages & divorces, children and retirement – every stage comes with different structural borrowing needs.

Structuring tips

Self-Employed – People who own businesses often have cashflow fluctuations. A portion of borrowing on Revolving Credit allows these fluctuations in income to be absorbed by this type of account. They allow an effective place to put extra funds in the good months and a pool of funds to rely on in the bad months

Investment lending – Borrowing for an investment is different that borrowing for your own home and the interest of this type of lending is tax deductible. For this reason, many investors chose to have an extended interest-only period of this type of lending

Conservative Borrowers – People who are concerned about rate fluctuations can fix in for a long period. This gives them the comfort of knowing that their mortgage payments will remain the same for as long as the loan is fixed

Aggressive debt payment – As with Self-Employed borrowers (above) a Revolving Credit portion allows you to repay debt quickly and gives the ability to have 100% of your income go into this type of account but still have access to funds at any stage

Rate Shock – This is where all, or most, of your borrowings are on one fixed rate. If the rates have risen dramatically between the time you first fixed and the time you come to refix then the payments can increase dramatically. A way of lessening the chance of this rate shock is to split the lending over several different rate terms meaning everything will not come off fixed at once

Interest Rates – The rate of interest that you pay is always a factor and effects all the points above. There is always a good argument for having at least some of your mortgage fixed to protect against rate rises and give some certainly to monthly costs.

Good borrowing habits

For most people, borrowing money for a home is the price you pay for owning that property. Like anything in life, you do not want to spend every day worrying about the amount of debt that you have. A good habit to get into is simply to have a review of where you are at and what your borrowing needs are now, and in the foreseeable future, every time you refix your lending.

We are here to listen and help.

Call the Edge Team today to discuss all of your borrowing requirements.

You might be surprised about how much you can borrow these days.

Trading banks measure how much you can borrow based on your total income against total outgoings.

This figure is then indexed against the interest rates which are applicable at the time you apply. The lower the interest rates, the more you can borrow.

The other thing to remember is that every bank has different lending criteria. This means that one bank may lend you a lot more that another on the same day, given exactly the same circumstances.

The mistake a lot of people make is to assume that if they get turned down for a loan by the bank they've been with for a long time that they cannot get a loan from anyone else. Every bank has different criteria and it does not make much difference to them how long you have been with them if you do not fit their lending rules. T

he key is to make sure that you get an overview of a number of different lenders to ensure that you have the best opportunity to borrow the most, given your individual circumstances.

At Edge Mortgages we have access to a number of different lender's calculators & criteria and can let you know, in one quick phone conversation with you, much you can afford to borrow.