Mistake 1: Not Getting Pre-Approval First
You fall in love with a house at auction, make an offer, and then discover the bank won't lend you enough. Solution: Get pre-approval before you start viewing properties. It costs nothing and tells you exactly what you can afford.
Mistake 2: Ignoring the Extra Costs
Many first home buyers only save for the deposit, forgetting solicitor fees, building reports, LIM reports, insurance, and moving costs. Solution: Budget $3,000–$5,000 on top of your deposit for these expenses.
Mistake 3: Buying at Auction Without a Fixed Budget
Auction rooms are emotional. Without a firm limit, it's easy to overbid. Solution: Set your maximum price before the auction and stick to it. Remember: the auctioneer works for the seller.
Mistake 4: Skipping the Builder's Report
An unconditional auction purchase means you waive the right to a building inspection. That $700 report could save you from a $50,000 leaky home disaster. Solution: Get a pre-purchase building inspection before auction, or make your offer conditional on one.
Mistake 5: Not Understanding KiwiSaver Rules
Some buyers assume they can withdraw their entire KiwiSaver balance — but the Government Contribution must stay. Others don't realise they need the 3-year rule. Solution: Check with your KiwiSaver provider or Kāinga Ora early in the process.
Mistake 6: Overlooking the LIM Report
The LIM report tells you about flooding risks, unconsented work, zoning changes, and earthquake hazards. Skipping it is a gamble. Solution: Always get a LIM report and have your solicitor review it.
Mistake 7: Forgetting About Insurance
Your bank won't settle without home insurance. If the property is in a high-risk area (e.g., flood zone, earthquake-prone), insurance can be hard to get. Solution: Check insurance availability before you go unconditional.
Mistake 8: Being Too Picky (or Not Picky Enough)
Some buyers wait years for the "perfect" home. Others buy the first place they see. Solution: Know your must-haves vs nice-to-haves. Aim for a home that's "good enough" in a location you love.
Mistake 9: Not Shopping Around for a Mortgage
Many first home buyers go straight to the bank they've always banked with. Different lenders offer different rates and features. Solution: Use a mortgage broker — they're free and compare multiple lenders for you.
Mistake 10: Underestimating Ongoing Costs
Homeownership costs go beyond the mortgage. Rates, insurance, maintenance, and body corporate fees (if applicable) add up. Solution: Budget 1–2% of the property value per year for maintenance, plus annual rates and insurance.
Bonus Tip: Use a Good Solicitor
Your solicitor is your most important ally. Choose one who specialises in property law and has experience with first home buyers. A bad solicitor can cost you dearly.
2026 Rule Changes That Catch Buyers Out
Several recent changes have tripped up buyers who relied on older advice. The First Home Grant is gone (discontinued 22 May 2024), so no one should budget for a $10,000–$20,000 grant. The KiwiSaver government contribution is now capped at $260.72 a year (halved from $521.43 on 1 July 2025), and the old $1,000 kick-start no longer exists.
The brightline test is back to two years (from 1 July 2024), DTI speed limits cap borrowing at roughly 6 times income for owner-occupiers, and the default KiwiSaver rate rises to 3.5% on 1 April 2026. Buyers who check these details early avoid nasty surprises at approval or settlement.
Working With a Mortgage Broker
In a flat market with competitive rates, the spread between lenders matters. Brokers are free to use (paid by commission), compare 15–20 lenders including non-banks, and know which banks still have room under their high-DTI and high-LVR quotas in any given month — which can be the difference between approval and rejection for a low-deposit buyer.
Even if you prefer going direct, get at least two or three written rate comparisons, check the rate for your exact LVR band, and confirm any cashback offer in writing. A 0.2% rate difference on a $600,000 loan is about $1,200 a year.
The 90-Day Settlement Sprint
- Week 1–2: go unconditional, pay the deposit into the agent's trust account, and confirm your KiwiSaver withdrawal with your provider.
- Week 3–6: finalise the bank valuation, sign loan documents and arrange home insurance (the bank will not settle without it).
- Week 6–10: complete the LIM/builder's report conditions if not already done, and brief your solicitor on settlement logistics.
- Week 10–13: pre-settlement inspection, transfer of funds, keys — and keep receipts for any pre-settlement work to support future brightline/main-home records.
Mistake 11: Getting Insurance Sorted Too Late
Insurance is the quiet deal-breaker of the conditional period. Insurers now ask detailed questions about earthquake zone, flood and coastal hazard exposure, and construction — particularly pre-1990 cladding systems and unreinforced masonry. A decline or an exclusion added after you go unconditional is expensive, and in some cases a bank will not settle without cover in place.
Get a quote before you confirm finance, not after. Give the insurer the specific address, the construction type and the year built, and get the answer in writing. A conditional period is cheap; an uninsured settlement is not.
A Due Diligence Budget You Can Actually Run
Most buyers budget for the deposit and forget that due diligence on homes they don't buy still costs money. On a contested property you may spend the following on a house you lose — and it is still the right spend:
| Check | Cost | What it protects you from |
|---|---|---|
| LIM report | $250–$400 | Unconsented works, flood zones, council designations, cross-lease problems |
| Builder's report | $500–$900 | Structural defects, leaky-home risk, deferred maintenance |
| Registered valuation | $600–$1,000 | Paying above what the lender will accept as security |
| Solicitor's review | $400–$1,000 (pre-purchase) | Auction terms, cross-lease or unit title clauses, boundary issues |
Budgets for three failed attempts: $2,000–$6,000. That is the honest cost of buying well, and it is the same money that stands between you and a $50,000 remediation bill.
Rates, Body Corporate and the Costs Nobody Mentions
- Council rates: commonly $3,000–$4,500 a year on a median home in a main centre. Ask the vendor for the last rates notice — it is the most accurate single number available about ongoing ownership costs.
- Body corporate levies: $3,000–$8,000 a year for apartments and units, and they can rise sharply if remedial work is planned. Always ask for the last three years of minutes.
- Maintenance: a rough rule is 1% of the property's value per year. On a $770,000 home that is about $7,700 set aside annually — most owners under-fund this and then treat a failing roof as an emergency.
- Insurance: premiums vary enormously by location and construction; a coastal or earthquake-exposed property can cost several times a Wellington suburb home of the same value.
Add rates, insurance and maintenance to your mortgage repayment before you decide a house is affordable. A home that leaves no room for a new roof is not affordable, whatever the bank says.