Home Buyer Glossary

  • Auction

    An auction is one method of selling a property. It opens up the selling process to the public, where people bid against each other, either themselves or through a representative. When it comes to auctions, it's important to know how much you have to spend and what your limits are.

  • Break costs/fees

    If you decided to 'break' or end your fixed-term loan early/before the term is up you could end up paying break costs/fees in order to cover the loss of interest your bank would have received if you continued the full term with them. This can sometimes be worth the cost if you end up with lower interest rates in the long run, however it could also end up costing more so be sure to do your research! 

  • Body corporate fees

    If you decide to buy an apartment, you'll need to pay 'body corporate fees'. This is the cost every apartment owner within the building pays to upkeep general areas like hallways, gardens and foyers.

  • Building report

    A building report can be for buyers or sellers and can make up part of your conditions upon purchase if you want to make sure the house is in good shape before you buy it. Building reports will let you know if there are any issues with the house's structure or potential maintenance issues that could pop up if you buy the home. Building reports are a smart way to avoid costly problems down the track. 

  • Capital gain

    Capital gain is the term used when you've bought an asset (such as a house) for a certain price and sold it after a period of time for more than the original purchase price, therefore making a profit.

  • Conditional

    A conditional offer is an offer you can make with 'conditions' attached. For example, you'll purchase the house on the condition that it passes a building inspection. If the house you've made an offer on passes your condition, you're legally bound to the purchase and your offer becomes unconditional.

  • Deposit

    When you buy a home, you need to be able to put down a deposit - or a sum of money that meets a certain percentage of the total cost of a home. This is so you can secure the loan from your bank and ultimately buy your home! In most cases a 20% deposit is required to purchase a home, but this can vary for people building their home or for first home buyers who may only need around 5% if they're eligible for certain grants.

  • Equity

    Is the value of your home, minus how much you owe on it. 

  • Fixed rate

    When you buy a home, you need to make repayments, including interest. You can decide how you'd like to make these repayments. One of the ways to do this is by a 'fixed rate', which means you'll be charged the same interest rate for a fixed period (usually between 1 and 5 years). 

  • Floating/variable rate

    When you buy a home, you need to make repayments, including interest. Unlike a fixed rate where you make the same repayment amount over the fixed term, a floating rate means the interest rate you're charged can change with the market, so your repayment amounts may increase or decrease depending on what the market is doing. A floating rate can provide flexibility to increase your repayments or make extra payments without any penalties. 

  • Guarantor

    A guarantor is someone you (as a borrower) can ask to guarantee your loan. Essentially letting the bank know that if you fail to make the repayments on your loan - they'll step in. If they agree, they'll be financially and legally obligated to make these repayments on your behalf. It's a pretty big deal, your guarantor will want to be someone who knows you well! In this case it's really important to get legal advice. 

  • First Home Grant

    With this grant you could be eligible for a cash boost of anywhere between $3,000 and $10,000. However, it does depend on whether or not you fit the criteria. This includes: Having a KiwiSaver account and making regular contributions for 3 years, not owning any home or land already, and having contributed a 'minimum allowable percentage'. There are a few other qualifiers but it's worth doing your research and check if you could be eligible and how much for.

  • Kiwisaver

    KiwiSaver is a savings scheme set up by the government. As well as being used to help New Zealanders save for retirement, KiwiSaver can also be used to contribute to buying a first home. KiwiSaver is voluntary, but there are loads of ways it can help you save for a first home - it's well worth learning more about. Click here to find out more. 

  • Lawyer/ Solicitor

    A lawyer/solicitor is essential during the home buying and selling process. Not only do they handle the paperwork - checking off your sale and purchase agreement - getting it ready for you to sign, settlement and contracts, they also provide a valuable source of knowledge and advice to support you through the home-buying journey. 

  • LIM report

    Stands for 'Land Information Memorandum' report. This can be purchased from your local council, and it provides information on the house including zoning info, any erosion, flood or high wind risks, scheduled roads or utilities, heritage features, as well as any building consents and work that has been done on the house that has been filed to the Council.

  • LVR

    Stands for 'Loan to Value Ratio'. It's the amount of the loan compared to the value of the home represented by a percentage. It's calculated by dividing the amount of the loan by the value of the home. For home buyers this percentage is important as your deposit generally needs to be 20% of the value of the home - this equals an LVR of 80%. For first home buyers it's possible to have a deposit of around 5% with the help of certain grants.

  • Mortgage

    A mortgage is a loan that involves property or real estate. When you buy a home, you make an agreement with your bank to see how much you can borrow, and how much needs to be paid back over a period of time, until the lender (your bank) is paid back in full. The difference between a 'mortgage' and a 'home loan' is that the mortgage is the legal document protecting the lender - making the house the 'collateral' that secures the loan. Basically, if you can't pay back your loan- the house belongs to the bank. A mortgage is the legal document that secures this. 

  • Mortgage Broker

    A mortgage broker is a person that approaches banks on the home buyer's behalf to get them the best loan and rate. Contrary to popular belief Mortgage Brokers do not charge individual customers - they gain their commission from banks. 

  • Market value

    Market value is the estimated worth of the house.

  • Negotiation

    An offer by negotiation. For example, they may supply an asking price, or 'offers over', and in some cases an expression of interest.  Buyers then submit their offers, therefore starting the negotiation. You can also add conditions to the negotiation such as adding on the need for the house to pass a building inspection or valuation before the sale can go ahead.   

  • OCR

    Stands for 'Official Cash Rate'. This is the interest rate set by the Reserve Bank of New Zealand (RBNZ). This rate influences the price of borrowing money in NZ and is a tool that the RBNZ uses to influence inflation and economic activity. 

  • Open Home

    An open home is where a seller 'opens' up their home to potential buyers for a short amount of time. This is usually hosted by a real estate agent who is available to answer questions about the home. You can go and walk through the home to check it out and see if it's the right fit for you. It's a great opportunity to get in depth insight into the house that you might want to buy.

  • Outgoings

    When it comes to buying a home it's important to think about your outgoings. This basically means when you get paid - how much of this will be going towards costs like rates, insurance, bills etc. You'll need to figure out if your income can still support you when all your outgoings have, well... 'gone out'. 

  • Pre-approval

    Before you buy a home it's a great idea to get 'pre-approval'. This is when you talk to your bank and they help you figure out how much you could borrow. That way, when you're looking for a home you know what you can afford. Being pre-approved can also help speed up the buying process once you make an offer.

  • Principal

    When you make your repayments part of this goes to the loan, and part of this goes towards the interest. Principal is the term for the portion that goes towards your loan. 

  • Real estate agent

    A real estate agent represents buyers and sellers through the buying/selling process. They work on commission and are paid a percentage of the house's sale price, by the seller. They also handle things like creating listings, help draw up contracts and negotiate conditions of sale. 

  • Refinance

    Refinancing is basically replacing an existing mortgage with a new loan. This is often done with the intention of getting a better interest rate, re-structuring your lending, adding to your lending for renovations/repairs, reducing your repayments.  You can also refinance from one bank to another.

  • Repayments

    These are what you pay weekly, fortnightly or monthly to the bank to pay off the remainder of your home loan. There are plenty of home loan calculators around that will help you find out how much your repayments will be based on the details of your home loan.

  • RV / GV /CV

    CV stands for Capital Value. This is the amount the house would most likely sell for at the time of a valuation. This amount is usually determined by a service like a property valuer or Council. It's also known as GV - Government Valuation and RV - Rateable value. Some people also use RV to describe a registered valuation. 

  • Security

    This is the asset that can be used as collateral for a loan - like a property or a car. It acts as security for the repayment of a loan. 

  • Settlement

    Settlement is the day you pay for the house and it officially becomes yours!  Settlement is looked after by your lawyer who pays the purchase price to the seller's lawyer. They handle the transfer of ownership to you and sign all the documents so you can focus on moving in. You'll be able to collect the house keys from your lawyer or real estate agent on the agreed upon date. 

  • Tender

    This is another method of selling a property. It's sometimes referred to as a 'silent auction' too. Sometimes you'll have a price guide… and sometimes you won't. What it does give you is a deadline. Offers need to be in by the determined date so sellers can review all the offers at once and decide which one they want to go forward with.

  • Unconditional

    Unconditional is a type of offer you can make when buying a home. It means there are no conditions to you buying the home, so if the seller agrees to the price and date of your unconditional offer you're then legally bound to the purchase. Or when the conditions have been met and your offer is now unconditional.

  • Valuation

    A valuation is like an appraisal of the home that determines how much it's worth. The valuation is based on things like location, number of bedrooms, bathrooms and condition of the home. This is usually done by a property valuer for a small cost.