Existing Home or Brand New: Which is Best for First-Time Home Buyers?

Deciding whether to buy a brand new home or an existing one to live in is a big decision for first-time buyers.

Each option has its unique advantages and potential drawbacks, making this decision a complex yet important step in your home-buying journey.

In this article, we’ll help you break down the key things to consider so you can make a choice that fits your needs, budget and long-term plans.

Pros and Cons of New Builds

Lending Exemptions

When looking to purchase your first home you might be thinking brand new is the way to go – less maintenance, newer appliances, just move in and enjoy – and you might be right. The government has definitely favoured new builds over recent times by making them exempt from some Reserve Bank restrictions. For example, new builds are exempt from the Loan-to-Value (LVR) restrictions, meaning you may only need a 10% deposit to purchase.

New builds are also exempt from the newly imposed Debt-To-Income restrictions if you purchase from the developer within 6 months of the property’s completion.

However, it’s important to note that banks will still apply their own lending criteria to individual borrowers, so it’s best to team up with an experienced Mortgage Adviser to guide you when it comes to purchasing a brand new home.

Modern Features and Energy Efficiency

New builds often come equipped with modern features and are designed with energy efficiency in mind. These homes usually incorporate the latest building materials and technologies, such as double glazing, advanced insulation and energy-efficient heating systems. These features can result in lower utility bills and a smaller carbon footprint, which is a significant advantage for environmentally (and budget) conscious buyers.

What’s more, new builds often include smart home technology, allowing you to control lighting, heating and security systems remotely. This level of convenience can be a major selling point for tech-savvy buyers.

New builds also often have open-plan living spaces and contemporary finishes, appealing to those who want a stylish, move-in-ready home. However, these benefits can come with a higher upfront cost, which is something to consider when budgeting for your first home purchase.

Pros and Cons of Existing Homes

Established Neighbourhood

One major advantage of buying an older home is the chance to live in an established neighbourhood with a character and charm that new developments might lack.

These neighbourhoods often have a sense of community, mature landscaping and access to a bunch of amenities like schools, parks and shopping centres.

These areas usually have good infrastructure, including public transport links and other essential services, making daily life more convenient.

Plus, property values in established neighbourhoods tend to be more stable, giving you a sense of security for your investment.

However, the downside is that homes in these areas might need more maintenance and renovations. Older properties might not be as energy-efficient or equipped with modern amenities, which could lead to higher ongoing costs. So, it’s important to consider both the immediate and long-term costs when choosing an older home.

Potential for Renovation

Older homes often come with the potential for renovation, letting you customise the space to better fit your needs and preferences.

This can be great for first-time buyers who are willing to invest time and effort into turning an older property into their dream home.

Renovations can be anything from simple updates like painting and flooring to bigger projects like kitchen remodels or adding extra rooms. The ability to renovate means you can gradually improve the home as your budget allows, potentially increasing its value over time. This can be a strategic way to build equity and make a profitable investment. Plus, older homes often have larger plots of land, offering more outdoor space for extensions or landscaping projects.

But, keep in mind the costs and challenges that come with renovations. Unexpected issues like outdated electrical systems or structural problems can come up, leading to higher expenses and longer timelines. Getting a building inspection up front will highlight some of these issues so you know what you are getting into and can plan accordingly to minimise any costly surprises.

Key Things for First-Time Buyers to Consider

Budget and Financing

Budget and financing are critical factors for first-time buyers to consider when deciding between a brand new home or an existing one.

Start by exploring your finance options with a Mortgage Adviser. We can help you figure out how much you can afford to spend on your new home. This includes not only the purchase price but also any additional costs such as legal fees, valuations, inspections and moving expenses.

We will also help you to understand the different mortgage products available and get you pre-approved for a loan. Pre-approval gives you a clear picture of your borrowing capacity and strengthens your position when making offers.

Long-Term Goals

When choosing between a brand new home or an existing one, it’s essential to consider your long-term goals. Think about how long you plan to stay in the property and how your needs might change over time. For instance, if you’re planning to start a family, proximity to good schools and parks may be a priority.

Consider the future resale value of the property as well. New builds often come with modern amenities and energy-efficient features that can appeal to future buyers, potentially resulting in higher resale value. On the other hand, existing homes in established neighbourhood’s might appreciate steadily over time especially if you can add value with renovations.

If you’re ready to start exploring your finance options for your first home, feel free to get in touch with us.

Applications for finance are subject to meeting the lenders criteria, terms, and conditions. Refer to our website www.hbmi.co.nz for our Public Disclosure Document.