Help for First Home Buyers
Are you wanting to buy your first home?
There are 2 options when it comes to placing a deposit on a property. You either have a deposit of 20% or more, or less than 20%.
There are unique methods for each option. Keep reading to see which method best suits you.
A) 20% Deposit or More
This can be made up of some or all of the following methods:
- Savings
- Kiwisaver withdrawal
- Kiwisaver HomeStart Grant
- Welcome Home Loan
- Flat mate Income – up to a maximum of 2
- Family help
- Gifting
B) Less Than a 20% Deposit
With a deposit less than 20%, 5% of it needs to be made up from your own savings. You cannot include the Kiwisaver HomeStart grant as part of your 5% genuine savings.
You can use the following methods to make up the rest:
- Kiwisaver withdrawal
- Kiwisaver HomeStart Grant
- Welcome Home Loan
- Family help
- Gifting
- Sale of asset (e.g. car)
"Margaret was able to help my wife and I secure our first home with a 10% deposit. We knew very little about this process and found Margaret made the entire journey stress free. She was always available to answer any questions we had during the process. We really appreciate her support and all of the hard work she has done on our behalf. We would highly recommend Margaret Richardson to anyone looking for a home. Thank you again for everything!"
- Aaron and Ellie Wiggins
Kiwisaver
Savings Withdrawal to Purchase Your First Home
You may be able to withdraw some of your KiwiSaver savings (provided you leave a minimum balance of $1,000 in your account) to put towards purchasing your first home.
You must be a KiwiSaver member for 3 or more years.
You can only withdraw money to purchase your first home – not an investment property.
KiwiSaver HomeStart Grant
After 3 years of contributing to KiwiSaver, you may be entitled to a KiwiSaver HomeStart grant. Grants are administered by Housing New Zealand and are paid to your solicitor.
The two HomeStart grants are:
1. Purchasing an Existing Home
The grant is between $3,000 and $5,000 based on $1,000 for each year of KiwiSaver membership eligible only after 3 years of membership.
2. For Building/Purchasing a New Home, or Purchasing Land to Build a New Home on
The grant is, in effect doubled to, $2,000 per year of membership in the scheme after 3 years, up to a maximum of $10,000 for five years for each member.
There are maximum values of grants payable for the purchase of a single dwelling, for 1 person is the following:
- $5,000 for the purchase of an older/existing property
- $10,000 for the purchase of a new property.
Getting a KiwiSaver HomeStart grant
To be eligible for a KiwiSaver HomeStart grant you must:
- Have contributed the required minimum amount to KiwiSaver for at least 3 years
- Be over 18 years old
- Be purchasing or building your first home
- Have a household income (before tax) of less than $85,000 per year (for one person), or less than $130,000 per year (for two or more people)
- Have a deposit that is 10% or more of the purchase price (including the addition of the grant)
- Plan to live in the house for at least 6 months from the settlement/completion of the property
.
Welcome Home Loans
It’s easy to get into your first home with a Welcome Home loan.
These loans are issued by selected banks, which are underwritten by Housing New Zealand, and allow the bank to lend on a lower deposit without any restrictions.
Which means getting on the property ladder sooner for first home buyers.
Family Help
Struggling to get a deposit together?
It may be possible to use a family member’s house as security. This will make up the deposit shortfall that you need to get into your first home.
Gifting
Do you have family members that may be able to help out with a gift of cash?
They can do this in two ways:
A. They can gift you sums of money to make up the deposit.
B. They can borrow against the equity of their property and gift this amount to you.
When Gifting Cash
When gifting cash it’s important that a simple ‘gift letter’ is created, signed and dated.
This will avoid any complications later down the track and should outline the terms of the gift.
Gifting is a cheap and easy way to structure a deal that keeps things as simple as possible.
