7 December 2021 | By Lending People
Help for first home buyers—what’s available to you
Thinking about stepping onto the property ladder? First home buyers can access plenty of help, from Kiwisaver to government grants. Learn about your options
Getting on the property ladder may feel like a big leap, but there’s help available for first home buyers if you know where to look. If you’re thinking about buying your first home, here are some options worth exploring.
First home grants
As a first home buyer, you may be eligible for a government grant of up to $10,000. There are a number of conditions including:
· Being over 18
· Earning less than $95,000 annually if you’re buying on your own, or less than $150,000 collectively if you’re buying with someone else
· Contributing to Kiwisaver for at least three years
· Having a deposit of at least 5% · Purchasing a property up to the value of the regional price cap
To see the rest of the conditions and check whether you’re eligible, check out the Kāinga Ora website.
If you’ve been contributing to your Kiwisaver for at least three years (it doesn’t have to be consecutively), you may be eligible to withdraw your funds to help pay for your first home deposit.
You have to leave at least $1,000 remaining in your Kiwisaver fund, and you have to live in the property you purchase—you can’t use the money for an investment property. If you meet both of these requirements and want to know more about what is involved, get in touch with your Kiwisaver provider.
Bank of Mum and Dad
While this option may not be available to everyone, more and more people are getting help from family to purchase their first home. Three ways that you can get help from a loved one include:
1. Gifting money: This is pretty much exactly as it sounds—they give you money which goes towards your deposit. This is done with the understanding that you don’t have to pay it back. If you go down this route, your lender may require a statutory declaration to prove this.
2. Guaranteeing your mortgage: If you’re unable to come up with a 20% deposit on your own, your lender may accept a lower deposit if someone in a more stable financial position acts as a guarantor. Essentially, this means that if you don’t meet your repayments, they will make them on your behalf. This is risky for the guarantor as they become liable for the entire mortgage if you’re unable to service it. We recommend having an open conversation with all parties involved about the “what-ifs” before anyone agrees to anything.
3. Borrowing against their own home: To help you get enough money together for your deposit, your parent/s (or whoever has agreed to help you) may be able to increase their own mortgage or take on a second one. You can either make these repayments, or your parents can. This is still risky for them, but not as risky as guaranteeing your mortgage. If things go pear-shaped, they’re only liable for the money they’ve borrowed, not the mortgage of your whole house.
Buying your first home is a big deal. It’s exciting and stressful, and is often a bit of a rollercoaster—but hopefully, one that’s worthwhile. If you want to get some insight into the house buying process, from beginning to end, check out this article. If you want to speak to someone to bounce your questions off and get some advice, get in touch to chat to one of our advisers.
This blog is provided for general information purposes and is not a recommendation you enter into or exit any particular loans or insurance policy. Information on the website does not consider your particular circumstances, including your objectives, financial situation or needs. We recommend you seek advice from a financial adviser before taking any action as appropriate. The Lending People Limited (FSP240365) is a licensed financial advice provider and can provide advice on some types of personal loans. Find out more about The Lending People and how we may be able to help you.