What help is there avaiable for first-home buyers?
Q My partner and I are hoping to buy our first home this year, using our KiwiSaver. We've been in KiwiSaver for seven years and have about $90,000 between us. We live in Tauranga. What help is there for people in our situation?
A Government policy is generally in favour of home ownership as it has benefits for society at large.
Home ownership allows people to raise their standard of living by improving their home; it is associated with higher wealth as, unlike renting, mortgage payments are a form of saving.
Home ownership also protects against rent inflation for those, like retired folk, on fixed incomes, and it may also provide a source of equity that can be drawn on in an emergency. A high level of home ownership also creates more stable communities as people are less inclined to move.
For these reasons it is important for the government to have tools such as the First Home Grant, the First Home Loan and the Kāinga Whenua First Loan Scheme all of which are aimed at encouraging and increasing home ownership.
With your KiwiSaver history, you may be eligible for the First Home Grant which is managed by Kāinga Ora (formerly Housing New Zealand). An eligible KiwiSaver member can get $1000 for each year that they have paid into KiwiSaver, up to a maximum of $5000, and up to $10,000 for a new build. To be eligible as a couple your combined income must be less than $150,000 per annum.
You must provide evidence that you have a deposit of at least 5per cent of the purchase price of the house you want to buy or build and intend living in the house for at least six months from the date of settlement.
The deposit can include KiwiSaver funds (all but $1000 can be withdrawn for a First Home), the First Home Grant and bank savings. Some people are also helped along with money gifted by parents or other family members.
The price cap in Tauranga for an existing home is now $800,000 — the price caps were raised on 19 May 2022. The price caps for a new build are higher — full details can be found on the Kāinga Ora website.
When the increased price caps were announced, Kāinga Ora Manager Home Ownership Products, Jason Lovell, said: "Kāinga Ora is committed to enabling New Zealanders to step on to the home ownership ladder, through the range of financial products we administer on behalf of the Government. The changes announced open these products up to more people, which means we can help a new cohort of prospective first home buyers who previously may not have been able to access this support. We look forward to assisting more individuals and whānau on their journey to home ownership."
It is never too soon to get help in your house buying journey. A mortgage broker will give you up to date information on how much you will need for a deposit, how to prepare your bank statements for scrutiny, and how much you can afford to borrow. Your combined income and ability to meet mortgage payments is just as important as the size of your deposit. You can then work out your timeline and start house hunting when you are ready.