It has always been hard for young people to buy their first home. First Home Buyers Lacking Choice Unless a first home buyer has been able to save up a 20% deposit, or has parents that are able to help there is now less choice of lenders with the major New Zealand banks being able to offer very few home loans with less than 20% deposit. Access Your Savings In Your KiwiSaver Account To make up your deposit for you first home you are able to access your KiwiSaver account after a minimum of 3-years. You can access your own savings, your employer’s contributions and any profits (returns) that your KiwiSaver account has made. The Government contributions are not able to be withdrawn for the deposit. You should contact your KiwiSaver provider and see exactly how much is available to you. Your mortgage broker will require this to accompany any home loan application. KiwiSaver First Home Subsidy KiwiSaver has enabled many first home buyers to save the deposit for their first home. As well as being able to access your own savings, you may qualify for the KiwiSaver first home subsidy which is a first home deposit subsidy of up to $5,000 per person; meaning a couple could qualify for $10,000 which they can add to their savings to make up their deposit. A KiwiSaver first home subsidy can certainly help! The KiwiSaver deposit subsidy is administered by Housing New Zealand and is eligible for people who have contributed to KiwiSaver for at least 3-years. It is only available for your first home, and therefore you can only claim this first home subsidy once. Welcome Home Loans Designed to help more ordinary Kiwis get into their first homes, the Welcome Home Loans package has recently been updated to enable more people to qualify. Welcome Home Loans give you the opportunity to own your own home if you're having difficulty getting together the usual amount required for a deposit. They are available subject to meeting some specified criteria (e.g. household income level, whether the dwelling is owner-occupied and others), and may suit home buyers who wish to make the move from paying rent to home ownership The basic criteria for Welcome Home Loans are; ·You must be a New Zealand citizen or a permanent New Zealand resident buying a first home which you plan to live in. ·Your household income must not exceed $120,000pa for 2 borrowers, or $80,000pa for a single borrower. ·You must be able to provide a 10% deposit which can include any KiwiSaver withdrawals and your KiwiSaver first home subsidy ·The house you buy needs to be within the price caps - $485,000 for Auckland and lower amounts for other regions. The bigger Welcome Home Loan lenders are Kiwibank, SBS Bank, TSB and Westpac. Most people have thought that Welcome Home Loans were created exclusively for first home buyers; however there is also the option for a second chance for those people that are in the same or a similar asset position as a first time buyer. What The Banks Offer The banks can theoretically still offer low deposit home loans but at this stage most banks will only offer low deposit home loans on rare occasions. While it is always worth asking your mortgage broker to consider your bank, it is always safer option to use a non bank lender. Banks are now not offering the low deposit home loans like they used to, with most banks now insisting on a 20% deposit. The new rules state that the banks cannot do more than 10% of their total new lending where there is less than 20% equity meaning that they are being very selective with which people they offer low equity loans to. The exception is where banks offer Welcome Home Loans where they can do low deposit home loans to those borrowers who qualify. Non-Bank Lenders Offer Choice While the banks are restricted by the new Reserve Bank rules, the non bank lenders do not have to adhere to any such rules. Two of the major non bank lenders are Resimac and Liberty Financial who work with mortgage brokers, which still offer low deposit home loans. Resimac are the most competitively priced and in many cases offer interest rates that are lower than the banks, especially the rates that banks advertise for any home loans with less than 20% equity. The rates that Liberty Financial will typically be higher, but they offer another choice and often this is the difference between being able to buy a house with a low deposit or watching house prices rise while you are trying to save a bigger deposit. Another popular option is to use a combination of a first mortgage and second mortgage to purchase the property with the view to refinancing as the value of your new home increases. A few years ago this was how most people got into their first homes and while it can be more expensive, it is often cheaper than waiting while you try to save the 20% deposit. You Still Have A Choice Yes, when you are buying your first home you still have a choice of lenders and home loan options. It is true that the new Reserve Bank rules have made it harder for a new home buyer to get a bank home loan approval, especially for a low deposit home loan. This also means that it is harder for all other first home buyers too, which could provide an opportunity for you to get a better price due to less competition. Most importantly, when you speak to a mortgage broker there are still choices. Stuart Wills is an http://www.mortgagelinkauckland.co.nz/ in New Zealand. For the best advice on home loans in New Zealand you can contact Stuart.
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