First Home Buyer

Preparing to buy your first home is exciting. But how do you know how much you can afford to borrow and what type of property you can purchase?

Before you start house hunting, contact ARL Mortgages. We can help you work out how much you can borrow so you know what property you can afford.

Pre-Approval

We can obtain conditional approval of your finances with the bank. This will put you in a great position to almost make you a cash buyer. It has a lot of advantages and there is no obligation to use the full approval. Best of all, it puts you in a strong position as a purchaser.

A conditional loan approval (sometimes referred to as a pre-approved loan):

Is valid between 60-90 days (depending on the lending institution)
Allows you to bid at auctions subject to your bank’s consent
Makes your offer more attractive to the vendor
Shows you are a serious buyer
Doesn’t cost you anything

Is there financial help for first home buyers?

As a first homeowner, there are several initiatives available that make access to home-ownership easier.

KiwiSaver
First Home Grant
First Home Loans

KiwiSaver

You have the option of using KiwiSaver to help you purchase your first home but there are a few restrictions you need to be aware of:

You need to have been a KiwiSaver member for three or more years
You can only use KiwiSaver to purchase your first home — not an investment property.
You may be eligible to use KiwiSaver if you already own a home or have previously owned a home but you are in the same financial position as a first home buyer. Our mortgage adviser can help you with this.

First Home Grant

You may be eligible for a First Home Grant from Kāinga Ora – Homes and Communities (Kāinga Ora). The amount you are eligible for will depend on the amount of time you have been contributing to KiwiSaver (minimum three years).

There is also income and maximum house price criteria. The amount of the grant will depend on the region you live in since each region has a house price cap. The Kapiti Coast District, Porirua, Upper Hutt, Lower Hutt and Wellington Cities have the following house price caps:

For existing properties, the cap is $500,000
For new properties, the cap is $550,000

To be eligible for a First Home Grant your household income for the last 12 months must have been $85,000 or less (before tax) if you are the sole borrower. If you are partnering with one or more borrowers to buy a house, then you can have a combined household income up to $130,000 (before tax).

Whether you are buying an existing property or a new house, or building, the deposit must be at least 5 percent of the purchase price. This can include KiwiSaver First Home Withdrawal and First Home Grant.

If you are buying land to build a home on, you must have funding for the construction of the house and the First Home Grant must be used towards the purchase of the land only.

If you are purchasing an existing home, the First Home Grant is $1,000 for each year of contribution to KiwiSaver:

3 years of contributing = $3,000 (the minimum you can get)
4 years of contributing = $4,000
5 years of contributing = $5,000 (the maximum you can get).

If you are purchasing a new home, a property bought off the plans or land to build a new home on, the First Home Grant is as follows:

3 years of contributing = $6,000(the minimum you can get)
4 years of contributing = $8,000
5 years of contributing = $10,000(the maximum you can get)

These figures are per person. If you are a couple and meet the criteria, the combined grant could be $6,000 to $10,000 for purchasing an existing home or $10,000 to $20,000 for a new home.

There are other eligibility criteria to meet. See www.kāingaora.govt.nz for more information on these grants or talk to us about what is available to you.

First Home Loan

First Home Loans are offered by selected lenders and underwritten by Kāinga Ora. It is designed for first home buyers who can make regular payments on a home loan but have trouble saving for a large deposit. First Home Loan deposit requirements are at the discretion of the lender and usually require a 10 percent deposit.

The amount you can borrow will depend on the region you live in since each region has a house price cap. The Kapiti Coast District, Porirua City, Upper Hutt City, Hutt City and Wellington City has the following house price caps:

For existing properties, the cap is $500,000
For new properties, the cap is $550,000

To be eligible for a First Home Loan your combined household income for the last 12 months must have been $85,000 or less (before tax) if you are the sole borrower. If you are partnering with one or more borrowers to buy a house, then you can have a combined household income up to $130,000 (before tax).

For more detailed information on what is available to you, call 04 5666 777 to speak to our adviser or fill out the contact form. We will be in touch with you within 24 hours.

Don’t have quite enough deposit?

The deposit required for a residential home (owner-occupied) is 20 percent. This is based on the current loan-to-value ratio (“LVR”) restrictions. LVR requirements can change from time to time dependant on the lender. The deposit required for an investment property is higher.

The deposit can usually include gifts from family or in some circumstances a guarantee given by a family member for a set sum supported by some security.

For example, the house you’re wishing to purchase might cost $500,000— 20 percent of this sum is $100,000.

With your own savings, KiwiSaver and First Home Grant (if eligible), you might have $60,000 available.

In this case, a family member might gift the remaining $40,000 or alternatively provide a guarantee for the sum. The guarantee would need to be supported by a mortgage security over that family members’ own home or investment property, or in some cases, a term deposit.

If a mortgage was to be used as a security for the guarantee, the mortgage that is being used for security would have to be with the same bank as the borrowers.

A guarantee cannot be used as part of the minimum 10 percent deposit when applying for a First Home Grant or First Home Loan.

You may have to pay a low equity fee if your deposit is not 20 percent or more.