Being a first home buyer is an exciting process but I also know it can be overwhelming – there is so much jargon thrown around and it can be really hard to know where to start. My biggest advice to people is break it down into steps and follow these to get to where you want to be.
The first thing that a bank will usually want to see for a first home buying journey is the deposit. This is how much you will be contributing towards the house and how much equity you will own. There are a range of ways to get a house deposit in New Zealand and if you are lucky, you will also be eligible to get some money from the government as well.
These are the 4 most common ways to get a deposit:
This is the easiest way to accumulate a deposit for a house and consists of your own cold hard cash that is in a bank account. This can be accumulated over time and the bank will just want to see that you have a savings history so will usually require 3 months bank statements when you do the application. This can include cash savings in the form of term deposits.
Gift from family
Sometimes your family members might be in a position to help you out which is fantastic. They can gift a sum of money to you and will usually need to sign a gifting certificate which can be given to the bank. It’s a nice and simple process to go through.
If you have KiwiSaver and then you may also be eligible to withdraw your funds to use towards your first home loan. The biggest rule around the KiwiSaver is that in order to receive your money you must be enrolled for at least 3 years. The other rule is that you have to leave behind $1000 in the fund.
If you qualify then you can withdraw:
- Your contributions
- Your employers’ contributions
- Interest you have earned
- Fee subsidies (if you receive these)
Unfortunately you won’t be able to use any funds that were transferred from an Australian Superannuation scheme.
The bank will often want to see the KiwiSaver first home withdrawal letter. You can get this by simply requesting for it to be sent to you from your KiwiSaver provider.
First Home Grant
This is an initiative that the New Zealand government has put into place that helps provide a cash grant to those first home buyers that qualify. This grant can be a little tricky to understand as the amount you receive depends on a lot of factors. The main thing to think of is if you are buying a new home (or land) or an existing home. Then the amount you receive depends on how long you have been contributing to your KiwiSaver fund. The minimum amount of time is 3 years and the maximum amount of time is 5 years.
For an existing home you are eligible to receive $1000 per year for each year that you have paid into your KiwiSaver.
3 years contributions = $3000
4 years contributions = $4000
5 years contributions = $5000
For a new home you are eligible to receive $2000 per year for each year that you have paid into your KiwiSaver.
3 years contributions = $6000
4 years contributions = $8000
5 years contributions = $10000
There are also income caps that apply along with caps on the price of the house you want to buy. The caps mean that you can’t earn over a certain amount a year or buy a house over a certain price.
You can find more information about this grant here.
There are some other crafty and more complex ways to come up with a home deposit that are "outside of the box". Feel free to get in touch if you want to discuss your personal options.