Tips To Consider When You Buying First Home

If this is your first time buying a home, but not sure what to do? This handy guide will tell you everything you need to know as a first home buyer in New Zealand. There are some tips and guidance on each step of the process, so you feel informed along the way. It is understandable that you may not know all the steps to buying a house.

Take a look at the checklist:

1. Determine Your Budget

Calculate your monthly income after tax. Figure out your living expenses per month, including loans etc. Now take a look at your actual amount after deducting your monthly expenses from your monthly income. This amount you would spend every month on mortgage for a new home.

2. How Much You Can Borrow

Your income and the size of your deposit will determine your borrowing ability. Start looking lenders, bank, financial institution or mortgage broker to speak about how much you can borrow and compare mortgage rates. They will look over all assets, liabilities, income, and expenditure to determine how much they can lend you. They will show plans you can afford and ensure that you can meet any loan repayments.

3. Deposit

Trying to keep up with rising house prices while saving a big deposit, can be the most challenging part for most first-time buyers. In most cases, the deposit should be 20% of the value of the property you are going to purchase. You could be eligible to access one or all of the government home ownership schemes designed for first home owner with a deposit of only 5%. Every bit you have saved means the less you will need to borrow. Your deposit can come from your own savings, gifted from family or from your KiwiSaver.

4. Apply for Grants and Subsidies

There are a number of grants, subsidies and low-deposit loans available to first home buyers in New Zealand. If you have been a member of KiwiSaver for at least 3 years, you may have the access of your savings to help fund the deposit for your first home.

(a) First Home Loan -

You need a deposit of just 5%. People are eligible who meet specific eligibility criteria:

• Must be a New Zealand citizen or permanent resident
• Must not already own any property
• Must be planning to live in the house you are buying
• Household income for the 12 months before you apply must have been:

• (i) less than $85,000 for individuals
• (ii) less than $130,00 combined if you are buying the property with other people

If you meet the eligibility criteria for a First Home Loan you will still have to meet the bank or lender's other lending criteria, too.

(b) KiwiSaver First Home Withdrawal -

If you have been a member of KiwiSaver for at least 3 years, you may be able to withdraw your KiwiSaver funds towards your first home.

KiwiSaver withdrawal criteria:

• You have been saving with KiwiSaver for at least three years
• You are intending to live in the property
• You leave a minimum balance of $1,000 in your KiwiSaver account
• If you own a home, a land or have a share in a property, you won’t be eligible
• The property is located in New Zealand

(c) KiwiSaver First Home Grant -

If you have contributed for three years to your KiwiSaver account you may qualify for a Kāinga Ora – Homes and Communities

KiwiSaver First Home Grant of up to:

• $5,000 if you’re buying an existing home; or
• $10,000 if you’re buying or building a new home.

First Home Grant criteria:

• You must be 18 years or over.
• Have not received the First Home Grant or KiwiSaver deposit subsidy before.
• You must have contributed regularly to KiwiSaver for a minimum of three years.
• In the last 12 months- as a sole buyer your income $85,000 or less (before tax), or if two or more buyers; a combined income of $130,000 or less (before tax)
• Have a deposit that is 5% or more of the purchase price. This can include the KiwiSaver first home withdrawal, First Home Grant and any other funds such as savings, or a deposit gifted by a relative

(d) KiwiBuild -

To buy a KiwiBuild home, there are some eligibility requirements-

• If you are single, your household income must no more than $120,000 and combined (more than one people) income $180,000 per year.
• You have to live in the home for at-least three years.

(e) Other Ways To Build Deposit-

• Your own savings
• A gift from family
• A guarantee from family

5. Get a Home Loan

There are many types of mortgages, each with its own interest rate, fees and degree of flexibility. All these things affect how much the loan costs and when it will be paid off.

• How long do you want to borrow for?
• What sort of interest structure do you want?

• (i) Fixed rates
• (ii) Floating rates
• (iii) Mix of Fixed and Floating

6. Ready to Apply

Banks and Mortgage Broker will give you a good idea of the kind of information and documents you will need to provide.