First-time home buyer? Here's all the help you can access to get you on the ladder

Sunday, 17 November 2024

If you’ve been thinking of buying a house, you’ll happy to hear it’s a buyers’ market.

In fact, in October Stuff reported that the market had remained so stable it had broken the stability record.

Realestate.co.nz’s September property report called it the “longest stretch of price stability since records began 17 years ago”, with the national average asking price hovering between $860,000 and $890,000 for more than two years.

First-time buyers also broke records this year, scooping up an unprecedented 27% share of the property market, according to Corelogic’s January figures. That share had not diminished by November - no doubt the slow descent of interest rates over the past 11 months had something to do with that.

In short, it hasn’t been a better time to buy since 2021. So, what help can you get to make it happen?

Let’s assume you’ve done your three month financial spring clean (if not, check out Sorted.org.nz to get your finances in the kind of order banks like to see), and you have a mortgage broker ready to help you get your mortgage pre approved (if not, ask friends and family for a reference, or jump on Facebook pages like the Kiwi First Time Buyers Group for referrals).

What other help can you get as a first-time buyer?

The best guides

The process for buying a home can be complex and a little overwhelming - I’ve been writing about it for years and it still freaks me out. Guides such as the one from Settled.co.nz, Kainga Ora’s home ownership guide and MoneyHub’s step-by-step guide can be helpful places to start.

You might also consider joining a first-time buyers group on Facebook to connect with people in the same boat as you. Check out The First Home Buyers Club. Former Stuff business editor Susan Edmunds’ book From Renter To Owner has plenty of advice too.

You can also get a lot of information about the market from sites like homes.co.nz, qv.co.nz, Opes Partners, and Interest.co.nz. And Stuff’s Business and Homed sections are always here to help.

Government Help

Although the First Home Grant was stopped in May 2024, there are still ways the government can help you get a foot on the ladder. First among these is the First Home Loan.

To be eligible for a First Home Loan, you must be buying a home - not an investment property or a bach - and you must have a bank ready to approve your mortgage. Banks have their own lending criteria to meet, and this is where having a good mortgage broker to help you get the best deal from the right bank comes in.

You need to be a New Zealand citizen, or resident, and this should be your first time buying a home.

There is also a cap on how much your household can earn: $95,000 for solo buyers, without children and $150,000 for two or more folks buying together.

You’ll also need to have at least 5% as a deposit. That can be made up any way you like, from savings, KiwiSaver and gifts.

There are a couple of other criteria, but those are the chief ones the government needs you to meet in order to apply.

Help for whānau Māori

Kāinga Ora also offers a kāinga whenua loan, from Kiwibank, which can help whānau Māori build, buy or relocate a house on multiply-owned Māori land.

Unlike most mortgages, these loans are on the house, not the house and land, so the government will underwrite the loan to make it possible.

How much you can borrow, and how much deposit you need is determined by the kind of home you want to build, buy or relocate. There’s no deposit required on loans below $200,000, but you will need 5% for every dollar above $200,000.

For more information about this opportunity, check out the booklet available at kaingaora.govt.nz.

Tenant home ownership grant

If you live in a state house, it might be possible to buy that home with the help of the government. Not all state homes are eligible, especially in areas where there is a high demand for them, such as Auckland, Wellington, Christchurch, Hamilton and Tauranga, so talk to your case worker to see if this might be an option for you.

If it is, you could get 10% of the purchase price of your home, up to $20,000.

KiwiSaver help

This is the big one when it comes to buying a first home, as you may be able to use almost everything in your KiwiSaver account - including employer and government contributions - to bolster your deposit. All you need to leave in it is $1000.

To be eligible, you must have been a member of a KiwiSaver scheme for at least three years, and be buying your first home. Once again, it can’t be an investment property or a bach.

You may be able to access your KiwiSaver funds if you have previously owned a home, but find yourself in the same position as a first time buyer - but you need to apply through Kāinga Ora.

According to Inland Revenue, if you meet the above criteria you can withdraw your and your employer’s contributions, the government contributions, and any interest and fee subsidies you have earned.

The only thing you can’t take out is $1,000 to keep the account open, and any funds that have been transferred from Australian superannuation. Those will only be accessible when you turn the ripe old age of 65.

If you are eligible to use your KiwiSaver, it will not just be paid into your account. You’ll need to arrange for these funds to be drawn down by your property lawyer, who will pay them to the bank as part of your deposit.