You know yourself whether owning a home is important to you, The motivation can be financial, emotional or a mixture of both. At FirstHome.Kiwi we are passionate about home ownership for two main reasons…

– Stability and control. No concerns about a landlord giving you notice a month before Christmas.

– Rental payments keep going up year on year – your mortgage principle stays the same and mortgage payments can actually reduce over time depending on your mortgage structure and interest rates. And eventually your mortgage will be paid off leaving you with a freehold, valuable asset- not so with renting.

You would be surprised at the number of mortgage lenders who will lend to people in their 50’s, 60’s and even beyond! It’s about whether the numbers stack up, your employment situation etc etc. A good mortgage broker will know which banks & 2nd tier lenders to approach in this regard.

By all means, talk directly with your bank if you prefer. There are a number of reasons though why we recommend having a good mortgage broker in your corner…

– A mortgage broker is up with the play on ALL major lenders. They know who is offering the best deals and do the spadework for you in this respect.

– Often a mortgage broker can negotiate a “Cash Back” offer, where a lender might actually hand over some cash upfront as a “thank you” for taking out a mortgage with them. Be aware though – there are always terms and conditions regarding this, so make sure you know what they are before signing anything.

– Communication. Brokers are (almost) always easier to contact than the average bank. Want a question answered quickly? Just jump on the phone or text – no awful hold music to be endured until you get to speak with the right person.

– Forward Thinking. Once you’ve bought your first home, a few years down the track you may have enough equity in it to consider buying a rental, further strengthening your financial future.
Having a good broker in your “Brains Trust” will give you someone to explore your options with, especially if they helped you purchase your first home so knows your situation well.

As a general rule, for existing homes you should aim for a 20% deposit to sit under a Loan to Value Ratio (LVR) of 80%. The LVR is in place to limit the number of low deposit mortgages in the market, to try and avoid the sort of property price “ïmplosion” seen in the USA in the late 2000’s.

However, for most new builds the LVR does not apply. This means that you could potentially buy a brand new home with only a 10% or even 5% deposit, depending on the lender. Whether it’s wise to buy a home with such a small deposit is something only you (and your Brains Trust) can decide. Again, a good broker will advise you on deposit requirements for each lender.

Potentially yes, although you can only withdraw your KiwiSaver savings once for a home withdrawal.

Under current KiwiSaver regulations, if you’ve owned a home before but are now in the equivalent position as a first home buyer, you may qualify for what is called a Second Chance withdrawal. Kainga Ora makes the decision as to whether you qualify, and if you do they will supply you with a letter that you attach to your KiwiSaver First Home withdrawal documents.

Want to see if you qualify? Here is the link to the Kainga Ora first-home withdrawal / Second Chance application webpage…

https://kaingaora.govt.nz/home-ownership/kiwisaver-first-home-withdrawal/

It is certainly possible, however any lender will want to make sure that you are capable of making your mortgage payments, on time, with money to spare.

It is also super important to ensure that all payments on existing debts are up to date. Debt is one thing, but outstanding payments on existing debts are a huge red flag and will usually stop a mortgage application dead in its tracks.

Banks will check your credit history for any mortgage application, and obviously the higher the credit rating you have the better. The good news is that after 5-7 years any defaults are wiped from your credit history, so if you’ve kept up with your payments for the last few years your credit score might actually be pretty good.

Do you know your credit score? It’s important that you do, and you can get it for free. There are a number of companies that can supply you with your up to date credit file – one we recommend is Equifax https://www.equifax.co.nz/personal who will supply your credit file at no charge, or you can pay a few dollars to get it sent to you a bit faster if need be.

In short, no. Not if you are planning to use your savings for a deposit within the next few years.

Growth funds (where most of your money is invested in companies listed on the various share markets) are great if you are not planning to withdraw your money for a long time. Volatility (the ups and downs of the markets) is your friend in this instance as you are actually picking up bargains when the share prices are down.

BUT – if you are planning to withdraw your KiwiSaver savings within 1 to 3 years, volatility is the enemy. You need a good short term strategy, which involves protecting the money you have already saved. This is where defensive or conservative funds (where most of your money is in cash, term deposits and bonds) are useful. A growth fund is simply not worth the risk in this instance.

“Experts” try and predict future interest rates because that’s what they are paid to do, but nobody knows with absolute certainty what rates will be doing in the next 1, 2 or 5 years.

The important thing though as someone saving for their first home is to control what you can control, and not stress about what you can’t. If you have a good savings & debt reduction strategy in place, then stick with it. Keep an eye on the mortgage markets as well as house prices – at some point there will be an opportunity for you and your family to buy something that is affordable regardless of what mortgage rates are at the time.

Yes it is, and it’s called Rentvesting.

The concept is pretty simple. If for instance you rent in Auckland and want to get on the property ladder, you could look at buying a house in a cheaper region (Hamilton, Invercargill etc etc) as a rental investment.

There are both positives and negatives to this type of home ownership. The negatives include not being able to withdraw your KiwiSaver to purchase the property (it must be for your primary dwelling), and the banks may require a higher percentage deposit. The big positive is that, if done right, you have a property asset that is at least being partly paid for by YOUR tenants.

If this concept appeals, talk to a mortgage broker about the ins and outs of rentvesting, and do as much research as you can. For starters, the magazine NZ Property Investor is a great source of information about how others have bought their first home in this way.

A “stress test” is a calculation that banks make on each mortgage application to ensure that the borrower could still meet repayments if their interest rate goes up.

If for instance a bank’s 1yr fixed rate is 6%, the bank will run the numbers to check that you could still make payments if the rate changed to 7.5 or 8% once the fixed rate mortgage expired. This protects both the bank and yourself as the borrower, knowing that your budget could handle higher repayments without too much grief.

Every lender has their own “Stress Test”. So be aware that when submitting your application, your budget will need to show that you could handle higher repayments if interest rates rose.

Co-ownership is becoming more and more accepted as a way of getting people into  their first home. So yes, it is certainly possible now to buy a home not only with your immediate family, but also with extended family, friends and possibly even work colleagues!

Are there lots of terms and conditions? You bet there are, and each lender offering co-ownership mortgages will have different criteria. But if you think this is a pathway that could work for you, we recommend you get in touch with the team at Slice – www.slicetobuy.com . Slice are a New Zealand based company who specialises in setting up co-ownership agreements. A great place to start your research into what is possible.

Shared Equity lending is where a finance provider (either Government backed or private) will actually lend you money to help reach a 20% deposit on a home. In return they will take an equity stake in your property, which effectively means they are a part owner of the home.

The big advantage of Shared Equity is that you can potentially buy a house with just a 5% deposit.

On a day-to-day basis the home is still yours (the lender can’t just bowl up and take over your lounge on a Friday night), but it does mean that their equity stake will grow in dollar terms the longer you own the house. And you will be expected to pay back their loan for the deposit over an agreed time period, as well as the mortgage.

Is it worth considering? In our view, yes. If the numbers stack up, these schemes can be an excellent way of getting people into a quality home with a much lower deposit than they might otherwise need. If you are comfortable knowing a third party owns a portion of your home, as long as the terms and conditions are fair then it is certainly worth investigating.

New Zealand’s best known offeror of such a scheme was Kainga Ora and their First Home Partner arrangement. They suspended this in Sept 2023, but there are other private companies such as YouOwn who also provide shared equity finance. Again, talk with your mortgage broker about other providers they may have access to.