First Time Buyer Mortgage Explained
The age old saying, "when one door closes, another one opens" appears to be a very real possibility for first time home buyers. Especially in New Zealand with interest rates at record, all time lows!
IMPORTANT - Do not get muddled. Using KiwiSaver to help you with your deposit on your first home is also an independent option, as well as being an option combined with the First Home Grant.
Using KiwiSaver without combining this with a First Home Grant as follows:
NOTE - for specific rules with regards to making a withdrawal as a First Home Buyer or 2nd Chance Home Buyer - you will need to contact your KiwiSaver provider in this regards.
There is no regulation on limits with regards to the purchase price on the property to qualify for a withdrawal, there maybe limits however on the KiwiSaver scheme you are in. You need to find out this information from your KiwiSaver provider.
There is no regulation limit with regards to what your current earnings are, to able to withdraw KiwiSaver as part of your deposit, there maybe limits however in the scheme you are in. You need to find out this information from your KiwiSaver provider.
There is regulation with regards to the following:
1. Individuals must have contributed to KiwiSaver for at least 3 years.
2. Individuals only qualify if they do not currently own or have never owned real estate in New Zealand. IE they are a "First Time Home Buyer".
3. Individuals that have previously owned real estate, but find themselves now, in a similar situation as a "First Time Home Buyer" may also qualify
4. The property must be a owner occupied. It cannot be an investment property.
4. You need to find out more information from your KiwiSaver provider.
Further to this, KiwiSaver assists in qualifying the FIRST HOME GRANT with restrictions on the purchase price of the property and current earnings of the individuals as follows:
Individuals that have been a member of KiwiSaver for 3 or more years may be able to withdraw some or all of the funds to put towards the buying their first home (this cannot be an investment property). This includes all contributions made, but will however exclude the government's one thousand dollar kick start payment made prior to the 21st of May 2015.
The KiwiSaver First Home Grant may be used in addition to the KiwiSaver funds but if the grant is used, income and price caps will apply. The First Home Grant can be for the purchase of an existing home (IE not a new build) or, if it's a new home benefit more from this scheme as follows:
Individuals that have contributed for 3 years be awarded a grant of $3000 on EXISTING HOMES and a $6000 grant on NEW HOMES.
Individuals that have contributed for 4 years may be awarded a grant of $4000 on EXISTING HOMES and a $8000 grant on NEW HOMES.
Individuals that have contributed for 5 years (the capped maximum) may be awarded a grant of $5000 on EXISTING HOMES and $10000 on NEW HOMES.
Pre-approval is possible, which allows the individual to "house hunt". There are also other eligibility criteria. This is administered by HNZ (Housing New Zealand)
Home Grants are also subject to housing prices along with them being existing or "new build" properties as follows:
In Auckland the price is limited to $625,000 for existing property and $750,000 for new properties.
Queenstown-Lakes District the price is limited to $600,000 for existing property and $650,000 for new properties.
Hamilton City, Tauranga City, Western Bay of Plenty District, Waipa District, Hastings District, Napier City, Nelson City, Tasman District is limited to $525,000 for existing property and $600,000 for new properties.
Waimakariri District, Christchurch City, Selwyn District is limited to $425,000 for existing property and $550,000 for new properties.
All other regions in New Zealand, the price is limited to $400,000 for existing property and $500,000 for new properties Deposits of 10% or more are required on the purchase price of the property which must be either Fee Simple, Stratum estate freehold and leasehold, Cross-lease (freehold and leasehold) or Leasehold.
If an individual is applying, they must have a gross income of LESS THAN $95,000 PA and if its two or more buyers, a combined gross income of LESS THAN $150,000 PA.
Successful applicants for the grant must live a minimum of 6 months in the property or the "grant" will need to be repaid as it will become void.
Applicants may purchase land for building on provided the property is built within 12 months of the purchase.
Grants maybe, under certain circumstances, available to individuals that have previously owned property.
First time home buyers are further assisted by what is called a WHL (Welcome Home Loan) which allows individuals to obtain a mortgage with a lower deposit of 10%. This is offered by selected banks and credit unions and is secured to the banks by having the "lower" deposit" (LVR) underwritten by Housing New Zealand. Recently the criteria has changed. We will update this as soon as we obtain more information.
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