May 30, 2022
Lance Shearman
First Home Buyers
All Blogs

Is the Government now the life of the party for first home buyer?

When we think of a budget it is usually in reference to restricted spending, restricted shopping, and as a result, restricted fun. However, it seems the latest Government budget is trying to encourage spending, help us shop, and bring back some fun...

At the latest budget announcement, there are changes afoot to help Kiwis get in their first home. And for our long suffering first-home hopefuls, the party has started and the government has invited us!

Here is the latest for how we can access KiwiSaver, the First Home Grant, and even a mortgage with 5% deposit!

Using your KiwiSaver for Deposit

There have been no changes to using your KiwiSaver (ok, so not a very fun start, I know…), but here is a recap of what you can do.

If you have been in KiwSaver for three years, you are able to use this to purchase your first home. It does not matter how expensive the home is, whether it has been lived in previously, or if it is brand new.  

Accessing your KiwiSaver for your deposit is also not restricted by your annual income. The only catch is that you need to leave $1,000 left in the fund, but you can withdraw all the rest.  

If you are looking to use your KiwiSaver for your house deposit in the near term, have a chat with us to check your fund is correct.  Using the correct fund is important to make sure you have less chance of a shortfall when it is time to take your money out!

Get a First Home Grant

As well as confirming the bank will lend you money, you also need to apply through Kainga Ora to gain approval for the First Home Grant.

Note: You need to have been contributing to KiwiSaver for at least 3 years.  

Your KiwiSaver

If you meet the eligibility criteria for the First Home Grant, your grant amount depends on how long you have been in KiwiSaver. These figures are below.

Per eligible person, for an existing home:

3 years in KiwiSaver = $3,000 grant

4 years in KiwiSaver = $4,000 grant

5 years in KiwiSaver = $5,000 grant

If you are purchasing a brand-new home, these numbers double per eligible person.

3 years in KiwiSaver = $6,000 grant

4 years in KiwiSaver = $8,000 grant

5 years in KiwiSaver  = $10,000 grant

Your Income

There is also Income testing and restrictions. The main changes are that the income caps along with the property purchase price has increased, to make it more realistic to the values of the property prices in Wellington and other parts of Aotearoa. Those who fit the below per annum income threshold can apply for the First Home Grant.

$95,000pa  Individual

$150,000pa Individual with one or more children

$150,000pa Combined income for two or more purchases

Property Value Thresholds

There are also Property value thresholds (restrictions) to get the First Home Grant.

For Wellington this is $750,000 for an existing property (one that has already been lived in, and/ or is 6 months old).

If you purchase a brand-new property, the cap is $925,000.

Get a First Home Loan

You can now purchase your first home with a 5% deposit. First Home Loans are issued by selected banks and underwritten by Kāinga Ora. This allows the lender to provide loans that would otherwise sit outside their lending standards.

To be eligible you had to have been in your job for 1 year, or in your industry for 2 or more years. Income thresholds are the same as above for the KiwiSaver First Home Grant.  

There is no property cap for the first home loan, however banks lend on income, and so this will end up being a cap in essence anyway. It is important to point out that not all banks are doing this and each of banks calculate their lending differently, so finding the bank that is best for what you are trying to achieve is still very important. There will also be a 1% fee added on you the loan.  

So, there is an opportunity to get into your first home, yes! Will it be fun...well in truth, purchasing your first home is usually super stressful. However, we are are here to help you manage the stress and walk you step by step through the process. I will also be running First Home buyer workshops to help you be the best prepared to purchase. Check out the dates on our website here.

Lance Shearman

About Lance

Hi, I’m Lance a Financial Adviser here at Velocity Financial. People in Finance love to make it all seem too complex. I see my role as removing these barriers, opening your opportunities, and connecting you with the sharpest and most helpful professionals Wellington has to offer. I am interested in people and enjoy being part of key (and often the most stressful) stages in their lives. From my background in heading up large social development projects, finding finance and resource to bring about change for some of our most vulnerable New Zealanders, to my role as a marriage celebrant helping organise one of the most dramatic, stressful, wonderful, precious days of people’s lives. Now as a Financial Adviser I'm able to help people reach their financial goals and help provide security by insuring them against life's challenging times. I love being active, boxing, running, surfing, basically if there is a chance of some form of activity I am on board. Music is extremely important to me, and I have been privileged to travel around many parts of the world playing drums.

Disclaimer: Lance Shearman (FSP431426) is a Financial Adviser with Velocity Financial(FSP95466). No investment decision should be taken based on the information in this blog alone. Please see Lance’s disclosure statement on our website.

 

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