Low Deposit Options for NZ Home Buyers
The dream of owning a home can often feel out of reach, especially when faced with the daunting task of saving for a deposit. However, there are several pathways available that can help make this dream a reality, even with a lower deposit. Here’s a comprehensive guide to the low deposit options available for home buyers.
Understanding Low Deposit Requirements
Traditionally, a 20% deposit is required to secure a home loan, but this can be a significant hurdle for many first-time buyers. Fortunately, there are options that allow you to enter the property market with less than this amount. These options often involve certain conditions and eligibility criteria, so it’s important to understand what each entails.
Kāinga Ora Initiatives
Kāinga Ora offers several schemes designed to assist first-time buyers with lower deposits:
- First Home Loan: This initiative allows eligible buyers to purchase a home with as little as a 5% deposit. To qualify, you must meet specific income and property criteria. The First Home Loan is underwritten by Kāinga Ora, enabling selected banks and lenders to offer loans outside their standard lending criteria.
- First Home Partner: This shared ownership scheme enables you to buy a new home with Kāinga Ora. While you are the majority homeowner, Kāinga Ora owns a share in the home, which you can buy out over time. This scheme is currently fully subscribed but remains a valuable option for those who qualify.
- Kāinga Whenua: Specifically designed for Māori land, this loan scheme allows individuals to secure a loan against the house only, rather than both the house and land. This can be a crucial option for those looking to build on ancestral land.
Bank Low Deposit Options
Several banks offer low deposit options that can help you get onto the property ladder:
- Kiwibank: Offers loans with a deposit as low as 10%, particularly for new builds or recently constructed homes. This is subject to loan-to-value ratio (LVR) restrictions.
- ANZ: Provides guidance on using existing equity or KiwiSaver savings to supplement your deposit. They also offer lower deposit requirements for new builds, subject to specific conditions.
- Westpac: Offers a range of low deposit options, including leveraging family equity and shared ownership programmes. They provide opportunities to borrow more than 80% of the home’s value, subject to availability and conditions.
Using KiwiSaver
KiwiSaver is a popular option for first-time buyers, allowing you to withdraw your savings to help with the deposit. If you have been a member for at least three years, you can use your KiwiSaver funds, alongside other savings, to meet the deposit requirements. This can significantly reduce the time needed to save for a deposit.
Family Assistance
Family support can be a valuable resource when saving for a home deposit. Options include:
- Gifting: Family members can gift funds to help you reach your deposit goal. It’s important to have clear agreements and seek independent advice to ensure all parties are protected.
- Family Guarantees: Some banks allow family members to use their property as security for your loan, reducing the deposit required. This can be a complex arrangement, so professional advice is recommended.
Navigating the property market as a first-time buyer can be challenging, but with the right information and support, it is possible to secure a home with a lower deposit. By exploring options such as Kāinga Ora initiatives, leveraging KiwiSaver, and seeking family assistance, you can find a pathway that suits your financial situation. Engaging with financial advisors and mortgage specialists can provide further guidance and help you make informed decisions on your journey to homeownership.