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Buying Your First Home

September 2020

 Buying Your First Home 

The purchase of your first home can be an exciting chapter in your life. We understand that it can also be a stressful process given the amount of new information and to-do lists. Engaging our specialist property lawyers before you sign an agreement can help alleviate this stress by assisting and advising you throughout the purchase of your first home.

 

By engaging us before you sign the agreement for sale and purchase, we will be able to review the agreement and advise about any possible issues within the agreement that might be against your interests and also advise you on what conditions you could potentially seek as part of the agreement. Further, if you are seeking to use your Kiwisaver fund as part of the deposit or are wanting to obtain the Housing New Zealand Home Start Grant then it is important that the agreement is amended in a way that allows enough time to complete these processes so that you are not put under undue stress. 

 Kiwisaver

If you are a first home buyer, you may be considering withdrawing your Kiwisaver funds to put towards a deposit or settlement of your first home purchase. In order to be eligible for the Kiwisaver first home withdrawal scheme, the following is requirements must be satisfied:

  • You must be purchasing your first home;
  • You must have contributed to Kiwisaver for at least 3 years;
  • You must be aged 18 years and over;
  • You must be a New Zealand Citizen or Resident;
  • You must plan to live in the house and not own any other property or land;
  • You must be pre-approved by a certified lender;

 

As every individual Kiwisaver provider has their own individual policy on first home withdrawals, we recommend that you contact your individual Kiwisaver provider for further information. If you are eligible to withdraw money from your Kiwisaver, you may also be eligible for the first home deposit subsidy, which may entitle you to up to $10,000. This is known as the Kainga Ora (Housing New Zealand) Grant. 

Low Interest Rates and Removal of High LVR Restrictions 

Since the beginning of the year, interest rates have been dropping. Some of the country’s largest banks have released all-time low interest rates for new and existing mortgages. A borrower can fix their repayments at an interest rate for as low as 2.59% for one or two years. However, these rates would only be available for borrowers with at least 20% equity (deposit). If the borrower does not have a 20% deposit the banks current interest rates are around 4% - 5%. 

 

An LVR (“Loan to Value Ratio”) is the loan compared to the value of the property. For example, if the property is worth $500,000 and you have a deposit of $100,000 then the LVR will be 80%, meaning the loan cannot be higher than $400,000. In April 2020 the Reserve Bank of New Zealand announced the removal of LVR restrictions. For first home buyers, this makes it easier to obtain lending and you will now have the opportunity to ‘shop around’ and decide which bank best suits their particular circumstances, not deciding by what bank has enough money to lend to you. As long as the applicant is considered credit worthy with income and meets the bank’s lending criteria.  

Get in touch 

The process of buying your first home can be confusing and overwhelming. One of our experienced property lawyers can help ease this stress by assisting you throughout the process from the beginning right through to settlement day. Get in touch today.