How To Buy A First Home In Four Years
(even if you currently have no savings and earn an average income)
It’s not easy out there for first home buyers. New Zealand has been going through a massive property boom for the last year. In Auckland the boom started a long time ago, right around the time interest rates went through the floor in the aftermath of the global financial crisis.
The good news is there are options out there for everyday Kiwis on average incomes, even if you haven’t started saving yet. Welcome Home Loans have been around since 2002, but with the Reserve Bank speed limits in play they’re an increasingly common way to get into your first home with just a 10% deposit.
How Kiwisaver Can Help You Buy A Home
If you’ve been in Kiwisaver for three years you can withdraw your contributions for a first home, no matter how much you’re earning.
For a couple earning $50,000 each your employer will chuck in $3000 a year to start with. After four years that gives you a combined employer contribution of $12,000. By putting the maximum contribution of 8% into your Kiwisaver you would also have $32,000 ($8000 each year) – giving you a total of $44,000 to put into a property.
How The Government Will Top You Up
Kiwisaver Homestart grants are available through Housing NZ for eligible borrowers. There are some restrictions around these ones so you need to tick a few boxes. The big two are:
- Combined income of under 130k
- House price caps apply – a maximum purchase price of $600,000 in Auckland or $500,000 in the main centres (including Tauranga, Queenstown and Nelson) for existing properties
The way it works is Housing NZ will pay a grant of $1000 for each year you’ve been contributing to Kiwisaver. You need to have been paying into Kiwisaver for 3 years and it caps out at 5 years.
New home buyers get to add $50,000 to the house price caps and can double their home start grant.
For our couple on $50,000 each they get to add another $8000 to their deposit after four years, or $16,000 if they’re buying a new build.
Putting It All Together
$32,000 – Your Kiwisaver contributions
$12,000 – Your Employer’s Kiwisaver contributions
$8,000 – Kiwisaver Homestart Grant
$52,000 – Total Home Deposit after 4 Years